The first shipment of graphite from Battery Minerals Ltd.'s Montepuez project in Mozambique is likely to be delayed by at least three months from the June 2019 schedule after the company lost a US$30 million funding package.
Shares in the company plunged 35% in afternoon trade on the ASX.
The company's US$30 million debt and equity funding agreement with Resource Capital Funds, signed in early May, was terminated after the private equity firm said the graphite market no longer meets its investment criteria.
Battery Minerals Managing Director David Flanagan, however, said the outlook for the graphite market remains "highly attractive," and the company expects operating margins of about US$500/tonne at Montepuez.
"Our view is that the graphite market outlook continues to strengthen, driven by the impending surge in demand for graphite from lithium battery manufacturers as well as refractory products and the rapidly growing expandable graphite market," Flanagan said.
Battery Minerals said June 13 that it will restart discussions to secure funding. The first graphite shipment is expected about 12 months after completion of project funding.
The company will go ahead with its plan to raise up to A$25 million via an oversubscribed placement and a securities purchase plan.
Battery Minerals said its current cash on hand of A$14.8 million and another A$9 million to A$14 million in future proceeds are enough to progress other financing arrangements and advance the Montepuez project.