The European Union (EU) and the federal US government recently named graphite a “supply critical mineral.”
In a secret diplomatic cable leaked to the public, the US State Department said that a loss of access to graphite could “critically impact the public health, economic security and/or national and homeland security of the USA.”
It’s no surprise that the State Department included graphite in the list of key resources as it is critical to environmental, defence technologies, and high-tech products.
Graphite is a “super element” – a commodity with very attractive demand and supply fundamentals. The anode material in lithium ion batteries is a $20 billion industry that is growing at more than 20% per year. Planned lithium battery manufacturing capacity growth will quadruple graphite demand within 2 years as governments around the world set targets of producing 17.5 million electric vehicles by 2020.¹
The graphite spot price is starting to climb; lithium battery demand is beginning to drive this upswing.
75% of global graphite production comes from China, which imposed additional export taxes, increased environmental regulations and cut production. China plans to build a graphite stockpile equal to 80% of annual production by 2020.
The US, Europe, Japan and South Korea are almost entirely dependent on imported graphite. Very little recycling of graphite takes place, and there are almost no substitutes for the material.
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No wonder graphite prices have shot up by over 40% in the last few months.²
These increases in global graphite prices are reflected in the trading numbers for South Star Mining (TSXv: STS; OTCQB: STSBF).
And while most of the global graphite production currently comes out of China, today’s focus is on a Brazilian mining operation poised to extract significant graphite deposits. The company is easily accessible to US and Canadian investors.
A note on Brazil: Mine production: 95,000 MT ³ Brazil was once again the world’s third-largest graphite producer in 2017. With 95,000 MT of output last year, it came in significantly behind India as well as China. As with those two countries, Brazil’s 2017 graphite-mining output was flat from 2016. The country’s top producers of the metal are privately held.
Let’s start with a quick look at graphite itself.
Iron-black to steel-gray; deep blue in transmitted light
Many investors are interested in finding the next big thing. Not only do you make money, you feel good about yourself for being ahead of the crowd.
You can make a mistake about the trend itself, or about the right company to play the trend, or about the timing. There are no shortcuts to this sort of investing.
How do you know you’re not too early?
First, allocate a smaller dollar investment, and be patient if nothing happens.
Then: Research and do more research and do even more research!
Graphite Stock News helps ease your research burden.
We looked at trends around the globe and found the need for lithium batteries is perched to explode. (Did you know that twice as much graphite goes into a Li-on battery as lithium!)
How do you know when a trend is about to take off?
What are the factors building this small cap trend?
Electric vehicles and related cobalt and lithium mining plays. (Remember, lithium-ion batteries need three major components: lithium, cobalt and graphite) Check out this Oct. 2017 headline from website PRNewswire.com: “Massive Graphite Shortage Looms Over Electric Car Future.”
The data boom (Skyrocketing computer and cell phone use.) “Digital Trends” web site screams this headline: Meet the World’s First 2D Material: 5 ways graphene could transform your phone!”
The rising Asian middle class (Hundreds of millions of people in China, Japan, Korea and India use computers and cell phones daily. Each of these devices is powered by a lithium-ion battery, each with graphite as a major component.)
Expansion into sports products (Modern tennis construction. A very large player in the golf ball industry just introduced a new ball with a graphene layer that delivers a longer, straighter shot.)
Use of graphite mesh in surgical procedures expanding (With an ever-increasing population of people over 50 years of age, medical issues increase every day. Graphite mesh is a favorite medical device used by surgeons today.)
The key to a successful graphite project (as with other industrial minerals) is to be able to produce a balanced range of products for a range of markets, ensuring that all production can potentially be sold and dilute risk across market cycles.
Today, you need to know about one penny stock graphite mining company with a bright future poised to capture all the benefits of the coming investment trend.
See that bright future for yourself – click here to see the TSXv Ticker, or click here to see the OTCQB Ticker
This is a must read for anyone looking to get ahead of the trading trend coming for this mining sector.
Technical information on the property has been prepared under the supervision of Richard L. Pearce, a Qualified Person as defined by National Instrument 43-101. This information and the PEA contain references to inferred resources. The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the PEA will be realized.
The Project has several important competitive advantages that contribute to attractive financial returns and risk – return parameters:
NPV (5%) of US$117 million, post-tax IRR of 78%, 2 years payback period
Free cash flow of US$15,800,000 per annum (p.a.) on years 1-5 and LOM avg. of US$10,400,000 p.a.
Excellent logistics and infrastructure (major urban centers nearby, power and gas line within 5 km from project, access via paved federal highway)
At surface oxidized mineralization (no crushing or blasting needed and favorable strip ratio)
Premium product granulometry; 35-40% of product at +50 mesh (jumbo flakes) and 65-75% of product at +80 mesh (large flakes)
88% recovery with 95% concentration using straightforward, proven flotation technology
Available skilled and experienced graphite labor within Brazil
Tax incentive area (reduction of 75% of federal income tax)
Substantial resource expansion potential
These are the competitive advantages investors seek. With these production projections, it is easy to see how South Star Mining (TSXV: STS; OTCQB: STSBF) should lead the trend toward graphite small cap investment opportunities.
The results of the bench scale tests showed high quality graphite with recoveries of 88% achieved via simple grind + flotation circuits, indicating no major difficulties in concentrating. Based on the results of the pilot plant tests, a process flow circuit consisting of material homogenization, segregation, grinding, conditioning, flotation, drying and packaging was developed.
Santa Cruz’s Graphite Concentrate Santa Cruz´s Final Concentrate:
It is important to note that if a concentrate with minimum of 93% Cg can be marketed and sold, an important gain (~10%) in +50 mesh and +80 mesh distribution can be achieved as less milling is required. In addition, an ultra-pure +99.9% Cg concentrate has also been produced, demonstrating the project is also able to provide product for the projected high growth battery market.
For savvy investors like you, this metallurgical test data indicates that the Santa Cruz project has the potential to supply a range of traditional markets (e.g. refractories, steels and 17 components) and to supply markets such as spherical graphite and expandable graphite.
(Page 17-18) CONCLUSIONS AND RECOMMENDATIONS OF THE PEA
The financial analysis shows very favorable and robust results that highlight the Santa Cruz project’s advantages in the graphite sector.
Key Financial Results:
Post-tax NPV (5%):
Post-tax all Equity IRR:
Avg. Post-Tax-Free Cash Flow (yrs. 1-5):
LOM Avg. Post-Tax-Free Cash Flow:
Total Indicated Resources:
14,990,400 t @ 2.70% Cg
Total Inferred Resources:
3,572,100 t @ 2.90% Cg
Life of Mine:
Annual Production (years 1-5):
18,900 t p.a.
Annual Production (year 5-23):
15,800 t p.a
Initial Capital Costs:
Avg. Operating Costs (LOM):
US$413 per tonne of concentrate
This is a commodity that can thrive in every market with the potential for very good returns for small cap investors.
The word graphite may make you think of pencils. But the reality is very different!
With new technologies creating new levels of demand, and little flake graphite being available, this strategic mineral has a big future.
Graphite is a form of carbon with unique properties. It is like a diamond in two dimensions.
It’s important you understand that most of the world’s graphite is “amorphous.” This is used mostly for equipment in the steelmaking industry and may as well be a different commodity to flake graphite.
Comparing amorphous graphite to flake graphite – is a bit like comparing thermal coal to coking coal.
The rarer, high-quality type of graphite to invest in is ‘FLAKE’ graphite.
Flake graphite production levels are just 400,000 tonnes a year. Analysts at investment bank Canaccord report 4 that demand from lithium-ion battery manufacturers is increasing at 20% a year.
And you can see why. Uptake has been slow thus far, but the US still plans to put 250,000 electric cars on its roads each year. China wants to put a million electric cars on Chinese roads each year in the same period. With 50 kg of graphite going into the battery of each electric car, the market will need to find an extra 250,000 tonnes of flake graphite to keep up with this demand alone. (Note: due to manufacturing/purification losses and use in other components, a typical EV requires about 100 kg of graphite concentrate).
But it’s not just electric cars that have batteries…
The battery in your mobile phone contains graphite as well.
They may be much smaller than a car battery – but according to the International Telecommunication Union, out of a population of 7 billion people alive today there are 5.9 billion mobile phones in use around the world. That’s an incredible statistic. And by the end of next year, they reckon there will be MORE mobile phones in use than there are people on the planet.
In fact, any heavy-use electric gadget will have a graphite-filled battery. Electric cars, mobile phones, your laptop computer, cordless drills, and electric toothbrushes…. all these devices significantly increase the demand for flake graphite.
The South Star Mining (TSXv: STS; OTCQB: STSBF) site in Brazil features a huge store of this highly prized large-flake graphite.
We’re convinced the real run has not yet started. Battery makers are not the only ones queuing up for flake graphite.
A new generation of nuclear reactors called “pebble-bed nuclear reactors” use large amounts of flake graphite.
(The reactors get their name from the pebble-sized spheres of graphite mixed with uranium they contain. This structure allows pebble bed reactors to produce power more efficiently – and safely – than conventional reactors. This technology means nuclear reactors can be smaller, and as easy to run as turning a switch.)
Graphite demand from pebble bed reactors alone could be greater than current annual production by the end of this decade.
In just a few minutes, you will see the ACTION ITEMS you should consider taking advantage of this small cap investment opportunity.
This includes your opportunity to see the impressive trading history of South Star Mining for yourself (TSXv: STS; OTCQB: STSBF).
Please keep reading…
Electric batteries and pebble-bed nuclear reactors are two current technologies driving demand. In my view, these two applications alone are enough to justify a bullish long-term outlook. But “high tech” commodities are rapidly evolving. And more markets (with more demand for flake graphite) are already developing.
But the real future of graphite may lie in fuel cells.
According to the United States Geological Survey, fuel cells could create more demand for flake graphite than all other applications combined.
A fuel cell is like a large battery that produces power through chemical processes. You need to ‘refuel’ it from time to time. This fuel contains graphite.
This is not science-fiction. Fuel cells are already used to power phones, vehicles, and provide back-up power for buildings such as hospitals. Toyota plans full-scale commercial production of fuel cells within three years.
If fuel cells are the next source of demand for graphite, then graphene is the ‘blue sky’ for demand.
The graphite used in these fuel cells is abundant at the South Star Mining (TSXv: STS; OTCQB: STSBF) project.
Graphite is also used as a fire retardant in building materials for new construction in China and is undergoing testing as an additive for cement/concrete.
Graphene is a one-molecule-thick sheet of graphite.
The carbon molecules line up in hexagons. Up close it would look like chicken wire. It is stronger than diamond, more elastic than silk, and conforms to any shape. It conducts electricity at the speed of light and can transmit 1000 times more electric current than copper. This amazing material is quite new to science, and we are still working out its potential applications.
What is Graphene?
Graphene was first experimentally obtained and described in 2004 by a group of Russian and British scientists
Konstantin Novoselov and Andre Geim were awarded the 2010 Nobel Prize in Physics® for groundbreaking experiments regarding the two dimensional material graphene*
Graphene, a carbon nanomaterial is a one-atom-thick planar sheet of sp²-bonded carbon atoms that are densely packed in a hexagonal hneycomb crystal lattice
Length of the hexagon’s side: 0.142 nanometers
Graphene is extremely strong and felxible. This unique substance acts as both a conductor and semiconductor.
Graphene is expected:
to replace silicon in microcircuits and computer chips. The enhanced capacity graphene chips will be lighter, stabler, will consume less electricity and will also disperse less electricity as heat
to replace heavy copper wires in the aerospace sector
to be used to develop flexible sensor displays and solar batteries
to be used as a sensor for detecting separate chemical substance molecules
IBM has already used graphene to produce the fastest computer chip in history. The US Air Force and Navy are funding research to investigate its potential. Graphene chips may displace silicon chips in computers. If this happens, then graphite demand would go through the roof.
IBM is not the only one researching it. Intel, the world’s biggest microchip manufacturer, is also investigating its potential uses, along with at least 200 other industrial companies.
What does all this mean to the penny stock investor looking at graphite stocks like South Star Mining (TSXv: STS; OTCQB: STSBF)?
The graphite price looks good to keep rising. Demand continues to rise, and there is very little flake graphite production coming on line.
With so little new production queued up, and new projects taking around five years to bring to production, it is hard to see how demand will be met. Analysts at a Canadian investment bank, Canaccord, reckon that demand for flake graphite will increase six-fold during this decade. This paints a very bullish picture for flake graphite prices. A six-fold increase to demand without any significant increase in supply should send prices one way: UP.
Analyst predictions aren’t any kind of guarantee this will happen, of course. I think what is probably more important is just how strategically important graphite is: particularly graphite deposits based outside of China.
¹ International Energy Agency, Global Electric Vehicle Outlook, 2018
² BBC.com May 2018
³ Indexmundi.com June 2017
4 Resource World Magazine, April 2018
Graphic1* – www.rian.ru
South Star Mining Corp. (the “Company”) has paid Invictus Digital Marketing for advertising and marketing services rendered on behalf of the Company.
CAUTIONARY STATEMENT Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.
This information and the PEA contain references to inferred resources. The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the PEA will be realized.
This news release contains “forward-looking information” within the meaning of applicable securities laws. Generally, any statements that are not historical facts may contain forward-looking information, and forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or indicates that certain actions, events or results “may”, “could”, “would”, “might” or “will be” taken, “occur” or “be achieved”. Although the Company believes in light of the experience of its officers and directors, current conditions and expected future developments and other factors that have been considered appropriate, that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on them because the Company can give no assurance that they will prove to be correct. Readers are cautioned to not place undue reliance on forward looking information. Actual results and developments may differ materially from those contemplated by these statements
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