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Lithium Facts and News

Amazon Fined for shipping lithium batteries on planes Sept 23, 2016

The race for lithium in Nevada July 25, 2016

When will the Lithium Stock bubble burst June 30, 2016

Forget oil: Lithium Is transportation's future June 25, 2016 USA Today

Lithium Boom Still in it's Early Stages   June 13, 2016

Australian lithium miners in focus  May 25 2016  CNBC

Richest Lithium Nation Risks Being Left Behind in Tesla-led Boom  May 19 2016 Bloomberg

The Lithium market is on fire. Goldman Sachs has described lithium as the “new gasoline” and it’s arguably the hottest commodity in the world right now. There is much hype about lithium carbonate SPOT prices hitting $20,000 per tonne in China. However, that is not the price users are paying or what new producers or juniors might get. The lithium price is set by long term contracts between buyers and sellers and currently 4 producers control about 85% of the market and their lips are sealed on recent or new contracts for competitive reasons. To further complicate the price issue, there is different prices for the many different forms of lithium and what it is used in.

The consensus out there seems to be in the $12,000 to $16,000 per tonne range for battery grade lithium. It is also important to consider that it could be difficult for new potential producers to secure off take agreements away from these big 4 producers.

The most accurate picture of prices is analyzing the export and import prices around the world. CRU Group is an expert in metals, such as lithium and the chart on the left is the average price of the exports/imports. You can see the obvious trend and keep in mind that these prices are for various forms of lithium. Current contract prices will be higher.

 Probably what is most important is the 3rd chart by the CRU Group, only their most aggressive price scenario, which assumes little response (Muted) from the market on the supply side will see a further increase in prices. Furthermore is that price rise would be modest in percentage terms compared to what we have already seen. Most likely we have seen the top to lithium prices or are close to it. Near term our best indicator will be the spot price in China, if it stops rising or eases, would be pretty strong confirmation the top is in.

  

A reccent factor  promoting lithium batteries and EVs was the 80eday race. There were 12 teams racing around the world in 80 days in all electric cars. They are mostly Tesla's but China has a Danza and Hungary an Electric Bus.

They landed in N. America June Saturday June 25th in Halifax Canada.

The 80edays Challenge 2012-2016-2020 aims to accelerate the transition to sustainable mobility with the world’s largest and most competitive 100% electric car rally around the globe.

See our most recent report - Batteries,  Lithium or Graphite - which is it

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This section on Graphite will continue to evolve so come back often. I added an Australia Graphite section, of course it is below - down under

I know it is difficult to find graphite prices and graphite charts, especially current ones. I will keep the above chart current on a quarterly basis or if there is a big price changes. This would be quite adequate for the type of market graphite is,  where prices are basically set by agreement between Buyer and Seller. Keep in mind there is no market price so these prices are estimates based on what I can gather from numerous sources.

I believe they are a good reflection of the market that is basically driven by steel and refractory demand and what China is doing on the graphite supply side. Large flake graphite is doing better as it fits better in the higher growth area of batteries and electronics.

Ultimately price is determined by how well a seller meets the requirements of the buyer

I tried to find good recent videos on various companies and there is not a lot of good ones. I highly recommend the Dr. Ian Flint Videos, nothing to do with Elcora. This is a chance to listen to a true expert in graphite/graphene and he is honest and objective. He talks about all kinds of graphite and different companies and mines - not in a bad or good way but a real way!!

Graphite - and many will think of a pencil but is a very versatile non-metallic mineral and one of four main natural forms of carbon along with coke, coal, anthracite and diamond. Graphite really caught my interest because I believed the demand for Lithium-ion batteries could be enormous and when graphene came along it really intrigued me on the tech side.

Another factor - I knew of a large graphite deposit long before it became popular and that was Bissett Creek. I knew one of the original principal investors when it was still private and he was never shy letting me know about the positive attributes of graphite.

Graphite is unique in a number of ways to other metals and to understand the graphite potential of mines and deposits as well as pricing there is a few very important things to understand.

Graphite Purity – in % Carbon

The purity or amount of Carbon (C) is very important. A mining operation has to get their graphite up to a 94% to 97% carbon level to get good market prices. If you think of Gold and some other metals it is similar to the recovery rate, except you need that 94% threshold for best price.

Graphite Types and Flake size

Natural Graphite from mines is produced in three forms: amorphous (60-85%C), flake (>85%C) and vein (>90%C). Vein graphite is only being mined in Sri Lanka.

Graphite can also be manufactured synthetically, primarily via the Acheson Process

Amorphous graphite is best to think of very fine like a powder

Graphite Flake is like it sounds but to complicate matters it is broken down into different flake sizes and that is important because there is price differentials for the sizes. The sizes are measured by mesh and the larger flakes get better prices. I have listed the four sizes below with the corresponding mesh size. Jumbo is not very common and the prices below are recent but I am basically using that to illustrate price differential. Those prices can fluctuate as the chart shows above

Small/fine flake        -100 mesh               $760/tflakegraphitr

Medium flake           +100 to -80 mesh    $950/t

Large flake               +80 mesh                $1,100/t

XL flake (jumbo)     +50 mesh                $1,950/t

A very important factor on the supply side is China because they dominate

the supply side of the marketProducergraphite piechart, especially Amorphous Graphite. Depending on the year and whose data you look at  China basically supplys between 73% and 77% of the market. However when you consider Flake graphite only - their share of supply drops to about 60% and Brazil 20% than India, Canada and others.

Recently the Chinese graphite industry has been consolidating and the more pollution prone mines have been shut down. The consensus is that this will eventually pressure prices higher. Never the less - China is currently supplying practically all the Spherical Graphite for batteries, as pointed out in my November 2015 Graphite Report.

Another important factor is most Lithium ion batteries are using synthetic graphite that is multiples the price of Large Flake. This is where a large opportunity lies for the new mines, if they can upgrade to Spherical Graphite they can get $6,000 to $10,000 a ton as a ball park. I also believe that here in lies the potential for Flake graphite to lower battery cost as it is way cheaper than synthetic as long as the Flake can be brought up to a high enough quality.

And that my friends is a challenge and harder to do than most of the junior miners are touting. But I am also sure that is what Tesla is looking for, see my peice on Seeking Alpha

 

The current issue in the market now that has caused price weakness is the drop in world economies and trade. GraphiteuseThe graphite companies will all hype the big demand coming in batteries and while that is true, battery demand is just not a big enough part of the market to influence overall price. 

Graphite prices will improve once the World economies recover and/or when we reach the point where the pendulum swings far enough for battery demand to influence price higher. The chart on the lower left showing battery demand and the amount of 100 mesh graphite feed required is data from an Anode Manufacturer that Syrah Resources had in a feasibility.

You can see that demand of 100,000 tons in 2015 will double to 200,000 tons in 2017. As long as world economies do not plunger further this pendulum swing should happen in 2016 or 2017.

VeinGraphiteMarket Seg

Well i have the Dr flint Videos on the left and Zenyatta I am going to touch on the Vein graphite because it is very unique. You can see on the pie chart to the right that uses for Sri Lanka vein is mostly in electronics and mobile energy. It really is a niche market and I believe Dr. Flint is probably correct that it is the best place to start for graphene production.

I will have a section on graphene below, but a short description and analogy would be; Graphene is only 1 atom thick and if you had a sheet as thin as a piece of paper and put a pencil point on it and balanced an elephant on top it could not break through.


Sri Lanka vein graphite comes out of the ground at 90% to 99% pure, so it starts at a level all the other miners are trying to get to. It can also be upgraded to Spherical Graphite much easier. Laborrates are very low in Sri Lanka and their graphite is truly unique and fetches the highest prices on the market.


                                                                    The Graphite Mining Stocks


It would require too many pages here to analyze the graphite players and deposits. I do that in the Struther's Report and will put links to some of those in here now and then. I am just going to make some general comments on things to look for and focus on as well as put up some of their video interviews.


Elcora Resources is different that all the other explorers as they have a mine and production. It will start up small with plans to ramp up but that has an advantage. What all the juniors are finding out, it is very difficult to get a mine to the feasibility stage that can compete with the best and then get financing.


Graphite is not like other metals because there is really no set market to sell into. Miners must get some agreements in place with end users to sell their graphite and then they might be able to get financing. Financing agreements with end users is another possibility. Financiers are going to be very picky - so only a handful of companies are going to get mine financing plus the market is only big enough and will only see enough growth for a few new producers.

Sri Lanka previously shipped their graphite raw because it is that pure, So Elcora will now process and upgrade on site for value add. Elcora really is a processing company that will be moving to the tech side with graphene.


A lot of the other juniors are testing and upgrading their graphite samples for various applications like battery grade, fuel cells, graphene and other future technical applications. Realize that in many cases this is just smoke and mirrors. What they are really trying to do is distinguish themselves and make claims that their graphite is the best so they can attract investors and investment dollars.


In reality and in the end no matter what your graphite can do or how good it is, you will have to mine enough of it to make revenues and profits. This means despite all the fancy testing, juniors still have to go through the traditional exploration path and prove up a resource to at least Measured and Indicated, obtain a Final Feasibility and Environmental and Mine permit.


So far Northern Graphite is the only one to achieve this, probably as they were one of the first starters. Focus and Mason Graphite in Canada are close behind with Final Feasibility and have filed for Environmental permits. Energizer Resource is at this stage too with their Madagascar project.


All of these companies have demonstrated they can produce battery grade graphite. It will be difficult for others to get ahead of these leaders and they will need to do so with some kind of cost advantage and or other advantages. Alabama Graphite has a chance because of their location in the U.S. the low costs and the type of deposit.
I met Dr. Ian Flint on a number of occasions and I once asked him if not Sri Lanka, where else would you choose.

His answer was Alabama Graphite.


Flinders Resources was producing from their Woxna graphite plant in Sweden but it is now shut down awaiting for better graphite prices. While a processing facility is great, a poor deposit is a poor deposit and you cannot change that. Their grade was good with last 43-101 indicating 7.7 million tonnes at 9.3 % carbon, but I suspect their flake size or distribution was poor. I could not find the flake distribution anywhere probably because it was not very good. The 43-101 talked about medium, fine and very fine grain so it sounds like they had no large flake or very little. They indicated that they closed because prices fell to US$700/tonne or less so this also indicates a low quality graphite, as it is way below large flake prices.

I also seen mention on their web site that the recovery plant produced concentrate at 90% Carbon which is too low for good prices.

This makes the point that flake size and distribution in the deposit is very important. Large flake gets the best price and that is an advantage Northern Graphite has with 90% of their Bisset Creek deposit at large and jumbo size flake.

There is no way any of the juniors will compete with China on Amorphous and fine flake graphite. They need a good distribution of large flake.

Another alternative is to have a competitivelyy priced process to upgrade your graphite to battery grade graphite, but again if you have a lower quality deposit with not much large flake you are at a disadvantage, it is a lot easier to upgrade large flake to Spherical Graphite or upgrade Sri Lanka vein graphite.

And remember this is a world market and the Aussies appear to be doing a very good job. Syrah Resources has the best graphite deposit in the world, a $700M market cap and a feasibility on a proposed Spherical graphite plant in the U.S. Obvious they will use their own graphite if they build the plant in the US and perhaps that fits into a Tesla plan. This is a reason I am starting an Australian Graphite section, because it looks like

Australia Graphite Stocks might be kicking Canadian butt in graphite

So pick your horse, the Dodge Charger Hellcat or the Tesla Model S, oh and both American made!!

If you are interested in Graphite you must know about Syrah Resources of Australia. That is because Syrah is so large, so high grade and so cheap to produce it might possibly put all the China producers and North American hopefuls out of business

 

syr

Reserves: 81.4Mt at 16.2% Carbon (yes millions)

Average head grade of 19% Carbon

380,000 tonnes of concentrate/year at 95%C

Cash costs of US$280/tonne mined and to Port

 

 

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A lot of Junior Australian Graphite stocks are doing very well

Valence Industries (VXL :ASE)   199M shares out at A$0.14 =  Market Cap A$27.9M - is a premier graphite producer. Their flake graphite process facility is a combination of high grade, easily mined, easily processed, moderate climate, close proximity to established port, skilled personnel and contractors and a stable first-world economic country.

A 2014 feasibility study on expanding concentrator capacity by 25,000t/y, reveals adding a new open-pit mine, advanced manufacturing facilities, indicated A$50 million (US$38m) capex could deliver handsome EBIT margins (circa 50%) on revenues of about $100 million a year or more, with six current customer sales contracts and further memoranda of understanding (MoUs) covering about 80,000t of future sales at around the US$1,400/t mark for traditional flake graphite production.

Kibaran Resources Ltd. (KNL:ASX)     159M shares out at $A0.17    =      Market Cap A$27M

Thei Epanko Graphite Project in Tanzania has Proved and Probable Ore Reserve of 10.9Mt @ 8.6% TGC. Bankable Feasibility Study completed with two off-take agreeements secured for 75% planned initial production.

Lamboo Resources (LMB:ASE) 174M shares out at $A0.06 =  Market Cap $A10.44M – Lamboo has 3 early stage graphite projects in South Korea and one further advanced in Australia the McIntosh Project. with a maiden JORC compliant resource indicated and inferred at Target 1 and is estimated to contain 7,135,000 tonnes grading 4.73% TGC (4.95%TC)

Metals of Africa (MTA:ASX)    211M shares out at $A0.06 = Market Cap $A 12.66M -  has successfully delineated two, high grade graphite resources in the world class Cabo Delgado province Mozambique, East Africa and is now progressing towards development. After completing a positive Concept Study, demonstrating lowest quartile operating costs, combined with exceptional quality graphite, it has positioned itself to combine with some of Canadian’s most advanced graphite owners and researchers to acquire a test mill in the United States to produce spherical graphite for battery manufacturers.

Much more to come