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What do peri peri chicken and graphite have in common?
The short answer… Mozambique.
While the flavour delights of the hot and spicy peri peri sauce - which stems from Mozambique’s Portuguese influence - have shot to prominence in recent times due to various fast food outlets, the country’s mining potential and high-grade graphite deposits are today proving to be an even spicier proposition.
And one Australian mining company that knows more than most is Triton Minerals Limited (ASX Code: TON).
The Company has projects located in north eastern Mozambique that, from a logistics perspective, are ideally located close to existing infrastructure and an operating container port.
Mozambique is known for many things, including Peri-Peri chicken as we’ve discovered already… but for Triton, you have a different focus and outlook?
Absolutely. Mozambique is home to one of the highest-grade regions of graphite globally. Our flagship asset is the Ancuabe Project, for which we’ve been focusing on securing the necessary debt funding to move into a construction phase.
Ancuabe’s large flake and high purity graphite is a key differentiator for us. It is complemented by two other assets that provide Triton with a project pipeline for development or joint venture partnerships. One of those is the world’s largest combined graphite and vanadium deposit, Nicanda Hill, that in particular, is ideally suited to the battery market.
Like most commodities, graphite has had its ups and downs, from being the new, cool kid on the block, to the ugly duckling… what’s your view on its outlook?
The world is product hungry – from batteries powering smart devices, to electric vehicles refractories, and a key growth area for us, flame retardants. In my view, the sustainable outlook for graphite is positive, really positive. And given applications globally are often working with fine flakes and lesser grades, we think having assets that produce high-grade graphite is a massive advantage.
So pitch Triton to us, what makes you tick from an investment perspective?
Well let’s put to one side the fact we’re the only project moving forward outside China for the moment. Which is a story in itself, but to answer your question and in simplest terms, we expect to be the next ASX high-grade graphite producer with a strong pipeline of projects.
Ancuabe is ready to go with all major permits in place, we have binding offtake agreements, an EPC contract secured and financing is now our main focus, which we are working with our largest shareholder to get this across the line.
We are in a global graphite market that continues to grow with approximately 60 per cent of Ancuabe's flake being large and suitable for expansion. The quality of our graphite puts us in a position to go into all the markets – we think this makes us a very compelling investment opportunity.
Explain the difference in grades and graphite qualities…
Often people think that all graphite is equal – but it’s the value proposition and higher margins from high purity larger flake graphite that really sets us apart.
It is worth noting that high purity jumbo flake graphite sells for around three times the price that high purity fine flake graphite does.
The bigger story is not necessarily the grades, but more so the forecast shortage of all graphite, in particular the large flake graphite in general over the next few years.
It’s why we’re so bullish about getting Ancuabe into production, producing a commodity that will be in high demand globally.
What’s the status of key commercial aspects of Triton today?
It’s a good question, particularly given the rapid change we’ve witnessed during the past six months. We’re on the home stretch of negotiating some new financial and investment structures to allow us to mobilise to site and commence construction.
2020 has been a year that no one could have predicted - for Triton, what’s the Company’s focus as 2021 fast approaches?
As already said, we’re in the final stretch of finalising financing that, once sorted, will open our next phase of opportunities.
We hope to be in a position to announce more details soon. Triton has modelled to become a high margin producer – with near term production – while requiring only a moderate CAPEX requirement of approximately $85m.
Facts. One worth remembering
Ever sit in the classroom sharpening your old HB2 pencil to use for a maths test - only to then reach for the eraser to make a correction? What you were writing then rubbing out was graphite, obviously the cheapest and lowest purity end of the market. Graphite today at the more premium end of the market has a much more expanded set of applications and uses and is now a key ingredient of some of the sexiest and newest products to hit global markets. Graphite is a good conductor of heat and electricity, which makes it suitable for inclusion in electronic products such as electrodes, batteries and solar panels. Think mobile phones, electric vehicles and flame retardants.