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MoneyTalks: Not all graphite is created equal. Here’s an emerging ASX player to watch

The graphite from Comet Resources’ (ASX:CRL) ‘Springdale’ project in WA is perfect for use in lithium-ion batteries, new test work … Read More
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MoneyTalks is Stockhead’s regular recap of the ASX stocks, sectors and trends that fund managers and analysts are looking at right now.

Today, we hear from Simon Popple of UK-based Brookville Capital.

 

Graphite is one of the most versatile non-metallic minerals in the world.

It is an excellent conductor of heat and electricity, has the highest natural strength and stiffness of any material, and maintains its strength and stability to temperatures more than 3,600C.

It is also one of the lightest of all reinforcing agents, has high natural lubricity, and is chemically inert with a high resistance to corrosion.

A true wonder mineral.

Graphite prices are a function of two factors, Popple says – flake size and purity.

“Large flake (+80 mesh), high carbon (+94%) varieties often (but not always) command premium pricing, but the ‘ultimate’ pricing [comes from] graphite suitable for EV batteries,” he says.

 

A graphite supply squeeze

Graphite is considered a key, strategic material in green technology, including advances in energy storage, electric vehicles, photovoltaics, and electronics from smartphones to laptops.

Graphite is also the source of graphene.

However, emerging markets such as India and China have been holding back supplies of graphite for domestic consumption, Popple says.

“China controls most of the world’s graphite production – 70% — with practically none mined in the US and very little in Canada,” he says.

 

Future Growth

Right now, natural graphite is used mostly in industrial applications.

However, applications such as lithium-ion batteries, fuel cells and nuclear power have the potential to create significant graphite demand in the future, Popple says.

“For example, it takes 20 to 30 times more graphite than lithium to make lithium-ion batteries,” he says.

“The use of lithium-ion batteries is growing rapidly in consumer electronics, and they are also popular in power tools and motor scooters.

“Growth is likely to continue with the increased use of hybrid and fully electric vehicles.

“The lithium battery industry alone is projected to grow between 30 per cent and 40 per cent, with around 20 per cent annual growth in the electric vehicle market (as much as 30kg of graphite can be found in some electric cars).”

 

Comet Resources: an emerging graphite play

But not all graphite is created equal, with most unsuitable for the lithium battery market.

The graphite from Comet Resources’ (ASX:CRL) ‘Springdale’ project in WA is perfect for use in lithium-ion batteries, new test work shows.

The graphite is also appropriate for ‘jet milling’ – a product which, like battery anode precursor material, can achieve premium pricing in graphite markets.

Additional test work will be conducted to optimise these “already impressive” initial test results, the company says.

Popple says the big question is how much more of this high-grade, high-quality graphite do they have?

“I’ve been told (by the company) that the 2.6Mt of the high-grade deposit that they already have is enough to go into production (the caveat being that it needs to be of the same quality as the batches that were tested). This is clearly a risk,” he says.

“Having said that, they’ve only explored around 40% of the property, so there is potential for more high-grade graphite to be found.

“In fact, an airborne EM survey has delineated several other targets on the licence.”

CRL share price chart


 

Analysing Comet using the B.R.I.D.G.E System

B.R.I.D.G.E. is Popple’s system to carry out quick research on a company and measure risk. It stands for:

BALANCE SHEET – “They had A$2.35m at the end of Q2,” Popple says.

“With [gold] exploration expense in Mexico and graphite test work, they will probably end the quarter about a million lower.

“I’m not sure how long they can last without another capital raise but would expect them to come back to the market in 4–8 months. How much they raise will obviously depend on what their plans are for next year.”

 

RESOURCES – “The Maiden Inferred Resource was 15.6Mt @ 6% TGC (TGC = Total Graphitic Content) which included 2.6Mt @ 17.5% TGC (this was the high-grade graphite that was tested for battery use),” Popple says.

“The key as far as the market is concerned is to provide greater certainty of this resource.

“The next drilling will largely be ‘infill’, with a view to upgrading at least the high-grade resource into Measured & Indicated (it’s currently Inferred).

“They will also try to extend the resource, in particular, look for areas that may hold further high-grade type material.”

 

INFRASTRUCTURE – There is good infrastructure around the Springdale Graphite project which is about 150km west of Port at Esperance, Popple says.

“There is also grid power, piped gas and sealed roads nearby. So, capex costs from this perspective are expected to be relatively modest.”

 

DIVERSIFICATION – Although this is more to do with having a well-diversified portfolio, it’s worth pointing out that they’ve got exposure to graphite, gold and copper, Popple says.

“Should any one of these commodities either ‘take-off’ or ‘dive’, they can adjust their strategy accordingly.”

 

GRADE – Although the grade of both their gold and copper projects is encouraging, it’s the graphite Popple wants to focus on.

“As things stand, they’ve got 2.6 million tonnes of high grade 17.5% graphite as an inferred resource,” he says.

“Clearly, we want to know how much they can classify as measured and indicated and whether there is any more high-grade ore.

“Drilling can’t commence until Q1 next year – so we’re probably talking May/June next year before we’ve got a better idea on this one.”

 

EXPLORATION POTENTIAL – What is particularly compelling about this project is that some of the graphite is close to surface, as close as 20m in some areas, Popple says.

“In a nutshell, it’s likely to be a low cost, open pit operation.

“In terms of Santa Theresa (Mexico), drilling has completed and they are waiting on final assays (delays at the labs could mean that we won’t have these until Christmas), there will be an announcement when those are ready.

“Comet are also in arbitration on the ‘Barraba’ Copper project with the Native Title party and hoping for a positive outcome.

“If that happens, they’re hoping to start drilling in Q1 next year.”

 

The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead.

Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.

 

The post MoneyTalks: Not all graphite is created equal. Here’s an emerging ASX player to watch appeared first on Stockhead.




Author: Reuben Adams

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Energy & Critical Metals

Hyperion Metals increases Tennessee land position at Titan Project by 78%

Special report: The company’s land consolidation strategy has rapidly grown its landholdings by 419% from its initial 2,100-acre position in … Read…

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The company’s land consolidation strategy has rapidly grown its landholdings by 419% from its initial 2,100-acre position in September 2020.

Hyperion Metals has increased its land position at the Titan Critical Minerals Project by 78% in west Tennessee, USA by 4,794 acres to 10,905 acres, enabling further growth in the resource.

Since September 2020, Hyperion (ASX:HYM) has grown its landholding by 419% from its initial 2,100 acre position.

These new landholdings include mineral rights contiguous to the recently reported mineral resource estimate at the Titan Project of 431mt at 2.2% THM, which established the project as the largest titanium, zircon, and rare earth minerals project in the US.

Hyperion has also acquired land positions over greenfield locations up to 80km from the Titan Project, with planned exploration work on these properties to help guide future land consolidation.

‘Compelling combination of scale and grade’

HYM managing director and CEO Anastasios Arima said Titan has a “compelling combination of scale, grade, high value critical mineral products, low-cost inputs, world class infrastructure and location” and looks forward to rapidly advancing the critical mineral project.

“We are also highly appreciative of the deep support we have received from the local west Tennessee community that will help us to establish zero carbon, sustainable, critical material supply chains for advanced American industries,” he said.

Major automotive, battery and chemical operations near the Titan Project. Pic: Supplied.

The company says its landholdings benefit from significant cost advantages due to the location and proximity to low cost, world-class infrastructure. That’s expected to provide material cost and logistics advantages compared to projects located in more remote areas.

These factors have contributed to a huge amount of recent investment in Tennessee, highlighting the region as a leading jurisdiction for business, including by major auto manufacturers Ford and Volkswagen, world leading battery producers LG Chem and SK Innovation, as well as major chemical organisations and end users including Chemours.

 


 

 

This article was developed in collaboration with Hyperion Metals, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

The post Hyperion Metals increases Tennessee land position at Titan Project by 78% appeared first on Stockhead.


Author: Special Report

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REZ levels up with maiden Granny Venn gold pour

Special Report: Richard Poole-led REZ has joined the ranks of producers with the maiden gold pour completed from its Granny … Read More
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Richard Poole-led REZ has joined the ranks of producers with the maiden gold pour completed from its Granny Venn deposit.

Sydney-based Resources & Energy Group (ASX:REZ) has showed off the very first gold bullion produced from its Granny Venn mine, part of the Menzies project in Western Australia.

https://twitter.com/REZ_GOLD/status/1452785965076926468

The first toll treatment for the Granny Venn cut back has reached the midway mark, which resulted in the first gold pours for the project yesterday morning at the Lakewood mill.

A total of 22.84kg of gold doré was produced from the pour and is now being dispatched to the Perth Gold Mint for determination of assay for out-turn certification.

Resources and Energy Group
Plate 2 gold pour and CIL leach bar 14.88kg

Before REZ and BM Mining restarted mining at Granny Venn in early July this year, no mining activity had taken place in 23 years.

Around 17,000 tonnes of Granny Venn ore has been processed since the toll milling campaign began in mid-August.

REZ and BM Mining partnered up under a profit-sharing agreement back in March to exploit the economically recoverable remnant resources at the Menzies project.

BM Mining is part of the BM Geological Services (BMGS) group of companies that have been active in the mining industry in the Goldfields of Western Australia since 2003.

Executive Director Richard Poole said the maiden gold pour represented a pivotal moment in REZ’s growth as it transitioned from exploration to production.

“We would like to congratulate BM Mining, which has done an exceptional job in assisting us in reaching this production milestone and completing the maiden gold pour at the Lakewood mill.” – Executive Director Richard Poole  

“Since acquiring ground in the East Menzies Goldfield, the company has moved rapidly to identify and commercialise resources, whilst maintaining a vigorous exploration strategy which has delivered some outstanding results for gold at Gigante Grande, and for nickel at Springfield.”

REZ’s near-term goal is to mine 120,000 tonnes of ore at an average grade of 2.3 grams per tonne (g/t) to produce 8,800oz of gold.

At today’s high Aussie dollar gold price, that would fetch roughly $21.1m, nicely boosting REZ’s coffers to help fund its continued exploration.

The original Granny Venn open pit, which was developed by Money Mining and Paddington Gold in 1997-1998, was based on a pit design optimised at a gold price of $454/oz. The gold price is now 5x that.

And making it even more lucrative for REZ is the fact that under the profit-sharing deal with BM Mining, REZ didn’t have to shell out a dime to get Granny Venn back in operation, with BM Mining covering the $3m capital outlay required.

The initial production campaign is scheduled to be completed in late December.

 


 

 

This article was developed in collaboration with Resources & Energy Group, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

The post REZ levels up with maiden Granny Venn gold pour appeared first on Stockhead.


Author: Special Report

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Lithium darling Vulcan Energy calls a halt in the wake of J Capital short report

Activist short seller J Capital Research has put ASX market darling Vulcan Energy (ASX:VUL) in its cross hairs, calling the … Read More
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Activist short seller J Capital Research has put ASX market darling Vulcan Energy (ASX:VUL) in its cross hairs, calling the company a “wannabe lithium miner” which “based highly optimistic assumptions for (its) project on work done by small consultancies that were owned by management and acquired by Vulcan.”

Vulcan Energy, J Capital — game on

Vulcan owns the Zero Carbon Lithium Project in Germany’s Upper Rhine Valley, where it promises to produce both renewable electricity and lithium on a ‘carbon negative’ basis from deep geothermal wells.

Excitement around the project has seen Vulcan raise more than $300 million from investors this year alone, secure lithium offtake deals with Umicore and LG and bring Australia’s richest person Gina Rinehart on board as a backer.

The company’s shares are up more than 6,000% since its management engineered a reverse takeover of minerals explorer Koppar Resources, having dropped in recent weeks from a high of more than $16 — 80x Vulcan’s 20c share price in early 2020.

That market exuberance transferred through to Kuniko (ASX:KNI), an arguably run of the mill Scandinavian base metals explorer spun out of Vulcan that mooned on listing in August.

Vulcan has also been the subject of some scepticism. While it maintains both its component parts of geothermal energy generation and direct lithium extraction are well understood and existing commercial technologies, no geothermal lithium project has entered commercial production to date.

“They claim the project is a twofer: profitable geothermal power and “green” lithium,” J Capital’s Tim Murray wrote in the note, titled ‘Vulcan: God of Empty Promises’.

“Neither assertion is likely to be true. ”

“Our research shows that the project may never actually get under way: the costs are higher than the company claims, output will be lower, the environmental impact is brutal enough that public outcry will block permits, as has happened before in the area, and the quality of the lithium resource is low.

“Many experts agree with us that this project is a non-starter.”

What was Vulcan’s response?

Pre-market indicators on Commsec suggested Vulcan, which was trading at $14.99 and a market valuation of $1.87 billion, was looking at 13% hit to its share price on the open this morning (now more like 10% according to Commsec).

It is now in a trading halt to prepare a detailed response to the J Capital Research note, after issuing a brief riposte this morning.

In it, Vulcan took aim at Murray’s background, as well as J Capital’s disclaimer that it plans to profit off shorting the stocks it reports on and does not hold an Australian Financial Services License.

“The report is authored by a Mr. Tim Murray, co-founder of J-Capital, who according to his own bio has lived in China for 19 years and has a degree in “Chinese Political Economy”,” Vulcan said.

“Based on his online profile, it is not apparent that Mr. Murray has any technical qualifications in geothermal energy or lithium extraction.”

“Mr. Murray’s report makes a large number of inaccurate statements and assertions regarding Vulcan and its Zero Carbon Lithium Project — in particular its Pre-Feasibility Study (PFS) published over nine months ago.

“Given the warning on J Capital’s website, it is clear the report is merely an attempt to profit from ‘shorting’ Vulcan.”

Vulcan went on to trumpet the “globally unique experience in geothermal energy project development and direct lithium extraction” across its 80 person team, saying it was committed to delivering the project.

“We are highly motivated towards achieving our goals of decarbonising these industries, and will always happily dedicate time and effort to answer any questions about our Zero Carbon Lithium Project that come from stakeholders with a genuine interest in the Company and the Project,” Vulcan claimed.

A more detailed response to the claims made in the J Capital report appears to be on its way.

What did J Capital claim?

J Capital claimed in its report that several positive claims made by Vulcan in its January pre-feasibility study were inflated. The PFS gave the Zero Carbon Lithium Project a 2.8 billion Euro NPV.

Murray said “assumptions in the PFS that beautify the project are easily disproved.”

He claims Vulcan has likely overstated its flow rates and recoveries in the PFS, and ignored evidence of community opposition to geothermal energy projects in Germany and adjacent regions of France.

He also criticised the use of Vulcan co-founder Horst Kreuter’s consultancy Geo-T, later purchased by Vulcan, in its PFS.

Murray claimed Kreuter received 1.5m performance shares on the successful completion of the PFS, and resigned as a director on March 25.

Vulcan also acquired Gec-co, which had worked on the PFS, having appointed its CEO and owner Thorsten Weimann as COO of Vulcan.

“Gec-co and GeoT provided a key assumption for the PFS, for flow rate, that is unrealistic,” Murray claimed.

“The recovery rate for lithium is also unrealistic. Realistic assumptions would halve the output of lithium and kill the commercial viability of the project.”

Among a litany of other claims, J Capital says Vulcan has published an unrealistic production schedule and is likely to face significant public opposition, something MD Francis Wedin said was not likely in an interview with Stockhead in July, and that geothermal wells often have a high failure rate.

Although it released a statement this morning, Vulcan requested a trading halt “pending an announcement to the market in order to prepare a response to an online report.”

Vulcan Energy share price today:

 

The post Lithium darling Vulcan Energy calls a halt in the wake of J Capital short report appeared first on Stockhead.





Author: Josh Chiat

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