The unlisted public company will this week launch a rights issue and share placement to try and raise a not insignificant $A10 million ahead of its proposed listing on the ASX by the end of calendar 2013.

The company has ambitions to restart the historic Uley graphite mine, on South Australia’s lower Eyre Peninsula early in 2014 which, if successful, would make Strategic Australia’s only graphite producer.

Strategic – which will change its name to Valence Industries upon listing – is banking on the steady growth rate in flake graphite prices of about 15% per annum for most of the past decade, ignoring the aggressive price spike and fall in the last couple of years.

Managing director Christopher Darby said despite the dramatic price increase in recent years, graphite had resumed its previous growth path, which bode well for the company and its production forecasts.

The outlook for graphite is strong with its growing use in modern industrial applications including lithium ion batteries, fuel cells and nuclear and solar power generation.

Perhaps reflecting this, Strategic recently restructured its board, appointing former

Mitsubishi Motors Australia head Graham Spurling as chairman.

“Over the past two years approximately $3 million has been spent refurbishing the existing road, electricity and water infrastructure at site,” Darby said.

“With mining licences and processing infrastructure already in place, the company is in a position to begin the process to restart graphite production and generate early cash flow.”

The Adelaide-based firm believed this strategy would allow it to ramp-up production further in 2014 at Uley – 23km from Port Lincoln – and deliver significant upside potential for investors.

The project has an indicated and inferred resource of 6.4 million tonnes at an average grade of 7.1% graphitic carbon and a relatively low strip ratio of 3:1.

Discovered in the 1800s, the mine been in intermittent production since the 1920s.

When in operation the plant was capable of 14,000 tonnes per annum of graphite concentrate – it has been on active care and maintenance since 1993.

The production restart, according to Strategic, would be carried out in two parts with the first stage involving the processing of existing stockpiles totalling about 7500t.

It is expected to generate revenues of about $12 million in the next 12 months, with the company already securing letters of intent from offtake customers for the first six months of production.

Stage 2 of the restart, scheduled to commence in 2014, plans to grow production to the plant’s increased, full-scale capacity of 50,000tpa, with the capital cost of this to be funded through stage 1 revenues, offtake finance, royalty finance and debt finance.

A recently completed scoping study indicated a mining and processing cost of below $550 per tonne, with an average selling price of $US1400/t.

The company said a bankable feasibility study on the project was expected to be completed in the first quarter of 2014.

If all goes to plan, Strategic will have a market capitalisation of $A34 million on listing based on an offer price of 20c per share.