was awarded US$37.5 million by the U.S. Department of Defense (DOD) to see the company's namesake project in Alaska through the feasibility study stage, reported ROTH MKM analyst Joe Reagor in a July 18 research note.
"We believe this is a significant positive development for Graphite One as [the grant] covers up to 50% of the cost of completing feasibility study work on the project," Reagor wrote. "Additionally, we view this as a positive endorsement of the project by the U.S. government."
Attractive Return, Buy Rating
Based on the news, ROTH updated its model on the Canadian graphite company to reflect recent financial results, news, the DOD grant, and the portion of the feasibility study work Graphite One Inc. will have to fund.
After these changes, ROTH's price target on the mining developer remained the same, at CA$2.50 per share. The company's current share price, in comparison, is about CA$1.57.
From this level, the return to target represents a compelling gain of 59%.
Graphite One Inc. remains a Buy.
Additional Funding Needed
To advance its graphite project, ROTH expects that Graphite One Inc. will raise capital to cover its share of the costs of feasibility study work, Reagor wrote.
As such, the investment bank factored into its model on the British Columbia-based company a conservative equity raise in H2/23 consisting of 27.6 million common shares sold at CA$1.45 apiece.
However, Reagor noted, the graphite company may instead pursue other less-dilutive funding sources.
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- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Graphite One.
- Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
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Disclosures for Roth MKM, Graphite One Inc., July 18, 2023
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Disclosures: Shares of Graphite One Inc. may be subject to the Securities and Exchange Commission's Penny Stock Rules, which may set forth sales practice requirements for certain low-priced securities.
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months. The material, information and facts discussed in this report other than the information regarding ROTH Capital Partners, LLC and its affiliates, are from sources believed to be reliable, but are in no way guaranteed to be complete or accurate.
This report should not be used as a complete analysis of the company, industry or security discussed in the report. Additional information is available upon request. This is not, however, an offer or solicitation of the securities discussed. Any opinions or estimates in this report are subject to change without notice. An investment in the stock may involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Additionally, an investment in the stock may involve a high degree of risk and may not be suitable for all investors. No part of this report may be reproduced in any form without the express written permission of ROTH. Copyright 2023. Member: FINRA/SIPC.