With the growing narrative around electrification, green-energy and the EV battery market, Armadale’s confirmation that their Mahenge Liandu high purity graphite is suitable for use in lithium-ion batteries is well timed going into formal off-take discussions.
Armadale reported in January that the results of Phase 1 test-work by CSIRO (Australia’s Commonwealth Scientific and Industrial Research Organisation) confirmed that their Mahenge Liandu graphite was suitable for use in lithium-ion batteries. This was a major step forward in rubber-stamping what actually sits in the ground and should impact positively on binding off-take discussions in progress right now.
For full details of the project you can read my in-depth research note here This will help you understand just why Armadale’s project stands out in the crowd not just because of the robust economics but the saleability of the high purity product that should command premium prices.
Why is high-purity important?
In a nut-shell, for natural flake graphite of smaller and medium fractions (an ideal size for battery anode feed), high-purity graphite requires less processing to get to the end spherical 99.9% purity product required.
Across all Armadale’s flake fractions 97%+ purity was previously confirmed which also bodes well for use in other applications too. Other African miners such as Syrah have struggled with the purities and have therefore struggled to achieve premium pricing. This means they will have to do more work at additional cost to reach a premium product. It’s not enough to say you have graphite – the quality vastly impacts pricing.
Armadale will now continue it’s test-work programme to include micronising and spheronising and electrode fabrication testing. Essentially further steps to final product but Phase 1 test-work already confirms they have a premium product.
At this point it’s worth noting that they have used more conservative graphite prices in their DFS (Definitive Feasibility Study) than a number of peers – with the confirmation of test-work I’d like to see the company re-visit the DFS and plug-in some higher numbers!
It’s all horses for courses though really, the project is high grade, low-cost and extremely high-purity heading into a market where battery grade graphite demand is set to explode.
This recent article from Stockhead summarises the case nicely and graphite prices have already started to respond.
Battery sector cries out for more graphite as shortfall looms
As I mentioned in a recent blog, graphite is now one of the key minerals identified by the US as strategic whereby they have made an Executive Order and declared a national emergency. You can read here, essentially as with the EU, reliance on China is a threat and Africa could be set to come to the rescue!
With the green-energy narrative gathering pace, and Armadale now at an advanced stage with a truly exceptional project, yet still with a very respectable market cap by comparison to far less advanced junior mining companies it’s one to watch and one that I personally expect to see significant up-lift in 2021 as the market increases it’s appetite for high quality junior resource companies especially in the green-energy sector.
Disclaimer
Research materials prepared based upon my own analysis and research. Accuracy cannot be guaranteed and research notes should not be taken as investment advice. Please always do your own research.
