Why graphite stocks are on the rise
Date June 24, 20
http://www.smh.com.au/business/why-graphite-stocks-are-on-the-rise-20140624-
3apyt.htmlThe rise and rise of the electric car is boosting the graphite industry and sparking incredible rises in the share prices of companies in Australia’s fledgling sector. The last week has seen a rush of news from the industry. Queensland’s Lamboo Resources announced a supply deal with China Sciences Hengda Graphite to supply 50,000 tonnes of high-grade graphite flake per year, Archer Exploration bought a tenement in South Australia from Monax Mining for $300,000, and Triton Minerals announced positive results from drilling at Nicanda Hill in Mozambique. All three companies have enjoyed incredible rises in the last 12 months. Lamboo’s shares are up 736.8 per cent, while Triton has surged 544.9 per cent. Archer is up at a more measured 20 per cent, but fellow graphite miner, Syrah Resources, has rocketed from 17¢ in 2012 to $3.92, and is up 127.7 per cent in the last 12 months. Advertisement Traditionally used in refractories, steelmaking and ‘lead’ pencils, graphite is now riding the wave of the electric car. With more electric cars getting built, demand for graphite, a key material in the lithium-ion batteries that power them, is also surging. Even American muscle icon Harley Davidson has announced that it is building an electric motorbike. Lamboo chief executive officer Richard Trevillion said his company was hoping to move to full production next year after running a scoping study on the graphite from its McIntosh project in the Kimberley. “The reason why flake graphite has got into the mindset of the market is because it’s the biggest bit of the lithium-ion battery,” he said. “The market for lithium-ion batteries has really exploded to capture the imagination of investors.” Syrah is currently working to bring its huge Balama graphite project in Mozambique up to full production. Syrah says Balama contains 117 million tonnes of graphite, larger than the rest of the world’s reserves combined. Mr Trevillion said lithium-ion batteries required graphite with high purity levels, which Lamboo was confident it could produce. The material surrounding the graphite was also extremely important for the purity of the flake. “Lithium is a very volatile material and it can explode. Cars and airplanes have exploded,” he said. “It’s a very volatile and dangerous material. If you have impurities in your flake, it can be extremely dangerous.” Lamboo is also benefiting from a reduction in production in China, Mr Trevillion said. China dominates the market for flake graphite, supplying up to 77 per cent of the world supply. “China started to put embargoes on its graphite and restrict supply, then it flooded the market,” he said. “Now it’s come out and said it doesn’t have much at all left for what it wants to do.” Graphite is an opaque market, meaning prices are usually set based on deals between companies and purity levels. Mr Tevillion said it was important to build relationships in the graphite industry, such as Lamboo had with Hengda. The next step for Lamboo was to move into the regulatory phase, where it acquires the various approvals it needs to begin production. The company has also proved the credentials of its graphite by taking some flake and putting it into a lithium-ion battery in a lab. Mr Tevellion said the results had been exciting for Lamboo. “We’re keen to walk the walk, not just talk the talk,” he said. Read more: http://www.smh.com.au/business/why-graphite-stocks-are-on-the-rise-20140624-3apyt.html#ixzz35dssmZot
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