By Jay Currie – Proprietor of resourceswire.com now editor and curator of motherlodetv.net
Baxter is a mining engineer with a long history in graphite mining. He has just been appointed as CEO of Ceylon Graphite (CYL.V) (OTCQB:CYLYF) and is bringing an engineer’s “no BS” attitude and know-how to the table. Baxter built one of only two producing graphite mines in North America and brought Alabama Graphite to the Preliminary Economic Assessment stage as CEO, with the first “Mine to Battery” concept in the industry.
Graphite is a key mineral in the march towards green energy. That march is fueled by Li-ion batteries and graphite is a key component to those batteries. However, there is not much “green” about the graphite which is currently used because, for the most part, it is synthetic graphite made by heating petroleum coke in a nasty, high energy, process. Nasty enough that the Chinese, the world’s leading producer of synthetic graphite, are scaling back production, and increasing production of natural, spherical graphite utilizing hydrofluoric acid to purify. The environmental ramifications of this have been featured in the Washington Post. Currently, China processes 100% of the natural spherical graphite used in anodes of lithium-ion batteries. The United States presently has zero capacity to process natural graphite to be used in batteries.
One of the principles of the ESG world is that the materials going into green energy products should themselves be green and ethically sourced. Replacing synthetic graphite with natural graphite would be a step in that direction if that graphite can do the job and if it can be extracted in an environmentally responsible way.
Plus, natural graphite needs to be cost-competitive. As Thomas Schmall, Volkswagen’s board member in charge of technology told Mining.com “80% of cell costs are determined by raw materials. So it’s obvious that one needs to be more engaged.”
Ceylon Graphite’s material is a solution for battery makers. It is what is known as “vein graphite”. As the name suggests, vein graphite is a true vein mineral as opposed to a seam mineral (amorphous graphite) or a mineral that is disseminated throughout the ore rock (as in flake graphite). The graphite veins can range from a few centimetres to a few meters in width. Critically, vein graphite comes out of the mine at a very high grade, from 90% to as high as 99%, purity.
“This grade is unique,” said Baxter. “Essentially we can mine it and it can go directly into our process for making battery anode ready.”
Ceylon holds a land package constituting 121 km² grids containing historic vein graphite deposits. Its mining operations are small. Ceylon’s first mine is producing and has a 150-foot shaft and a winch to haul material to the surface. Its second mine is 3 to 4 months away from production. Ceylon’s overall plan is to bring up to ten small mines into production with a target of 5000 tons of graphite per year for each mine.
“This is all underground,” said Baxter. “There are no tailings or waste rock.”
Because of the scale of the mining operations, there is a minimal CAPEX, approximately 2 million a mine as compared to the 100 to 200 million a flake graphite operation is often looking at. This means that Ceylon can explore, drill test and then construct a mine rather than having to establish a resource large enough to justify the staggering CAPEXs of the flake graphite world.
“We can start small and grow,” said Baxter. “We can bring things on in parallel rather than in series. Keep our exploration and mining costs low.”
The economics are straight forward, it costs Ceylon about $200 a ton to mine its vein graphite and it can sell that graphite for around $2000 a ton. “But we are planning on building spheronization capacity,” said Baxter.
By producing Spheronized, coated high purity graphite, Ceylon will be able to charge $10,000 per ton.
A cursory look at the growth in the Electric Vehicle market reveals that the demand for the right sort of graphite is going to grow significantly over the next few years. A fact Baxter is well aware of. He is travelling to Sri Lanka in the near future, Covid restrictions permitting, to get a fuller picture of Ceylon’s operations, exploration program and potential for expansion. As a mining engineer, Baxter is already looking at ways of mechanizing the mining operations.
Ceylon Graphite is well positioned to meet the growing demand for graphite. Bringing on a mining engineer as CEO ensures that the company will optimize its existing projects and build new mines with the most modern techniques. Baxter is committed to best ESG practices and that means that end users of Ceylon’s graphite can be assured that it was ethically sourced and mined in an environmentally sensitive way.
Ceylon trades at around $0.20 Canadian for a market cap of 26.6 million. As the company brings its vein graphite to market there is every chance that stock price and market cap will rise and rise quickly.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.