Evolution Energy Minerals Site Visit
We visited Evolution Energy Minerals (EV1), Chilalo coarse flake graphite project in southern Tanzania.
The Company is progressing it’s updated DFS/FEED study, overseen by Executive Director Michael Bourguignon, who previously worked at SYR’s Balama graphite project during its re-optimisation phase (post original construction and ramp up).
The key differentiator of the Chilalo project is proportion of larger flake size within its product mix, allowing the concentrate to sell for a premium as its used in higher value end use products such as: fire retardants, heat sinks for electronics and bipolar plates in hydrogen fuel cells.
We are confident that the Company will extend its mine life, with numerous untested EM targets coincident with outcropping mineralisation, drilling to commence in July.
Community relations are strong and building. With the relocation action plan (RAP) advancing in-line with expectations.
EV1 recently signed an offtake agreement with Yichang Xincheng Graphite Co Ltd (YXGC) in regards 30,000 tpa of coarse flake graphite for a minimum of three years, representing 70% of DFS revenue and de-risking the project in our view.
YXGC is a Chinese company that is global leader in the manufacture of high-value expandable graphite.
Another potential value driver for EV1 is its collaboration with YXGC to toll treat graphite into expanded graphite and to potentially develop downstream expanded and graphite foil facility in Europe.
As a reminder the Chilalo DFS in 2021 showed capex of US$87m for a 0.5mtpa plant producing 50ktpa of graphite concentrate (mostly coarse flake, which is the key differentiator of the Chilalo project).
Company finished the MarQ with cash of A$7.5m.
Upcoming catalysts for EV1 include:
- updated definitive feasibility study/FEED study SepQ.
- we expect FID 1H CY23
- Sales arrangements for fine flake product from Chilalo (to be used in battery anodes.)
- framework agreement with the Government of Tanzania to provide fiscal and regulatory certainty expected JunQ.