Alabama Graphite: The near future is Bright Green
In the center of a wounded junior resource market those companies with superior management and realistic business strategies present the best opportunities. Alabama Graphite Corp. (V.ALP) might actually be one of those companies.
Alabama Graphite includes a resource: a huge graphite deposit in the mining friendly state of Alabama; a skilled management team: President and CEO Don Baxter, P.Eng. and his team have significant graphite mining and processing experience; and a truly unique business strategy: to make a finalized battery-ready graphite product, as opposed to creating a primary-processed concentrate as almost every other graphite companies are pursuing. An apt analogy could be if Alabama Graphite were within the petroleum business, it might be producing 94 Octane premium gasoline, while its competitors were producing barrels of crude oil.
Alabama Graphite’s core strength, brought to the organization when Mr. Baxter came on board, is its corporate strategy to move straight to the production of battery-ready coated spherical purified graphite or CSPG.
Every graphite deposit is unique and presents its own group of advantages and challenges. There is actually no such thing as a perfect deposit, and that is why specific experience with graphite and CSPG is so critical for graphite juniors. To be able to successfully develop assembling your shed, it is crucial that management possess the knowledge and also the skill-set necessary to maximize advantages and also to determine a sound strategy for meeting the company’s objectives.
“By the time I joined AGC, it had been quite obvious to me that the graphite development space as a whole was up against some tough challenges. It was clear that the entirely new strategy was required C one which recognized three things. First, demand is currently being driven by development in CSPG for lithium-ion batteries (not run-of-mine concentrate). Second, a task must have a low initial CAPEX that is fundable in the present market. Lastly, a project must start small, with the ability to scale-up as demand increases.”
With this in your mind, Baxter based AGC’s Preliminary Economic Assessment (PEA) entirely on secondary production of CSPG. Alabama Graphite recently published its PEA, but instead of vast sums, the proposed Alabama Graphite CAPEX is around the order of $43 million, including both primary and secondary processing plants.
Baxter stated, “AGC is built on the first step toward three pillars, including the PEA, our CSPG battery performance results and also the pilot plant results. The PEA (announced November 30, 2015) indicates that the economics of the project are sound based on diverting 100% of primary production to secondary production of higher-value CSPG. Notably, the byproduct of CSPG is purified, micronized graphite (to be used in polymer, plastic and rubber composites, powder metallurgy, energy materials, and friction materials, among other applications), which supplies us with another salable product free of charge for creating it. The second pillar may be the successful independent testing in our 99.95% Cg CSPG in lithium-ion batteries (announced January 19, 2016). Alabama Graphite manufactured 60 coin-cell batteries. These results indicated that we could produce our CSPG to battery manufacturers’ specifications and that it performs better than costlier and environmentally damaging synthetic graphite. The third and final pillar is our pilot plant (announced February 3, 2016), which shows that we are able to acquire a high carbon grade, averaging 96.7% across all flake sizes. What this means is 100% from the concentrate to be produced via primary processing from the Coosa Graphite Project is anticipated to be ideal for secondary processing. Further, upgrading from 96.7% towards the 99.95% Cg required for CSPG shouldn’t be problematic at all.”
Perhaps the key take away in the company’s accomplishments to date is the fact that AGC has changed from a mining story right into a technology story. Specifically, a green-energy technology story as it pertains to batteries. The lithium-ion battery marketplace is growing rapidly. Demand comes from electronic devices (for example smartphones and laptops), electric vehicles (which utilize as much as 200 pounds of CSPG per vehicle), and many significantly, from stationary batteries (meaning, energy storage for electrical grid, commercial and residential buildings; solar, wind and traditional power storage and peak shaving). Actually, the Panasonic Corporation forecasts exponential development in stationary batteries, having a 74% CAGR (2014-2025). All of these applications require finished CSPG, not conventional graphite concentrate. Additionally, it is important to note that, on average, there’s 10 to 30 times more graphite than lithium found in a lithium-ion battery (CSPG is used as the anode in a lithium-ion battery).
The mining side from the Alabama Graphite story is very easy. “We have what is called an ‘above surface’ deposit,” explained Baxter. “The graphite is heavily oxidized and is a ridge.” In other words, the particular mining could be done with backhoes and trucks, meaning that the extraction costs from the Coosa deposit are very low.
The successful li-ion battery electrochemical testing allows Baxter to position Alabama Graphite like a means to fix the technical challenge of making batteries in the United States, using all American, environmentally sound, inputs. “There is only one graphite project in the contiguous Usa,” commented Baxter.
For the likes of Tesla Motors, sourcing the critical recycleables because of its batteries is a major problem. Graphite produced outside North America has an awful environmental record. It’s also, obviously, not “Made in America” (or sourced from America). Building “clean”, “Made-in-America” batteries to power clean, made-in-America electric vehicles requires graphite that can be traced back to a plant which utilizes up-to-the-minute, environmentally sound technology.
By being able to supply battery-grade, value-added graphite within an eco-friendly manner, Alabama Graphite is able to reach out to alternative funding sources – a vital advantage in today’s horrendously depressed mining market.
“Our survival depends upon adaptation,” said Baxter. “We’ve had discussions with a quantity of institutions that are thinking about engaging in the availability chain for battery technology. In Europe, I’ve spoken with numerous institutional investors. They’re looking at non-traditional investments. They are already investing in lithium. They do know the battery technology and the growing future demand.”
As well as the European institutions, Baxter can also be starting to consult with various U.S.-based ‘green’ funds.
The company’s mine-to-green-energy-markets business strategy puts Alabama Graphite at the head of the pack of potential graphite miners.
Alabama Graphite was trading at $0.13 sometimes of writing with 115.7 million shares outstanding for a market cap of $15.02 million.
