Volt Resources set to transform into graphite producer in near-term through Zavalievsky stake acquisition

Volt Resources Ltd (ASX:VRC) (FRA:R8L) is set to transform into a graphite producer in the current quarter with the pending acquisition of a 70% stake in the Zavalievsky group of companies based in Ukraine complementing the company’s recent membership of the European Battery Alliance (EBA).  The ZG Group acquisition will give Volt the opportunity to become a key participant in the European EV battery value chain leveraging the benefits of membership of the EBA.  Completion of the acquisition will immediately transform Volt into one of the few ASX-listed graphite producers, positioning the company well ahead of most of its peer graphite companies to become a graphite producer without the usual greenfield financing and development risk. The company intends to become a fully integrated graphite mine and SPG producer based in Europe with plans to progress the development of LIB anode material (SPG) to be in production by 2022. Volt also intends to continue to progress the exploration and development of its wholly-owned Bunyu Graphite Project in Tanzania and its gold projects in Guinea, West Africa. "Significant step forward" It has signed binding share purchase agreements (SPAs) in April 2021 to acquire a 70% interest in the Zavalievsky group of companies for a total of US$7.6 million. Volt managing director Trevor Matthews said: “The signing of the binding share purchase agreements is a significant step forward for Volt in its ambition to be a graphite producer. “The acquisition of a controlling interest in the ZG Group positions Volt years ahead of its peer graphite companies and without the usual development risks associated with a greenfield project. “Following Volt’s recently announced membership of the European Battery Alliance providing Volt with access to business development opportunities and a business investment platform, the ZG Group acquisition has the potential to make Volt a key participant in the supply of graphite and battery anode materials into the growing European market with excellent access to other markets in the USA and Middle East.” Completion of the transaction remains subject to the satisfactory completion of Volt’s due diligence by May 14, 2021, or such later date as the parties may agree. Advantages of Zavalievsky purchase The Zavalievsky Graphite business has the following significant advantage: ➢ The Zavalievsky Graphite business is in eastern Europe is close to key markets, with significant developments in lithium-ion battery (LIB) facilities planned to service the European-based car makers and renewable energy sector; ➢ Plans to produce battery anode material using existing graphite production to become a fully integrated supplier to LIB cell makers based in Europe; ➢ Makes graphite products across the range with the potential to significantly increase its large flake production; ➢ Produces a high value “green” purified 99.5% total graphitic content (TGC) product; ➢ Long life multi-decade producing mine with further exploration upside; ➢ Existing customer base and graphite product supply chains, which Volt expects to be able to leverage off in developing its existing Bunyu graphite project in Tanzania; ➢ Excellent transport infrastructure covering road, rail, river and sea freight combined with reliable grid power, ample potable groundwater supply and good communications; ➢ An experienced workforce to assist with training, commissioning and ramp-up for Volt’s Bunyu development; ➢ Potential to generate material cashflow, which could make Volt internally funded for corporate costs and working capital into the future; ➢ Co-products of quarry stone for the domestic market and garnet for the European market that could generate material cash flow for relatively low capital and operating cost leveraging the synergies from the graphite business infrastructure and experienced mining and processing staff; and ➢ A 79% interest in 636 hectares of freehold land, with the mine, processing plant and other buildings and facilities located on that land. Battery anode materials The ZG Group has plans to install a processing plant and equipment to commence the production of spheronised purified graphite (SPG) for the European LIB anode market within the next 12 months. It has already attracted interest from LIB cell manufacturers and major carmakers. Bunyu Graphite Project The Bunyu Graphite Project is the largest JORC resource in Tanzania with 461 million tonnes at 4.9% TGC, a proven reserve of 127 million tonnes at 4.4% TGC and 22.6 million tonnes of contained graphite. There is huge upside potential with exploration of less than 6% of the project area. All key approvals are in place and advanced funding discussions for Stage 1, expanding to 170,000 tonnes per annum (tpa) with excellent economics for Stage 2. The project is being undertaken in a two-stage development strategy with Stage 1 significantly de-risking the Stage 2 expansion through a lower risk small scale development with mine and plant operations, trained workforce, supply chain and product sales experience. Stage 1 is a 400,000 tpa plant to supply 23,600 tpa at 6.26% TGC feed grade and Stage 2 planned production of 170,000 tpa. The financial analysis for the Stage 2 expansion is based on the pre-feasibility study, which has a 1.4-year payback, post-tax NPV of US$890 million with an average annual EBITDA of US$195 million. Targeted funding of US$40 million includes the development cost of US$31.8 million and resettlement compensation of US$3.5 million. Stage 1 is based on an initial 7-year project life, with plans to expand to a multi-decade project via the Stage 2 development. A Definitive Feasibility Study for the Stage 2 expansion will be undertaken once finance has been approved for Stage 1. There is at least 22 years project life, with potential multi-decade project based on current JORC mineral resource. The development funding is estimated at US$173 million, with a 1.4-year payback, post-tax NPV of US$890 million, average annual EBITDA US$195 million. The plan is for Stage 2 to be commissioned in 2023 to align with the forecast significant increase in graphite demand from 2022. Volt is in advanced discussions with African development banks. Guinea gold projects The company owns six permits covering 348.7 square kilometres in the highly prospective Birimian Greenstone Belt in the Siguiri Basin. These six permits fall under the Kouroussa, Mandiana and Konsolon projects. The Kouroussa and Kouroussa West permits border the Predictive Discovery Ltd (ASX:PDI) gold project, which last year announced a gold intersection of 46 metres at 6.58 g/t. Further, 90 grab samples from Monebo and Nzima returned grades of up to 14.5 g/t at Nzima and 8.89 g/t at Monebo. A legacy soil geochemistry review of Konsolon data found multiple gold in soil anomalies between 1-2.5 kilometres in length across this permit. The review found high-grade gold results including 20.25 g/t, 12.87 g/t, 5.12 g/t and 4.97 g/t. Auger drilling programs on four permits are in progress, with initial drill sample assay results due to be announced soon.