Updated Coverage of Walkabout Resources (ASX: WKT)

January 2, 2024

We have updated our coverage of Walkabout Resources (ASX: WKT).

The company has commenced commissioning and nearly completed development of its 84%-owned, high-margin Lindi Graphite Project, located in Southern Tanzania. First production for the 40,000 tpa graphite concentrate operation is expected in the first half of 2024, with the Project being fully funded, and with offtake agreements in place for 100% of production for the first five years of the current 24 year (but readily expandable) mine life.

Funding of the ~US$34.5 million up front capital has been through a traditional mix of debt and equity (with the development just $4.5 million over budget from the US$30 million in the 2019 updated DFS, however with this including scope additions of US$2 million), and with Lindi being the first of the recent graphite development projects to be approved for debt funding.

By virtue of the high grade resource (17.9% TGC), only a relatively small (and low-cost, low-carbon footprint) operation is required for a given concentrate production – which has allowed the Company to operate under a standard Mining Lease, rather than a Special Mining Lease as required for larger operations, and which require Cabinet approval. This also results in an estimated high-margin operation, with our modelling indicating margins in the order of 55% to 60%. In addition, the products are suitable for a wide range of end uses.