Evolution is the newest ASX graphite play to make waves – here’s why it’s an ESG poster-boy
Link copied to
With Europe and the US banging the drum on sustainable development, it stands to reason that focusing on ESG and sustainable development right out of the gate would place a newly minted company in a positive position.
This focus has drawn the support of UK-based ARCH Sustainable Resources Fund, which executive chairman Trevor Benson told Stockhead was a “huge endorsement” for the company’s Chilalo graphite project in Tanzania and the company’s ESG credentials.
“They also will bring a total package of US$25m into our much bigger development funding to get the operation going,” Benson added.
However, the focus on ESG isn’t the only thing going for the company.
The other two legs that it stands on are its management team and the near-surface, high-grade large flake graphite resource at Chilalo.
Benson noted that the company’s board and management has plenty of graphite experience with executive director Michael Bourguignon being the project manager directly involved with the construction of Syrah’s Balama graphite project in Mozambique and other projects on the African continent.
“Phil Hoskins, the non-executive director, has seven years’ graphite experience, and lots of trips to China and involved in marketing,” he added.
“And we have Chris Whiteley, who has 25 years in international sales and marketing of graphite.”
Benson himself has six years of graphite experience thanks to his time as executive chairman and chief executive officer for Walkabout Resources (ASX:WKT), arguably Evolution’s closest peer.
This combination of skillsets and experience is just right for progressing Chilalo, which is already the subject of a completed definitive feasibility study outlining attractive economics and is fully permitted with a mining licence and environmental approvals, putting it a hop, skip and a jump away from development.
Chilalo itself is a standout project with an existing high-grade resource, 60% of which +80 mesh, or what is commonly known as large flake graphite.
This means that not only will Chilalo graphite find a ready market in the battery anode market, Evolution can also access the growing expandable graphite market, which includes the traditional uses of foils, seals and polymers as well as for fire retardants.
Benson notes that the exponential growth of electric vehicles will “drag a lot of raw materials out of the market”, adding that multiple studies have shown the graphite supply chain going into deficit as early as 2023.
“There’s lots of opportunities for us to produce graphite and sell into a very strong market,” he remarked.
Chilalo currently has a resource of 20.1 million tonnes grading 9.9% total graphitic carbon (TGC) that includes an ore reserve of 9.2Mt at 9.9% TGC, enough to fuel a mine life of 18 years.
There is also room for further growth with Benson pointing out that there’s potential for near-surface, high-grade graphite.
This current resource fuels the DFS, which outlines annual plant feed of 500,000t of ore to produce 50,000t of graphite concentrate along with steady state expandable graphite and micronised graphite.
Net present value and internal rate of return, both measures of a project’s profitability, has been estimated at US$323 million and 34% respectively.
Capex is estimated to be about US$87.4m, which Benson says is unchallenging with ARCH’s support, while payback is expected in 3.4 years.
Looking ahead, Evolution will progress its ESG commitment to sustainable graphite.
“We will be doing more exploration including drilling next year because we believe there is outcropping and near-surface graphite that will be able to increase our resource and drop our cost of production,” Benson added.
The company will also engage with stakeholders in Tanzania to progress its relocation assistance program and move to optimise its DFS to World Bank standards.
Its optimisation of the DFS will also include any increases in resources from exploration with Benson saying that the company will add value if it could.
“We will be looking at downstream studies as well in terms of the micronized and expandable graphite to capture more value from our resource,” he concluded.