Graphite

Evolution Energy Minerals locks in sales for 50% of its graphite production

Mon 09 May 22, 10:54am (AEST)
Abstract futuristic 3d rendering illustration of batteries
Source: iStock / Black_Kira

Stocks in article

ev1
MktCap:
-

Share article

Key Points

  • 50% of graphite flake production from company’s Tanzanian Chilalo project locked-in via Binding Offtake Agreement (BOA)
  • BOA partner is Chinese downstream heavyweight Yichang Xincheng Graphite Co (YXGC)
  • Evolution to make first shipment in 2024; BOA allows for new financing opportunities

Evolution Energy Minerals (ASX:EV1) has locked in sales for 50% of its graphite output from the Tanzanian Chilalo Project, with Chinese heavyweight Yichang Xincheng Graphite Co (YXGC) executing a binding offtake agreement. 

For a minimum of three years, Evolution Energy Minerals will supply YXGC with 30,000 tonnes per annum of coarse flake graphite. The 30,000tpa figure reflects 50% of expected Chilalo output.

YXGC is a high-impact company in the graphite space and one of the leading international companies capable of producing refined, high-value graphite products from flake graphite feedstock. 

The BOA also sees Evolution secure some 70% of its forecast revenues into 2025, making the deal one of the most important for the company going forward. 

(Supplied) map detailing the Chilalo project location with company specifics on the right hand side

De-risking unlocks financing opportunities

The deal, Evolution Energy Minerals says, is crucial, as the presence of an offtake agreement allows the company to access more desirable financing options, given the guarantee of commercial engagement. 

An update definitive feasibility study will be procured by the company in the coming months as Evolution moves towards the appointment of new financial advisors to re-assess the company's opportunities given the security surrounding the 30,000tpa BOA clause.

ESG credentials as Evolution eyes battery tech 

The company expects to see its flake graphite go onto be made into graphite foil, which will be used in green hydrogen batteries and other applications. 

Evolution continues to liaise with the Tanzanian government to secure fiscal and regulatory certainty for the Chilalo project and the company continues to negotiate with other downstream players towards the view of selling its Chilalo flake output to battery anode manufacturers. 

The manufacturing hub within which YXGC's facilities are located is a region dominated by hydroelectric sources, allowing the company to point towards ESG credentials in its supply chain. 

Several parties are already in talks with the company to offtake some extra 35% of its Chilalo output, leaving Evolution Energy Minerals in a strong position for potential investors with a number of immediate risk factors being actively mitigated by the company. 

Shares are currently worth 50cps. Last month, Evolution Energy Minerals listed on the Frankfurt Stock Exchange, the largest stock exchange in Germany, one of the largest in Europe, and one of the most liquid in the world.

Evolution's charts since February against the XMJ Materials Index
Evolution's charts since February against the XMJ Materials Index

 

Evolution Energy Minerals (ASX:EV1) was a Market Index client at the time of publishing. All coverage contains factual information only and should not be interpreted as opinion of financial advice.

 

Written By

Jonathon Davidson

Journalist

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication.

Get the latest news and media direct to your inbox

Sign up FREE