The Talga Group Ltd (ASX: TLG) share price is backtracking today despite announcing a positive update to the ASX.
At the time of writing, Talga shares are swapping hands for $1.325, down 7.02%.
What did Talga announce?
In its release, Talga advised that LKAB and Mitsui have extended a Letter of Intent (LOI) for the Swedish graphite anode project.
Established since 1890, LKAB, or known as Luossavaara- Kiirunavaraa Aktiebolag is an international mining and minerals group based in Sweden. The company is focused on mining and processing iron ore for the steel industry.
Mitsui, on the other hand, is one of the largest general trading companies headquartered in Japan. Its businesses cover energy, machinery, chemicals, food, textile, logistics, finance and more.
Under the agreement, LKAB and Mitsui will work together in co-developing Talga's European green anode project for lithium-ion batteries. This includes the construction of a 19,000 tonnes per annum (tpa) anode production facility and an integrated mining operation in northern Sweden. The latter will provide an additional 85,000tpa capacity of the anode material.
The extension of the LOI follows both joint venture partners engaging in customer interactions, and advanced discussions on the potential development. Talga noted that the terms of the agreement are being progressed by all parties involved.
The LOI has an expiry date for 30 November 2021 for LKAB and Mitsui to enter into a formal arrangement.
Talga managing director, Mark Thompson commented:
Talga is very pleased to progress JV partner discussions with LKAB and Mitsui for the development of our European anode supply chain to serve the lithium-ion battery market from our Swedish operations. We look forward to continue exploring potential synergies across operations, investment and global sales/distribution in our partnership negotiations.
Talga share price summary
Since the middle of November, Talga shares have barely made any significant movement, hovering around the $1.50 mark. The company's share price however is up more than 130% when looking at the last 12 months.
On valuation grounds, Talga presides a market capitalisation of roughly $410 million, with approximately 303 million shares outstanding.
