Evolution Energy eyes European graphite processing facility for battery customers; shares surge

Thu 29 Sep 22, 10:20am (AEST)
Pile of graphite
Source: iStock

Key Points

  • Evolution Energy enters into a binding term sheet with its current offtake partner Yichang Xincheng Graphite Co
  • The two parties will undertake studies to assess the development of a downstream processing plant, likely in Europe
  • The plant will produce value add graphite products for battery and hydrogen customers

Evolution Energy (ASX: EV1) has signed a binding term sheet for a joint venture with Yichang Xincheng Graphite Co to produce high value, downstream graphite products for battery and hydrogen customers.

Evolution Energy is an advanced graphite explorer operating the Chilalo Project in Tanzania. The company expects to make a final investment decision for the project in early 2023.

The joint venture seeks to establish a facility to process up to 25,000 tonnes per annum of coarse flake concentrate into value add products such as graphite foil, bi-polar plates and graphite seals for electric vehicles and hydrogen fuel cells. Evolution shares rallied 21.7% as the market opened.

"The demand for graphite foil and bi-polar plates is increasing and supply of these products is constrained principally by the lack of availability of quality coarse flake graphite feedstock," the company said in a statement.

"In response to rising international demand, YXGC recently expanded its plant, increasing capacity by 25%."

"Maximise the value of Chilalo"

Processing graphite into a value add product is highly lucrative. Graphite flake concentrate sells for around US$800 a tonne but downstream products such as spherical graphite has a price tag of up to US$60,000 a tonne.

Not all graphite is made equal. But to date, Evolution's Chilalo graphite has passed several stages of testwork to qualify for downstream applications.

"Combining Chilalo’s high-quality coarse flake graphite with YXGC’s experience, technology and know-how will enable Evolution to capture additional margins and maximise the value of Chilalo," said Managing Director, Phil Hoskins.

YXGC has been a cornerstone stakeholder in Evolution's journey towards reaching producer status. In May, the company signed a binding offtake agreement with YXGC for 30,000tpa of flake graphite concentrate for three years.

The offtake represents approximately 50% of Chilalo's expected annual output.

Next steps

The term sheets will kick off three key phases to explore the feasibility of the processing facility. This will include:

  • A scoping phase to identify the plant's financial metrics, size and required land plus the scale of the opportunity and indicative product pricing

  • Subject to the results of the scoping phase, progress a definitive feasibility study (DFS)

  • Subject to the result of the DFS, a decision to construct a downstream processing plant

Upon completion of the scoping hurdle, the parties will form a joint venture where Evolution will hold a 60% stake.

DISCLAIMER: Market Index helps small-cap ASX listed companies connect with Australian investors through clear and concise articles on key developments. Evolution Energy Minerals was a client at the time of publishing. All coverage contains factual information only and should not be interpreted as an opinion or financial advice. A staff member at Market Index indirectly holds shares in Evolution Energy Minerals.


Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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