StratMin: An eligible challenger?

By Laura Syrett
Published: Tuesday, 02 June 2015

With a new CEO at the helm, the AIM-listed Madagascan graphite miner is open to collaboration offers as it seeks to broaden both its operational footprint and shareholder base, with eyes on India and Australia.

Brett Boynton has barely had time to warm up his seat as the new CEO of StratMin Global Resources and already he is beset by suitors eager to team up over the company’s Loharano graphite mine in Madagascar.

"I’ve had my feet under the desk 10 minutes and already I’ve got incoming calls offering collaboration opportunities," Boynton told IM.

"We are definitely open to offers and have had some discussions, but we’re waiting for the right opening to come along."

StratMin’s main attraction is its ability to produce flake graphite with consistent purity of over 94% C at a steady rate – currently in the mid-200 tpm (dry) range, but with a design capacity of up to 350 tpm – from its 5.7m tonne JORC inferred resource, mine and plant in northeast Madagascar.

All of its output above the 94% C benchmark is contracted to an undisclosed offtaker at market prices and shipped out of the eastern port of Tamatave, two hours away by road from Loharano.

Loharano plant StratMin Madagascar_StratMin 
Floating its graphite boat: StratMin's commercially-operating plant in Madagascar is one of its key assets (source: StratMin). 

Boynton is the company’s latest strategic addition. A former corporate financier with roots in Zimbabwe and the UK, the Australia-based high-flyer was announced as CEO of UK AIM-listed StratMin last week, replacing the incumbent, Manoli Yannaghas, who stood down from the company board with immediate effect.

Dubbed "Holy Manoli" in some circles for his feat of turning overpromising and underdelivering StratMin from an investment shell with a two-decade-old mothballed mine into a commercially operating facility, Yannaghas has left Boynton to pursue a different, if no less arduous, task of growing the company’s size and reach.

With infrastructure and a buyer for its products already in place, plus the capacity to expand, StratMin is in a prime position to consolidate into a supplier of some clout in the global graphite market, which is presently dominated by China.

As a potential partner, therefore, the company is a very eligible proposition and Boynton will have to decide on a match – a goal that not all that long ago might have seemed quixotic.

Secretive and fiercely competitive, the graphite industry is not renowned as an arena for making friends, let alone forming long and committed relationships.

But as funding tightens and the selling price of graphite casts an unforgiving light on the economic viability of exploration projects, making many look much less attractive than they did at the height of the graphite boom in 2011, companies are beginning to sense there might be strength in numbers.

New leadership

Fresh as he is from leading positions at a number of Australia-listed resource companies, Boynton is well aware of the penchant for graphite in both the Australian media and on the ASX.

His role at StratMin will be to channel this fervour into momentum for the miner, whose share price is currently hovering around the £0.05/share ($0.08/share*) mark – some way off the £0.71/share high seen in January 2013.

"My job with StratMin is not to be a technical expert but to build a team that can deliver the best results," Boynton told IM. "The company has made a successful transition to a commercial graphite miner and now we’re looking at expansion opportunities, from both strategic and organic points of view."

In March, the company confirmed it was looking at options to finance expansion at Loharano, following the publication of exploration results in February, which revealed the presence of graphite grading up to 11% C at the previously unexplored Mahefadok, Mahela and Ambatofafana prospects.

Plans to increase the size of the project are expected to involve the opening of additional mining pits and the installation of a second processing plant, for a total production capacity of 1,000 tpm graphite.

"Madagascar is not the right environment for a 100,000 tpa plant," Boynton said.

"We would look at other areas in Africa, but at the moment we are concentrating on maximising the value of what we have. Strategically, we’ve already got the infrastructure set up in Madagascar, so it makes sense to use that. Collaborations could be on a logistical or operational level, or both," he added.

Boynton is also looking at opportunities to produce more valuable graphite products, particularly given what he calls the "dynamic shift" in the global graphite market.

"We think this shift is going to be both supply led and demand led, with the clean-up that’s going on in China and the drop-off in grade affecting supply and new growth markets shaping demand, particularly in India. For us, Asia is definitely the expansion space," he told IM.

With experience as a senior banker at top financial institutions including UBS and Credit Suisse, Boynton is part of a trend of financiers who have made the leap from banking to mining. He admits that executives with this type of background have something of a chequered reputation in the resources industry.

"Some have done fantastically well and others not so well. I don’t really view myself as an ex-banker, though – I saw the job in finance as an international passport and took an opportunity to move over into another sector where I felt I could make an impact."

Boynton’s first tasks, after ingratiating himself with StratMin’s UK-based investors, will be to get the Loharano plant up to its nameplate capacity and broadening the company’s appeal back home.

"The Australian market is really focused on graphite at the moment, with successful companies achieving excellent valuations," he said. "I will be taking the StratMin story to this audience to diversify the London shareholder base."

*Conversion made June 2015



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