There is an expectation of a significant increase in the demand for graphite, and companies equipped with the appropriate knowledge and skills have the potential to receive substantial benefits.
The updated feasibility study by Focus Graphite on its Lac Knife project in Quebec reveals the difficulty in answering a particular question. The study uses an average sales price of US$1,679 per tonne of concentrate for graphite, but it should be noted that this price is for concentrate and not the pure commodity.
The study further analyzes how this price was determined, using the Benchmark Mineral Intelligence Flake Graphite Price Index, which is an independent compiler of global graphite prices that considers variations in graphite flake size and concentrate purities.
The assumptions for graphite price are based on the required mesh size to capture a flake of graphite. The range starts at US$2,040 per tonne for a +48 mesh product and decreases to US$1,579 per tonne for the smallest economically viable product. Since graphite flake size varies within a deposit, the price obtained is likely average. Additionally, market factors such as supply and demand impact pricing.
Although larger flakes are generally more desirable and command higher prices, not all graphite company CEOs agree on the reason why. The standard explanation is that larger flakes have greater conductivity, which is a fundamental reason why graphite has gained much attention in recent years.
According to experts, graphite is expected to have a crucial role in the global shift towards sustainable energy. This is because it is a vital component in the manufacture of next-generation batteries. The World Bank estimated that more than 50% of the demand for new batteries is or will be for graphite, while lithium only accounts for 4%.
In terms of weight, graphite makes up over 28% of an electric vehicle battery, followed by aluminium at just under 19%, and then nickel. This trend is the basis of a statistic highlighted by Blencowe Resources, a UK-listed graphite company. They boldly claim on their website that demand for flake graphite is expected to triple in the next few years, from 1.5 million tonnes in 2020 to 4.3 million tonnes by 2030.
The renewed interest in graphite mining, including a recent graphite boom in Australia, is not surprising given its importance in the production of next-generation batteries. However, in mining, steady and sustainable operations tend to be more successful in the long run, and it will not be the opportunistic companies that will reap the significant benefits on offer.
Instead, the companies worth watching are those with long-term plans and specific expertise and knowledge of graphite, such as Tirupati Graphite and Blencowe, and those companies that excel in developing new resources, like Power Metal Resources.
Tirupati has been a trailblazer in the London market, with significant and growing production from its Madagascar projects, as well as value-add opportunities in India. The company has expertise in effective and socially responsible graphite mining, as well as the ability to add value to the product and turn it into a finished product.
This unique characteristic sets Tirupati Graphite apart from other companies in the graphite mining industry, making it one of the few go-to graphite companies in the world.
On the other hand, Blencowe Resources is a single-project company that focuses on developing the Orom-Cross graphite project in Uganda. While Uganda may not be a top mining destination, Orom-Cross has high-quality graphite in terms of both grade and flake size. A pre-feasibility study has shown the viability of a 21-year operation, and a full-scale feasibility study is currently underway.
In contrast, Power Metal Resources is a multi-asset and multi-jurisdictional company with exposure to various commodities, including gold, nickel, and lithium.
POW now has direct and indirect exposure to multiple strategic resources across North America, Africa, and Australia, but there are two projects to keep an eye on for near-term catalysts. The first is that drilling has been completed at brownfield site Berringa, where Wade notes that ‘4 of 6 drill holes encountered visible gold including a significant 30-metre-wide mineralised quartz vein in the final hole complete.’
The second is the company’s 100% interest in a 967 square kilometre uranium project footprint in the Athabasca Basin area of Saskatchewan, Canada, where it owns over 16 properties ( though two are under disposal agreements).
Power Metal Resources acquired the Doerksen Bay graphite project in Canada earlier this year, which now serves as the flagship asset of its subsidiary, ION Battery Resources. In addition to Doerksen Bay, ION will also hold certain lithium projects of Power Metal.
While the Doerksen Bay deal had a modest financial value, Power Metal Resources is developing a track record of building up subsidiaries into significant companies in their own right. Last year, the former subsidiary, First Class Metals, was spun out onto Aim.
Marula Mining has not yet launched its listing on the AIM market, but it may as well have already been welcomed into the dysfunctional family — with a listing almost a certainty in the near future.
For clarity, the miner is moving from the AQSE market, so there should be no dilution or other unwanted side effects from the listing.
Q Global Commodities CEO Quinton van der Burgh is a billionaire, and recently noted that ‘Marula has potential, and we intend to assist the Company in meeting its growth targets.’
MARU’s flagship remains the 100% owned — and already producing — Blesberg Lithium and Tantalum Mine in South Africa, which has seen a $5 million advance from an agreement with Southern Jade Resources Pty Limited, a South African-based subsidiary of global commodity group Traxys SARL.
But Brewer hopes MARU will have ‘very quickly another producing mine at our Kinusi Copper Project’ in Tanzania. And there are also graphite and REE projects in the development pipeline.
Looking at the constant updates on social media, Brewer seems to be onsite at multiple projects simultaneously. Shares have risen dramatically in recent months, but the AIM listing could see further rises soon.
