10% Fixed Convertible

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Earn 10%p.A. for 3 years


Convertible Note Terms:

  • Interest   – 10% PA
  • 3-year Term
  • Semi Annual Payments: 5% every 6 months for life of Note
  • Interest accrues daily
  • Available option to convertible into the PLC share capital at IPO price at any time during life of Note
  • Buy back provision by company only after 1styear – 30-day notice period, holder can elect to convert if so wishes, if bought back all interest payments over Note life to be paid in full.
  • All interest payments to be paid in cash.
  • Unsecured  
  • Conversion permissible 15 days after IPO and subject to a six-month orderly market agreement in the 1st

Summary

10% interest per annum rate over 3 years gives an investor a secure 30% return on capital over the period. 

The option to convert into the share capital at any time over the life of the Note gives the investor a free option on the success of the business over the period. If the market research is correct, then the share price should be trading a multiple above the IPO price in 3 years’ time.

Interest unlike listed convertible bonds will accrue daily as for a standard bond instrument and six-monthly interest payments give a regular flow of income to underlying holders.

The company is in production and ramping up so cash is now flowing into the company which will support the payment of interest and longer term any repayment liability.

Key notes:

Demand for graphite to rise to 4.5M tons per annum by 2030 from 1.2M tons in 2018, within that Lithium ion battery demand growth will be 32% CAGR over this period!  A generational revolution in electrification of vehicles.

150 potential applications for graphite – growth areas are, lithium ion batteries , flame retardants, expandable graphite – all areas where there’s high quality flake graphite can supply to.

This is the only company bringing new production onto the market in 2019 – 9000 tons per annum and 18,000 tons by end of 2019.

NPV on risked valuation £159M (168p per share), unrisked £307M (324p per share).

Last equity funding round at 35p – IPO pricing to be decided but range 50-80p expected. 

Current position:

3000 ton per annum mine operational and now reaching full capacity of 250 tons per month  – shipments to customers in Europe commenced and forward payments received – from June plant will be generating a US$100,000 monthly positive  cashflow – US$1,200,000 per annum.

1200 downstream flame-retardant plant ramping up currently – The company has its own product CarboflameX flame retardant – selling to foam manufacturers.

6000 ton per annum on another mine now 50% complete and post this funding will be fully operational within 3 months. 

Graphene oxide trial samples produced in India and sent to potential customers in Europe. Potential collaboration deals in the discussion stage.

Combined revenues by September 2019 annualized will be US$15M with an EBITDA of US$6Mwhich will be more than enough to cover any interest payments on the Note – maximum interest payments per annum would be £360,000 ( US$470,000) – interest cover 8x.

IPO scheduled for September 2019 at which point the company will raise additional equity and debt to fund the expansion of the mining operations to 81,000 tons per annum of flake graphite and build out a 20,000 downstream specialty product plant in India. The company is planning a modular ramp up depending on demand over a three-year period out to 2022. At that point if development plan is executed then revenues will be in the region of US$160M with an EBITDA US$80M!!   

The above revenue numbers do not factor in anything for the development of the company’s graphene and high value products business,  which could add significant value to the company and once listed will provide a lot of interest from investors. 

Risks

  • Notes are unsecured
  • Unlisted
  • The IPO is scheduled for September / October 2019 but may be delayed if market conditions are not suitable.
  • Graphite pricing and demand risk
  • NOTE: YOU WILL RECEIVE A FULL RISK DISCLAIMER PRIOR TO MAKING ANY INVESTMENT