Graphite Miners And Graphene Production. Fact Versus Marketing. 0 comments
Oct 14, 2015 1:38 AM
Most references to graphene by graphite miners is marketing hype.
It is possible to make high quality very few layer graphene from raw graphite ore.
Talga Resources will be one of Europe's largest graphene producers in 2016 from only its pilot plant and has a market capitalisation of $40 million.
Margins on graphene sales for companies like Talga will be incredible as costs for production are low and covered by credits from other graphite products.
Mining companies in a sense are quite simple to understand. There are defined deposits. Earnings are driven by how efficiently companies mine these deposits and commodity prices. There are differences in grades and impurities but be it oil, gold, iron ore or copper there is generally a market which companies can sell their product into.
Graphite is different. There is amorphous, flake, vein and highly ordered pyrolytic graphite. In flake graphite there are small, medium, large and jumbo flakes with varying mesh sizes quoted. Flow sheets for processing graphite are not standardised so it is difficult to compare one companies claims with another.
There are also a dizzying array of graphite products such as expanded, micronised and synthetic graphite to name a few and each graphite deposit performs differently when processed into these products. Prices paid are opaque and graphite producers must work closely with customers to ensure that they process their graphite in an appropriate manner.
Then there is graphene.
True graphene is a single layer of carbon atoms and hence one of the simplest structures known to exist. Graphene has so many amazing properties that it almost sounds to good to be true. It is best in class for strength, conductivity, surface area and is also transparent, flexible and hydrophobic.
It is because of this hype that many graphite miners have announced that their graphite can be made into graphene. These releases are in the most part redundant as graphite is made up of innumerable layers of graphene. This means that any graphite deposit can be used to make graphene. The problem is how many steps are required and the cost associated with this.
Figure 2. Differences in Graphite/Graphene Production Process. Source Talga Resources Corporate Presentation. (click to enlarge)
Standardised specifications for graphene do not exist as no company has been able to produce commercial quantities of graphene at an affordable price. Indicative prices can be seen online at Graphenea for various types of graphene products.
Despite the exorbitant prices some graphene enhanced products have already made it to market such as Head's tennis racquet, Vittoria's bicycle tyre and two Chinese companies (Moxi and Galapad) released a mobile phone with a graphene enhanced screen. They exploit the fact that a small amount of graphene goes a long way when used as an additive. As little as 0.5%-2% can greatly enhance the properties of the original material.
If graphene was affordable it has the potential to become as ubiquitous as plastic in our society. I have listed the graphite companies I know of that have mentioned their capacity to make graphene and analysed what this capacity actually means. Not all press releases allow for adequate analysis but I have categorised by amount of graphene production, capacity to achieve graphene production and uniqueness of their production process to make graphene.
Current Graphene Producers with Sales
AMG Mining
AMG (AMG:AMS) is the largest company on this list. It is a diversified speciality metal and minerals company. Its subsidiary AMG Graphite formerly Graphite Kropfmuehl operates the Bogala graphite mine in Sri Lanka producing approximately 3000 tonnes of vein graphite per year.
AMG uses part of this vein graphite to produce graphene. It had been planning to scale up production from 100g batches to 2-5kg batches in a pilot plant. It appears that AMG has stopped its own graphene production program and has instead partnered with Haydale Graphene (HDGHF:Grey market) to utilise its split-plasma process to produce graphene nanoplatelets.
The quality of this graphene is unknown and revenue achieved by Haydale minimal. At this point graphene is unlikely to be a significant driver for AMG's share price.
Talga Resources
Talga Resources (TLG:ASX) is in the process of ramping up production of graphene at its pilot plant in Germany.
Talga sources its graphite from its Vittangi deposit in Sweden which is the world's highest grade JORC compliant resource.
The truly amazing thing about Talga Resources is the capital intensity of its graphene production process. Talga is expecting to reach production rate of 100-200 tonnes per annum of very few layer graphene in 2016. The cost to Talga for this is in the region of $1 million. Admittedly this is with some capital expenditure rebates from local government.
The capital cost for its full plant is only $21 million which would see Talga become the largest producer of graphene in the world. The NPV of this project $343 million assuming a 2% graphene yield when Talga has already achieved yields of >10%. This is also based on a graphene price of $55 a kilogram many times less than what Talga has previously received and prices listed on Graphenea.
Management has previously indicated they have chosen a graphene yield of 2% to be conservative and so that their numbers appeared credible. If graphene yields of >10% were achieved consistently the NPV of the project reaches >$1.6 billion. Compared to a $21 million capital cost and a market capitalisation of $40 million this is significantly large to be of interest.
Figure 3. NPV of Talga Resource's Vittangi Project versus Graphene Yield. Source Talga Resources Presentation. (click to enlarge)
Focus Graphite and Grafoid
Grafoid is a private company 18% owned by Focus Graphite (OTCQX:FCSMF). Its trademarked product Mesograf is made directly from the high grade ore of Focus Graphite's Lac Knife deposit. The process they use to make this high quality few layer exfoliated graphene is purportedly scalable, does not involve the crushing or treatment of the graphite ore with harsh chemicals.
Grafoid CEO Gary Economo was quoted in August 2015 as saying that he expected the company to earn C$100 million in revenue by the end of the year. As a private company there is little other information available about Grafoid's revenue in the public domain.
There are some problems with Focus Graphite as an investment which I have previously written about here and its value seems almost entirely linked to Grafoid.
Graphene Hopefuls
MRL Corporation
MRL Corporation (MRF:ASX) is one of a number of companies trying to reopen vein graphite mines in Sri Lanka now that the civil war has ended. Vein graphite deposits are typically quite narrow, 30cm-1m for commercial deposits so it is not feasible for companies to report JORC compliant resources. MRL like Talga has been able to produce high quality few layer graphene directly from its graphite in a one step process and has achieved graphene yields of >90%.
MRL is in the process of raising $3 million in 2 tranches to fund further metallurgical studies and the reopening of old mine shafts. It expects to be able to restart production of graphite by the end of this year. Quite rightly, generating positive cash flow appears to be the immediate focus of management but research is continuing towards commercial production of graphene.
It will take longer for MRL to get to market than Talga but they could be significant competitors or at least have a profitable niche with its crystalline graphene.
Graphene Marketers
Triton Minerals
Triton Minerals LTD. (TON:ASX) announced that it was able to make graphene oxide and graphene through standardised industrial processes. Triton has not stated what this standardised process is but graphite ore is typically upgraded to synthetic graphite prior to the production of graphene. Talga and MRL should be able to produce graphene at a lower price than that of synthetic graphite so Triton would not be in a position to compete with them.
There are no signs that Triton will become a graphene producer in the near future.
Alabama Graphite
Alabama Graphite (ABGPF:OTCQX) announced in March 2015 that it had found naturally occurring flake graphene at its Coosa Property in Alabama. After reading this article you should know that this is a redundant statement as graphite is naturally made from layers of graphene.
The release did say that the graphene was obtained in an innovative and cost effective process but it is interesting to note that there is no mention of graphene production from its processing trial of 200 tonnes of its ore. There is also no mention from management that the process to liberate graphene from its Coosa deposit is unique.
Furthermore the Coosa deposit only has a grade of 2.87% which does not compare favourably with the 24.4% for Talga's Vittangi deposit and subsequent graphene yields.
Alabama Graphite share price doubled on the back of its graphene announcement but this has subsequently drifted back to its pre-announcement price.
Figure 4. Alabama Graphite Share Price. Source Google Finance. (click to enlarge)
Metals of Africa
Metals of Africa (MTA:ASX) is potentially another source of lower cost few layer graphene. Its graphene appears to be of lower quality then that produced by Talga or MRF and also uses a thermal process which will increase costs. I have placed this company in the marketers section due to its recent capital raising indicating that it is more likely to pursue zinc production rather than graphite and graphene production.
Conclusion
Graphene has many amazing properties that could see it become as ubiquitous as plastic in our society. Cost at present is the only thing that stands in the way of this happening. Talga Resources looks set to change this and other companies like MRL Corporation are not far behind.
It is difficult to compare the claims of the various companies about their capacity to produce graphene but this presents an opportunity for profit. At present these companies have been evaluated as traditional mining resource stocks as this sector is not typically associated with cutting edge technology. If these companies are successful however it is Talga and Co who will herald the coming of the graphene revolution.
