Tirupati Receives Prepayments to Support Production Ramp-up
Tirupati Graphite plc (TGR.L, TGRHF.OTCQX), the specialist graphite producer and a supplier of critical minerals for the green transition economy, is pleased to announce it has received c.US$ 1 million net of prepayments from existing clients, to support the ramp-up of operations.
Shishir Poddar, Executive Chairman, said:
“Today marks a significant milestone in Tirupati’s journey and reflects a step up in the Company’s financial and operating profile.
“Since we completed the significant expansion at our Madagascan operations, increasing our production capacity to 30,000tpa, we have been advancing discussions with multiple new customers, leveraging our decades of experience in the Graphite industry, to ensure they recognise Tirupati’s scale and position as a leading provider of natural graphite outside of China.
“The prepayments announced today will significantly support our working capital requirements and provide suppliers and customers with confidence allowing us to maintain a strong pipeline of business.”
· Tirupati’s preference has been to meet its working capital needs for ramping up of operations through non-dilutive arrangements.
· The Company has now successfully closed deals with certain existing clients in the United States and Europe with 100% upfront prepayment for orders placed.
· As a result, the Company has received c.US$ 1 million net of prepayment.
· The orders are to be shipped over a six-month period.
· These orders represent c.15% of the quantum of sales the Company expects to make over the six-month period.
· A discount of between 7 – 15% has been applied to the price in return for the pre-payments and which also reflects recent market price softening.
· The Company continues to ship goods to its other customers alongside and to realise proceeds thereof as per terms agreed with the respective buyers.
· The current average realisation period from shipment for the Company’s other clients varies between 30 to 45 days.
· Accordingly, the Company expects to receive sufficient cash proceeds from its sales going forward to maintain the growth trajectory of its production and sales.
· The Company will use the funds to bridge gaps in cash requirements for ramping up its production and sales with targets as announced in RNS dated 8 August 2023.
· Going forward the Company will continue to focus on strengthening its cash position through other non-dilutive opportunities.
· Notably, the Company already has sufficient finished product inventory required to ensure it satisfies customer requirements in a timely manner, and also to allow the Company to take the benefits of the spot market and further business development purposes as we ramp up production.
Outcomes for the Company
· Significant cash-injection into the Company, allowing it to proceed with its ramp-up of production in Madagascar while the Company earns growing sales proceeds each month.
· Smoothing of working capital cash-flows by providing cash instantly for operations, will allow the Company to operate at higher production and utilization rates to help drive stronger sales growth.
· Cash-receipts from larger monthly sales are set to be received in a waterfall manner of growing receipts as a result of their payment periods.
· The Company’s ability to grow its market share faster in respect of the supply of natural Graphite should also be enhanced as it becomes a more visible partner of choice for customers.
· The Company’s graphite products are entering more supply chains associated with the decarbonisation of the global economy, enhancing the visibility and recognition of the Company’s Sustainability strategy and the emphasis the Company has placed on lowering the carbon footprints of its flake graphite.
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