REG - Tirupati Graphite - Funding and Operational Update

Tirupati GraphiteAnnouncement

05/02/2025 16:00

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RNS Number : 0675W  Tirupati Graphite PLC  05 February 2025

The information communicated within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulations (EU) No.
596/2014 which is part of UK law by virtue of the European Union (Withdrawal)
Act 2018. Upon the publication of this announcement, this information is
considered to be in the public domain.

 

 

5 February 2025

Tirupati Graphite plc

 

('Tirupati', or the 'Company' and together with its subsidiaries, the "Group")

 

Operational Update, Strategic Investment and Proposed Fundraising

 

 

Tirupati Graphite plc (TGR.L), the specialist flake graphite company and
producer of this critical mineral for the global energy transition, is pleased
to announce an update on its operations, current fundraising activities and
financial condition, and outlook, following the re-structured Board and
executive team's initial strategic assessments and site visit.

Operations Update

 

The Group re-started mining and processing operations from its Vatomina
project in Madagascar on 1(st)  February 2025. Production will initially be
through  two pre-concentration units (PCUs) and is expected to stabilise at a
daily rate of around 20-25 MT per day for February. The Group intends to
install two additional PCUs during 2025. The mine had been idle since 12
December 2024 and had limited and intermittent operations throughout 2024, due
mainly to liquidity problems affecting operations. with around 2,000 MT of
flake graphite produced throughout the calendar year 2024 according to
production records.

 

During a site visit by CEO, James Nieuwenhuys, in January 2025, meetings were
held with key suppliers of goods and services and with key employees to review
what steps were necessary to achieve stable production, expand capacity and
better develop the mine, as well as improve ESG and safety aspects of the
Group's operations.

 

Initial indications are that the Group could achieve monthly production rates
of approximately 600 tonnes per month of flake graphite by end April 2025 and
thereafter increasing to around 1,000 MT per month by 31 July 2025 and 1,500
MT per month by December 2025.

 

The Company has existing orders that it intends to honour and can advise it is
receiving strong demand inquiries for its available production capacity going
forward.

 

Strategic Investment and Proposed Fundraising

 

The Company has received proceeds to date of just over £1 million from a new
strategic investor and existing investors, including certain directors of the
Company, as part of the total commitments received for the issue of
£1,605,000 (before expenses) of Convertible Loan Notes (the "2025 Notes")
by a private placement (the 'CLN Offering') through Optiva Securities
Ltd ("Optiva") as placing agent. The remaining balance of the proceeds is
expected to be received by the Company before the end of February 2025 on
closing of the transaction. This is the first stage of a larger proposed
fundraise, as discussions continue with other parties who may also invest in
the CLN Offering as well as a proposed placing of ordinary shares discussed
below.

 

The Company has received investments in the 2025 Notes from certain current
directors as below:

 

£100,000 - Mark Rollins

£100,000 - Murat Erden

£50,000 - Christian Dennis

 

In addition, £50,000 was received from Optiva; a related party by virtue of
Mr Dennis being a director of that company.

 

The Company intends to launch a placing of ordinary shares later this month.
This will be subject to approvals of the shareholders at a general meeting,
arrangements for which will be announced in due course. Further potential
financing opportunities are also being evaluated.

 

 

Abridged Terms of the CLN Offering

 

The 2025 Notes will be issued, subject to agreement of the final
documentation, in integral multiples of £5,000 each, have zero coupon (except
in the limited circumstances described below) and a final maturity date of 31
December 2025. Redemption will be at par value, plus any accrued interest. The
2025 Notes will be direct, unsecured general obligations of the Company, which
will not be secured by any mortgage, pledge, or other charge, and will rank
equally with one another and with all other existing and future unsecured
indebtedness of the Company, except as prescribed by law. The terms of the
2025 Notes will not restrict the Company from incurring additional
indebtedness for borrowed money or from mortgaging, pledging or charging its
properties to secure any indebtedness.

 

The proceeds of the 2025 Notes may be used for general corporate purposes and
working capital.

 

The 2025 Notes may be converted into ordinary shares of £0.025 par value each
in the capital of the of the Company at a conversion price of £0.05 per share
("2025 Conversion Shares") by notice from a holder of the 2025 Notes
("Noteholder") or from the Company, provided that the Company is able to admit
the 2025 Conversion Shares to listing.  This is expected to require, inter
alia, the approval of a prospectus, to be prepared in due course. Issue of the
2025 Conversion Shares will also be conditional on approval by shareholders in
general meeting of the required authorities to allot new shares for this
purpose.

 

Interest shall only accrue and be payable on any outstanding 2025 Notes in the
event that the Company is not able to exercise its right to convert the 2025
Notes and procure the listing of the 2025 Conversion Shares on such conversion
on or before 31 July 2025 (whether through the publication of a prospectus or
otherwise). In such circumstances, the 2025 Notes will accrue interest from
their issue date at a rate of 12% per annum (such amount to be rolled-up into
the principal amount due in respect of the 2025 Notes.

 

For each 2025 Conversion Share issued, a Noteholder will be issued one warrant
providing the right to subscribe for one ordinary share in the capital of the
Company at an issue price of £0.05. The terms of the warrants also include an
incentive to warrant holders to exercise their warrants in the initial six
months from issue, subject to meeting certain conditions, including pricing.
If the conditions attached to the incentive are met, the Company shall grant
the warrant holder one additional warrant for every two warrants exercised, to
subscribe for ordinary shares at a subscription price of three times the
conversion price.

 

 

 

Amendment and conversion of existing Convertible Loan Notes

 

The Company has reached agreement with the required 75% majority of the
holders of the £0.9 million convertible loan notes issued in 2019 ("Series 1
Notes"), subject to finalised documentation, to amend the Series 1 Notes,
which had a maturity date of 31 December 2024. The Series 1 Notes will be
converted to ordinary shares of £0.025 par value each in the capital of the
Company, at a conversion price of £0.05 per share ("2019 Conversion Shares"),
on approval of a prospectus and the admission of the 2019 Conversion Shares to
listing. Issue of the 2019 Conversion Shares will also be conditional on
approval by shareholders in a general meeting of the required authorities to
allot new shares for this purpose.   The interest rate on the Series 1 Notes
is to be increased to 8% per half year with back-dated effect from 1 July
2024, to be rolled up as additional principal and paid in shares on
conversion. In the event that a prospectus has not been approved by 31 July
2025, the amended Series 1 Notes will have a final maturity date of 31
December 2025 and accrued but unpaid interest will be rolled up in the
principal amount of the Series 1 Notes to be redeemed or converted.

 

The Company is engaging with the holders of the 2022 issue of £1.9 million
convertible loan notes ("Series 2 Notes") (due 2025) on potential amendments
to the interest payments on those notes; any such amendments will require a
75% majority of holders to agree.

 

Financial Condition and Creditors

 

The Group had cash resources as at 1 January 2025 of under £50,000, although
that balance has since been augmented by early receipt of part of the proceeds
for the issue of the 2025 Notes referred to above, allowing the Group to meet
immediate payment obligations and re-start production.

The new Board has undertaken a review of outstanding creditors of the group,
which has revealed a significant number of overdue balances. Creditors of the
Group comprise:

·      A total of $1.2 million (£0.97 million equivalent) in respect of
amounts prepaid to the Group by customers and for which delivery has not
completed by the due date. Certain of these balances are expected to be
settled by delivery of graphite, albeit later than originally scheduled, while
part has been converted to promissory notes due for repayment. The Company is
negotiating with a number of customers on schedules for repayment and/or
delivery to settle these balances. There is a risk that certain of these
negotiations will not be successful and balances will consequently be due for
immediate repayment.

·      The £2.8 million of existing convertible loan notes, principally
comprising £0.9 million Series 1 Notes, which are due to be converted into
ordinary shares in the capital of the Company as set out above, and £1.9
million Series 2 Notes which have a final maturity date in July 2025.  These
CLNs represent unsecured general obligations of the Company. The Company will
need to re-finance or obtain agreement of the noteholders to amend the
maturity of the Series 2 Notes. The holders of the new 2025 Notes referred to
above will be additional general creditors of the Company until converted.

·      Approximately £1.6 million of other trade creditors for services
and goods received and mostly not paid for on a timely basis.

·      Approximately £0.4 million which is due to Pranagraf Materials
and Technologies Private Limited. Pranagraf was a related party, by virtue of
former director and CEO Mr Shishir Poddar being a director and significant
shareholder of that company. These balances were incurred under service
agreements and procurement arrangements. The Group is reviewing these
contracts and balances claimed.

·      Approximately £0.5 million due to staff, directors and former
directors. The Company may seek to settle part of this balance in equity.

 

As part of the completion of the financial statements for the year ended 31
March 2024 and for subsequent periods, the Board is reviewing the
recoverability and possible impairment of certain of the Group's assets. There
is a risk of adjustments being required to the preliminary unaudited results
announced in May 2024 including for impairments of historically recorded asset
values and accounting provisions for recoverability being necessary.

 

While the Board has a number of initiatives and negotiations underway to
stabilise the Group's financial position, as described in this announcement,
and is pleased to have re-started mining operations in Madagascar, in view of
the quantum of creditors noted above and legal processes, threatened or
already notified to the Company for settlement of overdue amounts, and the
number of different workstreams that need to be successfully completed to
achieve its plans to restore the Group's financial condition, the Board is
obliged to highlight that there is no guarantee of a successful outcome and
that there remains a high financial risk to the Company's future at the
present time.

 

Annual Report and Financial Statements, Suspension of LSE Listing

 

The Company presently has limited access to its accounting systems and data,
as a result of system restrictions imposed by the outsourced  service
provider in India, of which the former CEO and director is a significant
shareholder and managing director. Urgent efforts and legal process are
underway to obtain administrative control and access to the Group's full
systems and data. As a result, the Company's completion of its 31 March 2024
financial statements ("Accounts") and the corresponding statutory audit for
the year ended 31 March 2024 ("Audit"), and the subsequent re-listing of the
company's shares to trading, have been delayed, as has the publication of the
Company's interim financial statements for the period up to 30 September 2024.
The completion of the Accounts and Audit is a high priority for management.
 The listing of the Company's shares on the LSE (transitional standard
sector) remains suspended pending completion of the Accounts and Audit, but
the Company will seek to return the listing of its shares to permit daily
trading as soon as possible.

 

Key Contact Information Changes

 

The Company advises that it has updated its contact details:

 

For general inquiries, please contact: info@tirupati.co.uk
(mailto:info@tirupati.co.uk)

 

For investor relations or media, please contact: ir@tirupati.co.uk
(mailto:ir@tirupati.co.uk)

 

Outlook

 

Following changes to the Board and executive management team over the course
of December 2024 and January 2025, the Company has started to establish and
will continue to enhance its corporate governance structure in line with best
practice for listed companies of similar size.

 

While recognising that the Group remains financially stressed with no
certainty of success in the various steps outlined above to stabilise the
Group's finances, the Board is pleased to be able to report the key milestones
of production resuming, a new management team being in place, and new funding
being secured for the Company. The Board considers that the Group's underlying
graphite resources, the demand and inbound inquiries for new supplies of flake
graphite that the Group can sell into, and interest being shown by potential
investors, can provide a very positive medium and longer term outlook provided
that short term liquidity can be secured. While production is likely only from
the Vatomina mine during 2025, looking ahead the Board will look to re-start
operations and mine development at its Sahamamy mine and also look to develop
the large resource at its concessions in Mozambique when conditions permit, as
well as continuing to actively evaluate various opportunities to vertically
integrate by the introduction of downstream processing into its business
model.

 

 

 

ENDS

 

For further information, please
visit https://www.tirupatigraphite.co.uk/ or contact:

 

 Tirupati Graphite Plc                          

 Mark Rollins - Executive Chairman             info@tirupati.com (mailto:info@tirupati.com)

 Alastair Bath - Investor Relations            IR@tirupati.com

                                               +44 7356 057 265
 CMC Markets UK Plc (Broker)

 Douglas Crippen                               +44 (0)20 3003 8632
 FTI Consulting (Financial PR)                 +44 (0) 20 3727 1000

 Ben Brewerton / Nick Hennis / Lucy Wigney     tirupati@fticonsulting.com

 

About Tirupati Graphite Plc

 

Tirupati Graphite is a specialist Graphite producer and a supplier of the
critical mineral for a decarbonised economy and the energy transition, with
leading low development capital and operating costs. The Company places a
special emphasis on green applications including renewable energy, e-mobility,
energy storage and thermal management, and is committed to ensuring its
operations are sustainable.

 

The Group's operations include primary mining and processing in Madagascar
where the Group  operates two key projects, Sahamamy and Vatomina with a
combined installed final production nameplate capacity of 30,000tpa, subject
to minor capex additions. The Madagascar operations produce high-quality flake
graphite concentrate with up to 97% purity and selling to customers
globally.

 

The Group also holds two advanced stage, world class, natural graphite
projects in Mozambique. Work has already commenced to optimise the economics
for development of the Montepuez graphite project, which is permitted for
100,000tpa production and where substantial construction work has already been
undertaken by the predecessor. A table of the Group's projects is provided
below:

 

 Country       Project           Stage
 Madagascar    Sahamamy          Production paused: 18,000tpa nameplate capacity
 Madagascar    Vatomina          In Production: 12,000tpa nameplate capacity
 Mozambique    Montepuez         100,000tpa permitted, construction-initiated Currently in Force Majeure
 Mozambique    Balama Central    58,000tpa permitted, development-ready Currently in Force Majeure

 

 

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