The Talga Group Ltd (ASX: TLG) share price rocketed higher today after the company released news of a successful study. Shares in the battery anode producer closed 5.29% higher at a price of $1.89.
It has been a wildly successful year for the company as its shares have risen by an astounding 301%. These gains come amid the electric vehicle (EV) revolution that has seen companies such as Tesla Inc (NASDAQ: TSLA) and Nio Inc – ADR (NYSE: NIO) perform well this year.
Talga’s fortunes are closely aligned with EV companies, as it makes battery anodes for lithium-ion batteries. Earlier in the year Talga made waves on this front as it partnered with battery giant Farasis.
What happened
This morning Talga announced the completion of a scoping study on its graphite resources (the Niska project) in Northern Sweden. The results sent the Talga share price soaring higher.
The study suggests there is strong evidence to support a stand-alone mine and anode refinery at the site, with robust economics being driven by high graphite resources, high anode product yields and the company’s vertical integration.
Talga sees the study as an important step towards increasing anode production. To this point, the company’s Niska project, when combined with its existing Vittangi Project, would form the largest natural graphite producer in the world.
What did the study say?
The Niska scoping study aims to utilise 5.1 megatonnes of carbon graphite at 28.7%. The study also states that the carbon will be mined at a rate of 400,000 tonnes a year.
Based on these numbers, Talga estimates its average annual pre tax cashflow would be approximately US$690 million per annum. This would be over a total of 14 years of operation and assuming US$2380/tonne of coated product.
The study also outlined some clear benefits for the project. For example, the mine would be favourably located in a tier 1 investment jurisdiction in Sweden and would have access to low cost 100% renewable energy supply and proximity to European battery markets.
Furthermore, the project would have a likely net present value of US$2.4 to $4.6 billion.
Investors have clearly been excited by the prospect, pushing the Talga share price up by more than 5% today.
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Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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