Report
Independent Research

Kibaran Resources Limited (ASX:KNL)

Kibaran Resources Limited (“Kibaran” or “the Company”) is well down the path to
implementation of a vertically integrated graphite business supplying a number of markets
outside of China. This includes traditional uses and the developing lithium-ion battery (“LiB”)
anode market, the latter of which some forecast will result in a eight fold increase in demand
for natural flake graphite for batteries by 2025.
The Company’s key asset is the 100% owned (through wholly owned Tanzanian subsidiary
TanzGraphite) Epanko Graphite Project (“Epanko”) in Tanzania, which is fully permitted and has
binding offtake agreements thus far with German and Japanese customers for ~44,000tpa of
the planned 60,000tpa of proposed high-quality graphite concentrate production. Kibaran is
now working towards finalising financing following a hiatus (now ended) in the development of
Epanko, with the potential for first production by 2021. Delays were initially due to conforming
with the rigorous bankable feasibility study (“BFS”) and other requirements associated with
sourcing funding out of Europe and complying with the IFC Equator Principles, however
satisfaction of these requirements has resulted in a rigorous study and robust, financable
project.
Delays were also caused due to the well publicised changes in the Tanzanian Mining Law -
this affected Kibaran (and a number of other companies) in that the issuing of Mining Leases
(ML) was held up for over twelve months; Kibaran has now been issued with a Letter of
Guarantee effectively extending the life of the Epanko Mining Lease from 2025 to 2035, which
is a requirement of the senior debt financiers in that it matches the term of the ML with that of
the debt financing, and which now allows for the recommencement of financing negotiations.
The second key part of the strategy is downstream processing of graphite to purified spherical
graphite (“SpG”), a key component of LiB anodes. This has involved the setting up of the
EcoGraf business, which has also included the development of an environmentally friendly
proprietary SpG purification process, that has been successfully tested on graphite from
Epanko and a number of 3rd parties globally. Purified SpG has been used to produce “in-spec”
battery anode material that has been successfully tested by a number of anode manufacturers.
The development of EcoGraf has continued in parallel with Epanko, with a pilot plant now
operating in Germany. Plans are for a staged expansion up to a production of 20,000tpa purified
SpG by 2021, with further expansions possible thereafter. The nature of the business is that
plants will have the flexibility to be able to be set up in locations to suit the markets, and with
the potential to be able to be developed in association with strategic partners.
KEY POINTS
Ready to go: With the recent Letter of Guarantee on the Mining Lease, Kibaran is now in a
position to finalise funding and progress Epanko to development and production; EcoGraf is
currently underway, with the Company now considering attracting a strategic partner to help
fund the commercial development of the SpG process.
Offtake in place: Binding offtake agreements are in place with quality partners; this includes
an 20,000tpa agreement with Thyssen-Krupp that could supply ~30% of the German refractory
market, 10,000tpa with a German trader and 14,000tpa with Sojitz, a major supplier to the non-
Chinese battery markets in Japan and South Korea.
Forecast strong market growth: Graphite markets are forecast to grow very strongly over
the foreseeable future, largely driven by the growth in electric vehicles; one outcome of this is
that end users will be looking to supply outside of China, which currently controls the market.
Quality resources with upside: Mineralisation at Epanko is of high quality, and suitable to
supply most markets; in addition, there is considerable upside potential for future operational
expansions. The Company also has a strategic holding and Resource at Merelani-Arusha in the
north of Tanzania, which has the possibility to be a future producer.
Success with EcoGraf: Results to date suggest that EcoGraf will be able to be successfully
developed commercially, and being an ethical and green non-HF purification technology,
products should have broad market appeal.
Experienced personnel: Company personnel have extensive and successful experience in the
resource sector (including graphite), and have a significant stake in the Company.
Active work programme: We expect to see milestones being met over the near to mid term,
thus leading to material news flow.
Valuation: We have a base case valuation/six month price target of A$0.64/share for Kibaran,
calculated on a share structure diluted for funding of Epanko and EcoGraf and graphite pricing
adjusted slightly upwards to reflect changes in pricing since release of the BFS. This is
predicated on menaingful progress at both the Epanko and EcoGraf projects.
Underlying
Kibaran Resources

Kibaran Resources is engaged in the exploration and evaluation of its tenements in graphite focused mineral resources in Tanzania in East Africa including feasibility work on the Epanko Project and marketing of graphite.

Provider
Independent Investment Research
Independent Investment Research

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