Special Report: Talga Resources is not your everyday, aspiring graphite miner. The company has poured years into developing its own IP and now, heading into 2020, is nearing commercialisation of its advanced battery anode materials and graphene additive products. 

Talga (ASX:TLG) began listed life as a gold explorer in 2010. And while it explored those projects quite successfully following the IPO, the company didn’t see them growing into company makers.

Simultaneously, it became apparent to Talga that electrification of transport would become a global long-term growth story.

At the time, there was almost no western explorers or miners in graphite – the mineral used to make the anode for lithium-ion batteries.

Talga began a global search for high-quality graphite assets, eventually finding the Vittangi project in Sweden owned by Teck Resources, one of the world’s top 10 largest mining companies at the time.

It was a veritable candy shop of mineralisation, says managing director Mark Thompson.

“It had the graphite – which Teck wasn’t aware was there – plus we got their copper-cobalt assets; we got the iron ore assets; and we have a vanadium project there also,” he says.

That deal was completed in 2012. Talga still owns those legacy projects, but graphite was always the focus.

After a year of exploring and developing the deposits, Talga discovered that it could make graphene by running an electric current through the ore.

This is very unique — graphene straight from ore in a single step.

“We could now cheaply, with no limit on scale, make endless amounts of graphene,” Thompson says.

“That remains one of the world’s greatest breakthroughs when it comes to graphene.”

 

What is graphene?

Discovered in 2004, graphene is a super material renowned for its incredible strength and conductivity.

It is 1 million times smaller than the diameter of a single hair, yet it is 200 times stronger than steel and still lightweight and flexible.

There are endeavours to incorporate the material into sensors, aircraft, green tech solutions, industrial robotics, sporting equipment, paint – the list goes on.

READ: Why graphene is called a ‘wonder material’ and which stocks are dabbling in it

It is early days for the graphene industry, and the upside for Talga here is huge.

Talga went public with their breakthrough in early 2014, and by 2015 decided to set up a pilot plant in Germany to scale up the process and make nanomaterials from their graphite ore.

For that they needed more metallurgists, more engineers, and more scientists.

“We discovered that the graphene itself didn’t play nice with other materials,” Thompson says.

“We needed to develop our own technology around how to make the stuff mix into other people’s products.

“We were working with companies like the Tata Group at the time. The [Tata] scientists we worked with were so impressed with what we were doing they left and joined us.

“We started building our own science and R&D team, responsible for working out how to get our graphene to mix with a customer’s product.”

Talga then set up an R&D centre in Cambridge, one of the top graphene universities in the world.

Everything was going really well, but the timeline for brand new materials to enter production can be long, Thompson says.

“We were finding that the [graphene] process was good, it was underway, but it was slower than we would’ve liked.”

READ:  Size does matter for Talga’s graphene coating trial

 

Lithium-ion batteries: a near term market opportunity

In early 2018, Talga tested some of its raw graphite in a battery – and it worked.

So, it did a bigger test – and discovered that anode material made from Vittangi graphite made really high-performance lithium-ion batteries.

At a European battery show in Hanover in early 2018 the company was swamped with queries from car brands, electronics companies, and battery makers, says Thompson.

“They were all interested in our results,” he says.

“It turns out that our special high-grade deposit in Sweden makes a natural graphite particle which performs a bit like synthetic graphite – very expensive synthetic graphite.”

For Talga, there are big economic and performance advantages to becoming Europe’s first anode producer.

It is set to benefit from its proximity to the “wakening beast” that is Europe’s electric vehicle manufacturing sector.

As this industry grows, there’s a coordinated push to establish internal EV supply chains across the EU. That’s where Talga comes in.

“The automotive and cell companies that we are talking to, they actually want European [anode] supply starting in 2022 or earlier,” Thompson says.

“Local supply isn’t just strategically important but can be mandated by the financiers and local governments.

“Our growth is strategically designed to match the growth of the wider industry. It’s great timing.”

 

A high-margin, long-life project

This integrated graphite anode project in Sweden has the potential to make serious money over its initial 22-year life, according to a May pre-feasibility study.

An open-pit mining operation, on-site concentrator and coastal anode refinery will produce about 19,000 tonnes per annum of Talnode-C, the company’s graphite battery anode product.

It will look something like this:

It’s going to cost Talga an estimated $US1,852 ($2,725) to produce each tonne of Talnode-C, which is expected to sell to battery makers for roughly $US11,250/t. That’s a substantial profit margin.

Importantly, it will cost Talga just $27m in capex to fire up stage one production.

Right now, the company is scaling up Talnode-C production for testing by customers ahead of potential supply deals.

Unlike battery metals like lithium, which are traded on the basis of purity, graphite anode is an advanced product that requires testing in batteries by the customer at increasing volumes before long-term contracts are signed.

This agreement with Leclanché SA is one of about 40 battery product related engagements – some of which cover potential offtake and project finance — that Talga says “are currently active under non-disclosure agreements”.

“In the last three to four years we have built our inhouse team of scientists that know how to make batteries and integrate both the graphite and the graphene material into other people’s products,” Thompson says.

“It’s that IP investment that is a barrier to entry for other companies. They don’t have that. These [companies] will be price takers, whereas we are set to define the products we want to sell.

“Our customers are the OEM’s and brand names of the world.”

 

>> Now watch: 90 Seconds With… Mark Thompson, Talga Resources

 

 

This story was developed in collaboration with Talga Resources, a Stockhead advertiser at the time of publishing.
This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.