31 October 2016
ASX:TLG
QUARTERLY ACTIVITIES REVIEW
Page 1
FOR THE PERIOD ENDING 30 SEPTEMBER 2016
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Talga Resources Ltd
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OVERVIEW
Australian advanced materials company, Talga Resources Ltd (ASX: TLG) ("Talga" or "the Company") is pleased to report its activities for the quarter ending 30 September 2016 - a substantial period of activity that delivered a number of project and business milestones. Highlights included:
COMMERCIAL DEVELOPMENT
Graphene products business strategy
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Manufacturing 'fit for purpose' graphene products to complement supply of raw graphene and graphite materials
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Strategic decision made to pursue revenue opportunities during pilot processing stage, prior to full-scale production
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Functionalised graphene coating produced and delivered to global leading customer following patent and trademarking of first value-added product
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Results of scientific study demonstrate Talga's graphene increases corrosion protection of steel by up to 74% - validating opportunities in the coatings sector
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Phase 2 graphene pilot test plant in Germany successfully commissioned
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High quality graphene output confirmed with the capability to convert approximately 76% of graphite to graphene
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Capacity scale-up continues and grows product inventory for business strategy
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Graphene collaboration agreement signed with JenaBatteries GmbH targeting commercial scale grid energy battery applications
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Commenced 2nd trial graphite ore mining campaign at Vittangi Project
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Graphite resource infill and exploration drilling commenced across three Swedish graphite projects
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Appointed Project Manager - Europe, to drive operations in Germany and Sweden
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Completed the $0.9m options entitlement offer component of a combined
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Completed sale of Pilbara based gold projects in Western Australia
First Functionalised Graphene Products Developed and Delivered
Phase 2 graphene plant commissioning completed in Germany
Graphene partnership with German battery group
MINING AND EXPLORATION
2016 Graphite Trial Mining Commenced in Sweden
CORPORATE
$10.9m capital raising
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ABN 32 138 405 419
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1st Floor, 2 Richardson St,
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West Perth, WA 6005
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T: +61 8 9481 6667
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F: +61 8 9322 1935
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www.talgaresources.com
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Corporate Information
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ASX Codes TLG, TLGOA
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Shares on issue 181.9m
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Options (listed) 44.9m
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Options (unlisted) 36.2m
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Company Directors
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Keith Coughlan
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Non-Executive Chairman
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Mark Thompson
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Managing Director
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Grant Mooney
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Non-Executive Director
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Stephen Lowe
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Non-Executive Director
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COMMERCIAL DEVELOPMENT
Graphene business launched
Talga's graphene business strategy was announced during the quarter with a focus on manufacturing 'fit for purpose' graphene products designed and produced by Talga to suit targeted market sectors. This strategy is in addition to Talga's proposed supply of raw graphene and graphite materials sourced from its 100% owned deposits in north Sweden.
The strategy opens up broader commercial opportunities from the production and supply of higher value 'products' and potential revenue from licensing and royalty arrangements with third parties using these products.
The business opportunity stems from Talga's investment in the Company's German pilot test facility in Rudolstadt which supports the optimisation, scale- up and design of full-scale commercial graphene production in Europe.
Talga's initial industrial market focus for its graphene is targeted towards the global coatings industry, energy/battery products and components, polymer composites and building products. Talga believes these sectors offer significant commercial opportunities in both volume sales, margins and speed to market through agreements with sector leaders, who require both value added products and graphitic carbon raw materials.
Talga's business plan has identified the following four key products for priority development and marketing to leading end users:
Figure 1. Talga employees and staff at commissioning of Phase 2 pilot test facility, Rudolstadt Germany.
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A metal pre-treatment coating - graphene significantly improves resistance to metals corrosion which costs global industry US$2 trillion a year and can replace environmentally and health damaging metals;
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An electrically conductive ink - for use in battery anodes and components, printed electronics and high performance polymers;
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A conductive cement product - trials show graphene improves the electrical and thermal conductivity of concrete making it suitable for under floor heating or snow and ice free pavements and roads; and
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A high performance membrane for energy and environmental applications - Membrane technology for liquid filtration is undergoing significant development due to global challenges related to water quality, battery and fuel cell cost/performance.
The current December quarter and the opening months to calendar 2017 will now see a ramped up schedule of in-house and industry partner testing programs as well as field and benchmarking product trials to confirm performance, validate products and support the step-up to full-scale commercialisation in future.
First Functionalised Graphene Products Delivered
The September quarter saw Talga produce and deliver its first value-added graphene based product, a metal pre-treatment coating, to a leading international coatings business. This company will be undertaking its own application and performance trials on the coating over coming months. Further tests on the coating product are also underway at research institutions in India and the UK. Talga has filed a patent application over the product's composition and synthesis (ASX:TLG 16 Aug 2016).
It is the first of a range of targeted, functionalised graphene and graphite products Talga is developing and looking to commercialise.
Product Development
New scientific studies released during the period showed that adding Talga's graphene in a coating increased corrosion protection of steel by up to 74% (Fig 2).
The peer review study - "Functionalised Graphene as a Barrier Against Corrosion" - was published in the scientific journal, FlatChem and used Talga's graphene nanoplatelets produced at the Company's pilot test facility in Germany to manufacture a coating for corrosion resistance tests on mild steel (ASX:TLG 21 Sep 2016).
The successful test underpins emerging evidence that graphene's high impermeability, high electrical conductivity and ultra-thin shape may prove a new and effective additive to improve coatings of many types.
The global coatings industry consumes more than 40 million tonnes per annum of materials and the sector is a priority commercialisation target for Talga.
Figure 2. The steel coated with Talga graphene shows less corrosion over more time than a reference coating with no graphene.
5% graphene
480 hrs
0% graphene
288 hrs
Phase 2 graphene plant commissioning completed in Germany
During the September quarter, all stages of the Company's Phase 2 graphene pilot test plant in Germany were successfully commissioned, including new recovery circuits which produce high quality few layer graphene. Approximately 76% of graphite introduced to the circuits is converted to graphene.
Capacity of the plant will continue to be scaled up over coming months as Talga grows its inventory for use in customer product testing and its business strategy focus.
The Rudolstadt facility is expanding rapidly and now employs 13 technicians, scientists and staff. The pilot test work facility allows Talga to initiate industrial scale commercially focused collaborations with major corporations around the world. Completion of Phase 2 commissioning means that Talga now has the ability to consistently manufacture graphene and micrographite for a range of targeted products.
Graphene partnership with German battery group
A collaboration agreement ("Agreement") was signed during the quarter with Germany's JenaBatteries GmbH to jointly explore the use of Talga's graphene products in JenaBatteries' patented polymer flow battery for commercial scale and grid applications.
Talga will formulate and supply graphene for testing in components with the aim of reducing manufacturing costs and increasing the performance and longevity of the battery components by utilising graphene's superior properties conductivity, chemical inertness and impermeability. This provides a platform for Talga's graphene to be introduced to the large stationary energy storage sector.
Grid connected energy storage is seen as a multi-hundred billion dollar market opportunity, with flow batteries expected to make up almost 20% of global energy storage markets by 2025 (ASX:TLG 13 Sep 2016). JenaBatteries is supported by Wirthwein AG, a leading international plastic components manufacturer with a strong focus on the energy business segment.
MINING AND EXPLORATION
2016 Graphite Trial Mining and Exploration Commenced in Sweden
Talga's 2nd trial graphite ore mining campaign commenced at its wholly-owned Vittangi graphite project during the period (ASX:TLG 25 Jul 2016). The program aimed to extract ~2,500 tonnes of raw graphite ore in blocks to be used as feed for pilot test work at Talga's German pilot plant facility.
This latest trial mining campaign extended and deepened last year's open pit site, cutting whole blocks of graphite ore from within the total JORC (2012) resource of 9.8 million tonnes @ 25.3% graphite. Improved, larger scale mining equipment was used during the 2016 campaign compared to the 2015 campaign and it performed very well, extracting blocks of ~7 tonne average weight (Fig 3).
The Company also launched a 20-hole, 1,950m diamond core drill program to test resource and exploration targets across three graphite projects.
Drilling at the Vittangi project was designed to infill and upgrade Talga's high grade Northern Nunasvaara JORC Inferred mineral resource of 1.5 million tonnes @ 31.0% graphite, which is part of the total Nunasvaara JORC (2012) resource of 9.8 million tonnes @ 25.3% graphite.
Results are planned to be used in a new resource estimate for permitting and development planning of the Vittangi project. Exploratory drilling was also planned for several targets in the Jalkunen and Piteå graphite projects. The drill program was successfully completed subsequent to the September quarter period (ASX:TLG 20 Oct 2016).
Figure 3. Trial mining of graphite ore blocks at Talga's 100% owned Vittangi graphite project, Sweden.