Graphite Gaggle

A significant portion of an electric vehicle battery is graphite.  Large electric vehicle batteries require as much as 25 kilograms (55 pounds) of graphite material for the anode battery component.  Anode materials need to have excellent porosity and conductivity, which is why graphite is the go-to material used by battery producers.  Graphite is also compatible with common cathode materials.  The anode material has to be durable for good length of use and light weight to give end-users more design flexibility.  Low cost is another factor that makes graphite popular for batteries.

Benchmark Minerals Intelligence, an industry research firm, recently issued new estimates of demand for graphite for lithium ion batteries at 230,000 metric tons by 2020, compared to current demand near 130,000 metric tons.   Allied Market Research has put a value on the graphite market at US$18.8 billion by 2022, implying compound annual growth near 5.4%.   

The market value is aided by an improved pricing environment.  In July 2017, Benchmark Minerals Intelligence, an industry research firm, reported that coated, spheronized purified graphite that would be suitable to a lithium ion battery was selling for US$10,000 to US$12,000 per metric ton.  Micronized graphite pricing was near US$7,000 per metric ton.  Prices appeared to have firmed up slightly in recent months as China has worked through its inventory.

Graphite selling price developments may have helped boost the investment case of natural flake graphite resource developers around the world.  Several graphite developers have been successful in raising capital.  In May 2017, Great Lakes Graphite raised CDN$177,000 at CDN$0.08 per share through the sale of 2.2 million shares.  Although the actions of Alabama Graphite are not included on the list, in the same month AGC raised CDN$1.1 million (US$965,000) through the sale of 8.8 million stock-warrant units.   

Following news of higher graphite selling prices it appears investors are becoming more receptive to the graphite story.  In early August 2017, SRG Graphite raised CDN$3.0 million and Focus Graphite raised the first CDN$2.9 million of a planned CDN$5.0 million private placement.  Great Lakes Graphite also came back to the capital markets with a much larger offering of 4.0 million equity units for CDN$2.0 million. 

Even early-stage resource developer Global Li-Ion Graphite found a friendly reception for its Chedic project near Carson City, Nevada.  Its proximity to Tesla’s gigafactory most likely added embellishment to an otherwise highly speculative story.

Nouveau Monde Graphite appears encouraged by the warm breezes coming off the capital markets.  In early August 2017, Nouveau announced plans for a CDN$10 million private placement of common stock and warrants at CDN$0.30 per share.  The proceeds will support development of the company’s Matawinie graphite mine.

Recent developments in the graphite sector:

October 2017	Alabama Graphite receives a buyout offer from an unknown junior mining company
August 2017	Focus Graphite announces closing of  private placement of common stock to raise CDN$3.0 million
August 2017	SRG Graphite announces non-brokered private placement of 7.5 million common stock and warrant units for CDN$3.0 million in gross proceeds
August 2017	NextSource Materials trademarks ‘SuperFlake’ in European Union for its graphite concentrate product;  similar applications planned in North America and Asia
August 2017	Northern Graphite releases metallurgical test results showing improved yield of large flake graphite from its Bissett Creek project
August 2017	Nouveau Monde Graphite signs lead agent for syndicated sale of CDN$10 million common stock and warrants
July 2017	Syrah Resources Ltd. enters long-term R&D pact with Cadenza Innovation for graphite anode technology; claims 90% construction of Balama mine project, Mozambique
June 2017	Graphit Kropfmuhl GmbH, a division of Advanced Metellurgical Group NV (AMG:  GK) commissions its Ancuabe graphite mine in Mozambique
June 2017	Lincoln Minerals granted 21-year lease for Kookaburra Gully natural flake graphite project in South Australia’s Eyre Peninsula; targets 40,000 metric ton product annually
June 2017	NextSource Materials updates feasibility study of its Molo project in Madagascar to reflect reduction in graphite prices over last two years
June 2017	Great Lakes Graphite ships 50 kilograms of high-purity micronized natural flake graphite for customer testing
May 2017	Imerys Graphite & Carbon sets new target production  goal of 20,000 tons per year at its Olijiwarongo graphite mine in Namibia after production begin in April 2017
May 2017	Magnis Resources signs supply agreement with developers of gigafactory planned in state of New York
April 2017	Kibaran Resources increases estimate of its Epanko graphite project in Tanzania by 40% to total of 31 million metric tons at 9.9% total graphite content
March 2017	Syrah Resources Ltd. signs non-binding agreement to supply graphite to BTR New Energy Materials, a producer of battery anode materials
February 2017	Japanese battery anode producer, Nippon Power Graphite, is acquired by Imerys Graphite & Carbon
January 2017	First Graphite announces US$3 million capital raise to support graphene development work

There are over 90 different graphite companies trying to cut off a piece of the graphite pie.  Following is a short list.  Our favorite in the group is Alabama Graphite (CSPGF:  OTC/PK or CSPG:  V).  The company is attempting vertically integrated business model to mine, process and market high value-added graphite.  AGC has developed a proprietary process to upgrade and purify graphite materials that command superior selling prices in the nuclear, defense and battery markets.  The primary graphite product Coated Spherical Purified Graphite and will be trademarked ULTRACSPG.  Alabama Graphite recently received a letter of intent from a lead-acid battery manufacturer to purchase the company’s PMG purified, micronized graphite product.

Name	Stock Symbol
Alabama Graphite	CPSGF:  OTC/PK
Bass Metals (formerly Stratmin)	BSM:  ASX
Eagle Graphite	EGA:  TSX
First Graphite Ltd.	FGR:  ASX
Focus Graphite	FMS.T
Global Li-Ion Graphite	LION:  CSE
Graphit Kropfmuhl	AMG: GK
Graphite India	GRAPHITE.BO
Graphite One	GPH.T
Great Lakes Graphite	GLK.T
Imerys Graphite & Carbon	NK.PA
Kibaran Resources	KNL:  ASX
Leading Edge Materials	LEM:  TSX.V
Lincoln Materials	LML:  ASK
Lomiko Metals	LMR.T
Magnis Resources	MNS:  ASX
Mason Graphite	LLC.T
NextSource Materials (formerly Energizer Resources)	NEXT:  TSX
Northern Graphite	NGC.T
Nouveau Monde	NOU.V
SGL Carbon SE	SGL.GR
Sovereign Metals	SVM:  ASX
Syrah Resources	SYR.AX
Talga Resources	TLG:  ASX
Triton Minerals	TON:  ASX
Valence Industries	VXL:  ASX
Zenyatta Ventures	ZEN:  TSX.V

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.