Tom Revy, Managing Director, Blackearth Minerals
|Interview conducted by:|
Founded in 2016, BlackEarth Minerals listed publicly on the ASX in 2018. What have been your recent developments since then?
Since BlackEarth’s foundation, our motto has been ‘fast track to cash flow.’ Before going public, we had to plan out how we spent our money to satisfy the project debt funders and equity markets in order to ultimately achieve cash flow. Within the first 12 months of being listed, we conducted a scoping study that heavily focused on establishing a quality resource. Our aim in conducting an advanced-scoping study was to provide grounds for direct advancement to a definitive feasibility study. We wanted to understand how the resource differed from surface to depth and along strike, which meant understanding the full chemical and mineralogical spectrum of our mineralized zones. Upon completion of extensive metallurgical test work, we then produced a process flow sheet to demonstrate potential product specifications to investors.
What has been the reason for the reduction in your share price since the IPO?
The general sentiment towards graphite and a lack of understanding of the graphite industry have been the main contributors to a fall in share price across most ASX listed graphite developers. Graphite is an opaque market because it is largely a closed market, dominated by the Chinese where product is often bought/sold on a case by case basis. There can be a huge variance in graphite price based on a myriad of chemical and physical product parameters. For example, one aspect determining battery material can be how well the graphite can be spheronized, which has to do with both physical and chemical product characteristics. Up to 60% of the graphite can be lost in the “upgrading” spheronization process, making it an expensive but potentially rewarding process.
BlackEarth Minerals currently has highly prospective resources at its Maniry and Ianapera Graphite Projects in Madagascar, as well as in Western Australia. Where do you expect demand for your future graphite resource to come from?
We have a high degree of confidence with 50% of our material exceeding 180 microns, which puts us in the large to super-jumbo category that taps into all high value industries. In terms of batteries, current and future demand is likely to come mainly from SE Asia, Europe, the United States and China. Experts envisage there will be in excess of 1.1 terawatt hours in new battery capacity by 2028. In order to produce this amount, they require up to 900,000 mt of suitable graphite to feed the industry. Accounting for losses and “non-suitable” material, the natural flake industry potentially needs to produce 2.7 million mt of new graphite production. The current global production stands at 1.2 million mt, so the demand will eventually pressure supply.
How do you foresee the investment sentiment around graphite changing in the coming years?
While investors continue to favor lithium as a battery metal, some end users (battery and automotive manufacturers) appear to be increasingly more concerned with the supply of graphite as a critical metal. There is a misalignment here, and eventually people will realize that they need to start investing in graphite. We are trying to stay ahead of the curve and anticipate this shift by producing graphite early in the game. We expect to achieve our fast track to cash flow by being in production by 2021.
How will you facilitate your goal of being in production by 2021?
Understanding the number of prospective graphite developers against the expansion potential with battery manufacturing, we expect the global shortage of graphite to strike around 2023. We are in a rush to produce by 2021 and continue to review project funding options – we have a real project with a high degree of confidence. All potential project finance options will be investigated, including those considered “left-field,” in order to realize true value for our shareholders. Clearly firm offtake commitments will be key to attaining project finance. The most likely end user markets seeking graphite supply would be Europe, North America, China, Japan and South Korea.
How would you like BlackEarth Minerals to be perceived by the industry?
BlackEarth Minerals differentiator is that we are run and managed by project developers in a technical, practical and financial sense. This means we that we won’t be driven by technical perfection, rather our focus remains to deliver maximum shareholder value. With our collective decades of experience within the industry, we can responsibly push a project whilst understanding the geopolitical, market, technical and funding risks. We want to take on cash flow positive projects with attractive returns for our shareholders. In the future, people will realize the importance of quality graphite when supply can no longer meet demand, and we believe the graphite industry has the potential to grow substantially.