Why is the Renascor (ASX:RNU) share price losing charge on Monday?

The Renascor Resources Ltd (ASX: RNU) share price has started the week in the red.

In afternoon trade, the graphite developer’s shares are down 5% to 28 cents.

What’s going on with the Renascor share price?

Investors have been selling down the Renascor share price despite the release of an update on the company’s Siviour Battery Anode Material (BAM) Project.

According to the release, work is progressing on an updated, optimised BAM Study, building on previous detailed feasibility work undertaken by Renascor for the planned vertically integrated mine and advanced manufacturing operation in South Australia.

The release explains that GR Engineering Services (ASX: GNG) is acting as study manager and engineering designer.

Management highlights that the optimised BAM Study will incorporate material improvements to the mineral processing parameters adopted in the earlier study. This includes increases in spherical graphite milling yields and improvements to both the Graphite Concentrate flotation and downstream purification circuits.

Furthermore, the optimised BAM Study is assessing an increase in Purified Spherical Graphite (PSG) production capacity, as well as additional staged expansions of PSG operations in order to meet projected demand. Management advised that studies to date have considered an initial Stage 1 production capacity of 28,000tpa of PSG.

This could be very lucrative given that Fastmarkets is currently reporting PSG prices of US$3,500 to US$3,800 per tonne. This is a 40% increase over the last six months and is being driven by demand for use in the production of anodes for lithium-ion batteries.

So why are its shares falling?

The weakness in the Renascor share price today may have been driven by the inclusion of a couple of risk factors in the company’s update.

Firstly, Renascor reminded investors that it is still seeking approval for its Siviour Graphite Mine. The release explains that the South Australian Department for Energy and Mining has completed its initial review of the company’s Program for Environment Protection and Rehabilitation and the two parties are in active discussions regarding a final approval.

In addition, the release highlights that Renascor recently became aware of an application seeking patent protection over certain previously known and published procedures for purifying graphite. Renascor has now opposed the pending patent application to protect and preserve its flexibility to use these processing procedures (or similar), should it wish to do so.

While these issues are likely to be surmountable, the uncertainty appears to be weighing on sentiment and the Renascor share price a touch today.

The post Why is the Renascor (ASX:RNU) share price losing charge on Monday? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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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