Tirupati Graphite is the only vertically integrated graphite company in the world, and UK investors

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It’s all systems go for the proposed listing of Tirupati Graphite on the standard list of the main market of the London stock exchange in a few days’ time.

Approvals have been granted by the FCA, and the funding has already been put in place, with GBP6mln pledged.

Of that total, GBP4mln has been raised from institutional and professional investors, while the remaining GBP2mln has guaranteed by an underwriting deal, but is in fact still open to any investors who see an opportunity to get on board what could be the major graphite story in Europe in the decade ahead.

The shares are priced at 45p each, meaning that the company is likely to have a market capitalisation of just over GBP39mln on listing, and they are currently available via broker, Optiva Securities and through the PrimaryBid platform, a partner of the London Stock Exchange.

Tirupati’s chief executive Shishir Poddar expresses himself well satisfied with the way the funding package has been put together by broker Optiva.

“This way of doing it allows us to provide reach to individual retail investors at the same price offered to the institutional investors,” he says.

“It’s all done, and we’re due to list on 11 December.”

When it does, Tirupati will become London’s only listed graphite producing company, and the only listed vertically-integrated graphite company in the world. To be sure, some Australian-based companies do venture some way up the value-chain, but none do it like Tirupati, which has manufacturing facilities in India, and even high-level research functions involving the development of graphene productions.

At the other end of the chain, of course, there’s the mines, and these are already proving their worth. Both are in Madagascar, a jurisdiction well-known for its abundance of high quality graphite. One, Sahamamy, went into production at the start of 2019, and has been supplying Tirupati’s upstream operations ever since. The other, Vatomina, will be brought on stream shortly, with the help of the new funding.

Two things are worth noting about these mines – and they are connected. The first is the high quality of the graphite that is produced, as typified by large flake sizes. The second is that the mines are consequently very low cost.

“We will be the lowest cost producer in the world,” says Poddar.

“We produce at a lower cost than other producers, and sell at a higher price than the others.”

So, the product from Madagascar is high margin, some of which will go directly into Tirupati’s own value-adding operations in India, a process which uplifts the value by almost three times.

What’s more, demand seems to be on the rise again, after a tricky coronavirus-ridden year.

“Prices have already started going north,” says Poddar. “The capital markets are looking quite positive in regards to graphite.”

Partly, it’s because the apparent recovery of the Chinese economy and the US elections being over, which has stimulated the prices of all commodities.

But graphite is a special case.

Not only is it used in the steel that China is pumping out at a rate of knots, it’s also used in fire retardants, composites and extensively in lithium ion batteries. That makes it one of the battery commodities crucial to the electric and green revolution and as such, likely to remain in favour for the foreseeable future.

“It’s such an opportune time,” says Poddar.

“The other thing that’s developing very strongly for us is the flame retardant market for our expandable graphite, which is picking up more than we’d forecast.”

And although Tirupati is yet to get involved directly in battery manufacture, flame retardants are just one of the high-end, value-added products that it manufactures at its Indian downstream plants.

It all adds up to a propitious moment for the development of Tirupati Graphite, and a clear opportunity for London’s investment community.

The company is already profitable at an operational level, and Poddar expects group profitability before too long too, as the various capital investment programmes are completed. The new mine should be switched on in April 2021, and with new sales agreement from the Indian manufacturing facilities in the offing, the early part of next year ought to be replete with positive newsflow.

In the meantime, it’s worth noting that another graphite company, Syrah Resources (ASX:SYR) has enjoyed a stellar run lately, its shares doubling even in the absence of a resumption in production, which was suspended by the company in March 2020.

So the market appetite is clearly there. And Tirupati brings not just revenues, but growth and vertical integration. It will be interesting to watch.

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