Evolution Energy Minerals Ltd (ASX:EV1)’s broader strategy to become a vertically integrated producer of sustainably sourced graphite products and battery materials has come to the fore with several key movements in the past few months.
Today, the company gave context to its recent body of work including the ongoing development of the advanced Chilalo Graphite Project in Tanzania where shareholders are about to see several key milestones achieved:
- execution of the Framework Agreement with the Government of Tanzania;
- completion of the updated definitive feasibility study (Updated DFS) and front end engineering Design (FEED); and
- project financing, with a final investment decision expected in the March quarter of 2023.
While Evolution’s downstream test-work to produce coated spherical graphite (CSPG) has produced excellent results, Chilalo remains the company’s key focus as it moves the project towards a final investment decision (FID) as soon as practicable.
Its work at Chilalo is driven by battery demand: the market for flake graphite has moved into deficit, resulting in graphite prices increasing from late 2021 into 2022.
Prices flattened during July/August as this is peak season for mining in China, the world’s largest supplier of graphite.
It is also worth noting, mine supply in China will reduce substantially during the Chinese winter from November to February and as a result, the outlook for graphite prices across all flake sizes remains favourable.
Evolution is looking to develop Chilalo amid these favourable headwinds.
Looking at the picture as a whole, test-work and qualifications have confirmed Chilalo’s performance characteristics for graphite foil and hydrogen fuel cells (coarse flake) and battery anode materials (fine flake).
This provides Evolution with:
- the ability to achieve high prices from the sale of its flake graphite concentrate; and
- a strategic opportunity to develop downstream facilities to purchase Chilalo flake graphite concentrate and manufacture value-added products, thereby capturing higher revenues and margins.
"Whilst the supply of flake graphite concentrate produces solid margins, the real opportunity lies in leveraging our high-quality graphite with proven technology to produce value-added products.
“We are committed to rapidly advancing these downstream strategies and have already commenced work on site selection and recruitment of specialist personnel to help drive our strategy.”
Project financing
The company has also made strides in project financing with the project garnering strong interest from banks, development finance institutions and credit funds.
Key project milestones required prior to FID include:
- execution of the Framework Agreement with the Government of Tanzania; and
- completion of the updated DFS and FEED – expected in Q4 2022.
Due to the high quality of Chilalo’s graphite, Evolution intends to pursue the manufacture of the following value-added products:
- CSPG and other high-value products from Chilalo’s fine flake graphite; and
- graphite foil from Chilalo’s coarse flake graphite.
The mine will produce a coarse and fine flake graphite concentrate regardless of the downstream initiatives. Evolution believes these concentrates will eventually be further processed into high-value graphite products, with the location of the processing facilities to be investigated in the next stages of study.
Downstream processing – fine flake graphite
Evolution has completed a commercial verification program with its US-based technology partner that has determined that Chilalo fine flake graphite:
- Can produce 99.9995% C via thermal purification, exceeding the qualification criteria for applications in the nuclear industry, where ultra-high purity graphite sells for up to US$30,000/tonne.
- Generates a yield of approximately 64% spherical graphite from spheroidisation milling, which when compared to the industry average of 40%, will have a substantial impact on revenue and overall economics of a downstream operation.
- Is highly suited to the production of CSPG, which has delivered exceptional electrochemical performance and is expected to be highly sought after by battery manufacturers.
- Outperforms leading synthetic graphite in electrical conductivity applications (note the product tested was the non-spherical by-product of the spheroidisation milling process to produce CSPG).
Further test-work is planned to support a feasibility study for the production of CSPG and other high-value graphite products with shorter qualification timeframes than into EV anodes.
To support this study work, Evolution is reviewing potential downstream site locations, started a process to recruit specialist personnel and is currently mining a 500-tonne bulk sample of Chilalo ore, which will be used to support qualification with both lithium-ion and alkaline battery manufacturers.
Downstream processing – coarse flake graphite
Further to this, Evolution is well advanced in its discussions with its cornerstone offtake partner, Yichang Xincheng Graphite Co Ltd, regarding the formation of a joint venture to manufacture expandable graphite products, including graphite foil and bi-polar plates for use in hydrogen fuel cells.
YXGC is the global leader in the manufacture of these products and is central to the technology and marketing efforts of the proposed JV.
As soon as the JV is entered into, a scoping study is expected to start.
To finish the study quickly, Evolution has started preliminary work to assess site locations and will use material from the 500-tonne bulk sample described above, to undertake product qualification with targeted customers.
YXGC is committed to the 30,000-tonne binding offtake agreement signed earlier this year.
Any Chilalo graphite proposed to be sold into this downstream JV would likely require an expansion to Chilalo’s initially proposed production level.