Evolution Energy Minerals Ltd (ASX:EV1)’s offtake partners BTR New Material Group Co Ltd (BTR) and Yichang Xincheng Graphite Co Ltd (YXGC) are recommitting to their agreements for fine and course flake from its Chilalo Graphite Project in Tanzania.
Evolution has binding offtake agreements covering 90% of planned production at Chilalo.
This surety will support the project financing – the company is now progressing a financing plan to allow a decision to mine to be made in the first quarter of next year.
World’s largest graphite producer
Global graphite giant YXGC has effectively re-committed to purchasing 30,000 tonnes per annum of coarse flake graphite – consisting of +100, +80, +50 and +32 mesh – from Chilalo for a minimum of three years.
While the YXGC offtake agreement represents 56% of Chilalo’s planned production, it represents more than 70% of forecast revenue given it covers the higher-value coarse flake products.
YXGC is the world’s largest expandable graphite and flexible graphite producer and supplier and recently undertook a capacity expansion of 10,000 tonnes per annum expandable graphite and 20 new graphite foil lines annually producing 12,000 tonnes.
The company continues to run at full capacity, which is a strong indicator of demand.
YXGC products include expandable graphite, graphite foil, graphite yarn, graphite packing and graphite fireproof board.
More than 50% of YXGC’s production is sold in international markets, mainly to South Korea, Japan, Europe and the US.
YXGC’s graphite foil is not only widely used by all the leading electronic manufacturers but also in producing graphite bipolar plates for hydrogen battery fuel cells.
Graphite packing for 5G station ground cable.
The graphite yarn and graphite packing produced by YXGC is also widely used as ground cable for 5G communication towers worldwide.
Potential US downstream facility
Evolution and global anode production leader BTR have joined forces to explore downstream opportunities, including the assessment of the potential for US anode production, as part of Evolution’s vertical integration strategy.
BTR has a binding offtake agreement for the sale of 100% of fine flake graphite production from Chilalo for three years – with an option to extend for a further three years.
The offtake agreement is in place until the establishment of a downstream processing facility, at which time the offtake agreement will be assigned to the entity undertaking the downstream processing collaboration.
Evolution’s obligation under the agreement is to supply 30,000 tonnes of graphite concentrate that is coarser than +100 mesh.
The market price of flake graphite concentrate for the purpose of the agreement is to be determined by the parties at least 30 days prior to the beginning of each quarter.
The parties anticipate that Evolution will produce some 20,000 tonnes of product annually.
Since a downstream MoU was executed in August 2023, Evolution and BTR have conducted a US visit to pick a site and taken advice on the corporate structures to achieve IRA compliance and position for Department of Energy funding.
Anode testwork and product qualification is also in train using Chilalo’s graphite. The partnership is also sounding out strategic partners to work together on a potential US anode production facility.
“One of the attractions of Evolution is the quality of our offtake partners, being global leaders in the value addition of both fines and coarse flake," Evolution managing director Phil Hoskins said.
"BTR is the global number one battery anode producer and YXGC is the global leader in expandable graphite and graphite foil production.
"Evolution is pleased with the continued support of our offtake partners which supports our financing activities by validating the product quality and providing certainty over revenue.
“Furthermore, BTR’s recent investment into Evolution should provide even further validation of the quality of the Chilalo project overall, given BTR are experienced operators of their own graphite mine in Heilongjiang, China.”