We need more graphite if we’re serious about our electric dreams. Here are 8 good value ASX graphite stocks
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The world’s overarching need for critical minerals is becoming ever more pressing as we near closer to the end of the oil age, which has lasted for 200 years.
The road to electric car dreams, as well the global transition to renewable energy and batteries, is already seeing demand for commodities like lithium, copper, nickel, and graphite outpace supply at an eye-watering rate.
But getting there won’t be easy. Experts over at Benchmark Mineral Intelligence did the maths and believe we need more than 300 new mines to feed a 500% increase in battery demand by 2035.
For graphite specifically, that means another 97 56,000tpa natural flake graphite mines will need to be built, assuming no contribution from recycling.
For context, Syrah’s(ASX:SYR) Balama graphite project produced 41,000t of natural graphite during the March 2023 quarter, which neatly outlines the scale of development needed to fulfil the expected rise in graphite demand.
Governments in Australia, the US, and the UK are now coming out with critical mineral strategies in a bid to kickstart domestic manufacturing and help secure national, economic and energy security, further turbocharging the demand pressure.
The US Energy Department (DOE) announced its first loan in more than a decade in July last year, sending US$102.1m to Syrah, the first battery-grade natural graphite active anode material supplier in the US.
More recently, anode aspirant International Graphite (ASX:IG6) was selected to receive a $4.7m grant from the Australian government as part of the national Critical Minerals Development program, which will be used to accelerate feasibility studies for the Springdale graphite project.
But as well as companies with larger market caps and big balance sheets, the overall graphite demand growth is also set to benefit ASX players on the smaller end of town, too.
Here’s a list of 8 good value graphite stocks.
(Note: All market cap information pulled from the ASX and correct as of June 8.)
Since listing 11 months ago, Kingsland Minerals has made enormous progress on its Leliyn graphite project in the Northern Territory where an exploration target – based on historic drilling, sampling, and reconnaissance work – was estimated and reported during the March quarter.
While no replacement for a JORC resource estimate, the exploration target of 200-250Mt grading between 8% to 11% total graphitic carbon (TGC) for 16-27Mt of contained graphite, easily qualifies as a globally significant tier one asset in a tier one location.
The company has also embarked on a massive large-scale 3,200m RC and diamond drilling program with the first four holes having intersected up to 150m of graphitic schist, both at the eastern and western ends of the 5km long target.
Metals Australia reported exceptional results of electrochemical (battery charging and durability) test work on battery grade spherical graphite from its high-grade Lac Rainy graphite project in Quebec, Canada.
The spherical graphite (SpG) and electrochemical test work was carried out by the specialist graphite testing group, ProGraphite, in Germany, and returned grades up to 96.3% spherical graphite carbon (Cg).
MLS believes these results build on the spherical graphite test work already completed, which demonstrated that very high yields of high-quality spherical graphite can be purified to battery grade using the low temperature alkaline purification method with an acid wash – lifting the spherical graphite to premium battery-grade.
Having proven that Lac Rainy can generate high-quality spherical graphite with outstanding battery anode charging and durability qualities, MLS is now rapidly advancing the project towards development.
MLS intends to begin a pre-feasibility study (PFS) and transition to a DFS imminently.
This South Australian explorer received some outstanding drill hits (up to 26.1% total graphite content) within the wider Campoona project in South Australia back in April.
Best results included 27m at 7.7% TGC from 8m and 13m at 26.1% TGC from 73m, 13m at 17.2% TGC from 42m, as well as 48m at 7.2% TGC from 5m and 49m at 16.1% TGC from 68m.
The holes all hit significant graphite mineralisation, demonstrating thick mineralisation from surface to over 100m depth and extending the strike of drilled mineralisation from 2km to more than 4.3km.
A second batch of drill results were returned earlier this month at the Lacroma graphite prospect, highlighting a 25m thick high-grade core in graphite mineralisation with assays including 28m at 8.7% TGC from 39m.
ITM managing director Mike Schwarz says with the drill rig turning for the next three to four months and results continuing to flow, the company is excited to see the Lacroma prospect continue to grow.
In May Castle Minerals kicked off an electromagnetic survey (EM) at its flagship Kambale graphite project in Ghana, which is designed to locate additional graphite occurrences across its 149km2 project footprint.
The program is running alongside a recently commenced 35-hole, 4,100m RC drilling campaign with the aim to materially increase the very solid mineral resource estimate of 1.4Mt of graphite at a healthy grade of 9.0% TGC reported last month.
Castle is fast-tracking Kambale to ensure that the project is well positioned to take advantage of the forecast looming supply deficit for fine flake graphite concentrate used in the manufacture of electric vehicles and stationary power storage battery units.
Madagascar-based Evion Group is developing the Maniry graphite project, where results from a 2022 definitive feasibility study (DFS) highlighted robust financial metrics such as a net-present value (NPV) post tax of $325m, life of mine EBITDA of A$60m per annum and payback period of 3.8 years.
The mining junior believes larger CAPEX figures in stage 1 (totalling $119.03m) allows for a quicker and less disruptive construction and commissioning period for stage 2 expansion.
Since the release of the DFS, the focus has been on finalising the environmental and social impact assessment (ESIA) which is set for completion this quarter.
Once all pre-construction activities are ticked off, including having received final mining permits and approvals, the company will be on the development pathway.
International Graphite was awarded a $4.7m grant from the Australian Government through the national Critical Minerals Minerals Development program to help fast-track the integrated mine-to-market graphite supply chain the company is developing in Western Australia.
This funding will be used to accelerate feasibility studies at the proposed Springdale graphite mine and battery anode material manufacturing plant in Collie, as well as for the construction of a planned graphite micronising facility, also at Collie.
“This grant is an important vote of confidence in our business and confirmation that projects like Springdale and Collie are vital in meeting global decarbonisation targets,” IG6 CEO Andrew Worland says.
Stand out assays such as 11m at 11.7% TGC from 57, including 1m at 23% TGC from 63m were returned at the Mason Bay exploration target, about 2km east of the existing Springdale graphite project mineral resource earlier this month.
Mason Bay represents the company’s fourth discovery at Springdale.
“It is clear the more we drill, the more graphite we can expect to find,” Worland says.
Last year, HXG signed a binding term sheet earn-in agreement with Green Critical Minerals (ASX:GCM) for the McIntosh graphite project in Western Australia’s East Kimberley region.
The agreement is set to bring cash and exploration funding to the project, as well as leverage off past investment from HXG.
A total of $500,000 cash is to be paid to Hexagon while $3m of exploration expenditure over four years is to be invested by Green Critical Minerals to secure 80% of the graphite mineral rights at McIntosh, where HXG holds 17 tenements across 542km2.
OAR’s graphite project of the same name is situated in the centre of South Australia’s Eyre Peninsula.
During the March quarter, the company announced metallurgical test work on historic drill core had identified ultra-fine flake graphite which is currently in demand due to its suitability for production of spherical graphite use din battery manufacturing.
Spherical graphite is consumed as an anode in lithium-ion batteries and is manufactured by processing high-grade flake graphite concentrate to an ultra-high purity product.
OAR hopes to conduct further Independent Metallurgical Operation-led test work to increase the concentration grade of its flake to 95 per cent or higher, which is suitable for refining into battery anode material (BAM).