An Overview of Investing in Graphite Stocks
Graphite is a non-metallic mineral that occurs naturally and is also produced synthetically. Natural graphite is a form of crystalline carbon, while synthetic graphite is manufactured by high-temperature heating of high-carbon materials, such as petroleum coke. Graphite is considered a good conductor of heat and electricity.
In 2020, 38% of the graphite used globally was natural, while 62% was synthetic. Natural graphite is commonly used in refractories and batteries. Most synthetic graphite is used to make electrodes, and the anodes of electric vehicle (EV) batteries are made exclusively from natural graphite. A plug-in EV typically contains 70 kg of graphite.
The Global Graphite Market
Fueled by its use in EVs and the EV market’s recent growth, the demand for graphite is expected to significantly increase in the coming years. Benchmark Mineral Intelligence (BMI) expects the graphite demand for lithium-ion anodes to be 1.25 million tonnes per annum (tpa) by 2025. The market researcher indicates a graphite shortage starting from this year and increasing steadily in the near future unless mine production increases rapidly.
China is by far the leader in mine production of Graphite, at 820 thousand metric tonnes (MT) of output in 2021. Brazil is a distant second with 68 thousand MT and Mozambique third with 30 thousand MT. Canada is in 9th position with 8.6 thousand MT. The U.S. does not currently mine for the mineral.
In terms of reserves of natural graphite, Turkey has the largest with 90 million MT in 2021. China (73 million MT), Brazil (70 million MT), Madagascar (26 million MT), and Mozambique (25 million MT) are in the top five. Asia leads the world in the use of natural and synthetic graphite. In 2020, consumption in Asia stood at 66% of the total for natural flake and 59% for synthetic graphite.
How to Invest in Graphite
Many major producers are private companies in places such as China; however, many publicly traded companies are also involved in the mining and exploration of graphite. Here are five prominent graphite stocks available on public markets.
1. Northern Graphite Corporation (TSXV:NGC)
NGC is a graphite exploration and development company with a market cap of $63.63 million. The Ottawa-based company has projects located in Ontario, Quebec, and Namibia. Its large-scale Bissett Creek project in southern Ontario has an expected average output of 25,000 tonnes per annum (tpa) with expansion to 80,000 tpa. Besides graphite, NGC explores for nickel-copper-cobalt properties. NGC had a stock price of $0.53 on August 19, 2022, a 26.1% rise from August 23, 2021 ($0.43).
NGC has completed a Preliminary Economic Assessment (PEA) for restarting its Okanjande/Okorusu project in Namibia, and expects to restart production by mid-2023 at an average of 31,000 tpa. The Company has also announced plans to acquire the Mousseau West project located near its producing Lac-des-Iles (LDI) mine in Quebec. The company expects to return production to 25,000 tpa.
2. Graphite One Inc. (TSXV:GPH)
Graphite One is a Vancouver-based graphite exploration and production company. GPH holds interest in the Graphite Creek property in the Seward Peninsula of Alaska. The company has a market cap of $99.5 million and a stock price of $1.14 on August 19, 2022, a 9.6% increase compared to the previous year ($1.06).
GPH’s Graphite One Project aims to mine, process, and manufacture high-grade Coated Spherical Graphite (CSG) for the electric vehicle lithium-ion battery market. In April of this year, the company signed an MOU with Chinese lithium-ion battery company Sunrise, who will assist with the design, construction, and operation of GPH’s proposed U.S.-based graphite manufacturing facility. The company recently released a pre-feasibility study for the Graphite One Project which demonstrated a pre-tax internal rate of return of 26.0%, using an 8% discount rate, with a net present value of US$1.93 billion and a payback period of 4.6 years.
3. Southern Star Battery Metals Corp. (TSXV:STS)
Vancouver-based Southern Star Battery Corp. acquires and develops near-term mineral properties. Its two main projects are the Santa Cruz Graphite Project in Bahia, Brazil, and the Alabama Graphite Project in Coosa County, Alabama. The company has a market cap of $10.78 million and a stock price of $0.45 as of August 19, 2022, a 40% drop compared to the previous year.
STS expects to start a 2-year 5,000 tpa pilot at Santa Cruz by Q2 2023 (Phase 1). In the 2-year Phase 2, the company will ramp up production from 25,000 to 30,000 tpa. The company has also announced an application submission for the full license to mine at the project and a planned economic analysis for doubling capacity in Phase 3.
4. Next Source Materials Inc. (TSX:NEXT)
Next Source Materials Inc. is a Toronto-based mine development company that explores for graphite and vanadium. The main asset of the company is its Molo Graphite Project in southern Madagascar. NEXT has a market cap of $280.25 million and a stock price of $2.83 as of August 19, 2022, a 10.55% rise in the past year, with $2.56 on August 23, 2021.
The Molo project is at the feasibility stage. According to the 2019 feasibility study, Phase 1 will consist of a processing plant with a production of 17,000 tpa of flake graphite concentrate for the first two years. In 2021, the company announced a study for an expanded Phase 2 production of at least 150,000 tpa instead of the 45,000 tpa indicated in the 2019 study.
5. Syrah Resources Limited (ASX:SYR)
Syrah Resources Limited is a Melbourne-based Syrah company that explores and develops mineral properties. The company has a market cap of AU$1.025 billion and its stock price was $1.53 on August 19, 2022, a 25.41% appreciation in the last 12 months, coming in at $1.22 on August 23, 2022.
SYR’s main project is its Balama Graphite Operation in Mozambique, where it explores for graphite and vanadium. The Balama Graphite mine has a life of 50 years and contains an estimated 1,422 MT of graphite. The plant capacity is 350 kilo tonnes per annum (ktpa) of graphite concentrate.
Through its Vidalia Battery Anode Material Project in Louisiana, United States, SYR also aims to be a major producer of EV battery-ready Active Anode Material (AAM). Syrah has received a US$102 million binding loan from the U.S. Department of Energy for the initial expansion of its Vidalia facility to 11.25 ktpa AAM production capacity.
About the Kinvestor Network
The Kinvestor Network is an exclusive network of investors that want access to enhanced research and reporting. The Kinvestor Network provides access to exclusive articles, reports, models, and various other tools that investors may find useful.
Visit the Kinvestor Network for more free content, including in-depth research reports, industry documentaries, CEO interviews, and more.
Please read this disclaimer in its entirety before reviewing any opinions, views or information expressed by Kin Communications Inc. (“Kin”).