Evolution Energy Minerals (ASX: EV1) sees increased graphite prices from EV demand

Thu 03 Mar 22, 4:41pm (AEST)

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  • 0:14 Company background
  • 0:54 Graphite prices
  • 2:22 Evolution Energy's path to an improved ESG rating
  • 4:51 6-month pipeline and future catalysts


Neesha (00:00):

Welcome back to Market Index. We're joined by Phil Hoskins, managing director of Evolution Energy Minerals. Welcome.

Phil Hoskins (00:07):

Hi, Neesha. How you going?

Neesha (00:08):

For listeners not familiar with Evolution Energy Minerals, can you provide a little background on the company for us?

Phil Hoskins (00:13):

Yeah, we've recently IPO'ed raising $22 million dollars towards the end of 2021, but we've IPO'ed with an advanced graphite asset. It's a DFS level development ready graphite project in Tanzania. All the work's been done. It's one of the highest quality graphite projects in the world driven by very course plate graphite. Yeah, from here the next six months are going to be very interesting and very excited as we get ready for our final investment decision towards the back half of this year. Plenty of years to come and yeah, exciting times for shareholders.

Neesha (00:50):

With the increasing popularity of electric vehicles, graphite is certainly a hot sector right now. Where do you see the demand for graphite moving to from here?

Phil Hoskins (00:58):

Yeah, we're subscribed to a number of, given it is an opaque market, subscribe to a number of forecasters in Wood Mackenzie, Benchmark Mineral intelligence, all those sorts of people, obviously forecasting very large increases in graphite. I think 1,400% over the next 25 years. I think Wood Mackenzie believe there needs to be five new mines built by 2025. It's inescapable that it's going to be a lot of graphite required for the decarbonization of the economy, for the continued electric vehicle revolution.

Phil Hoskins (01:31):

I guess the other side of graphite is the supply side of graphite and China's dominance not just of the raw material supply, but of downstream processing for battery graphite and expandable graphite has left the USA, the EU, Japan, and Australia listing graphite on its strategic critical minerals list. Certainly as we move forward from here, the world is looking to develop ex-China supply sources and sustainable graphite sources. That's where us coming in with the pursuit of a net zero carbon mine and a high quality graphite produced in Tanzania, targeting some of those Western customers is really going to come in and fill the void.

Neesha (02:17):

The company recently received its first ESG rating, however you received a B rating. You do have a framework set out that we'll see the company move to an A rating. Then my question is in two parts. First of all, what did the company need to prove for its B rating? Then secondly, if you don't mind as well, and what's required for a graphite company to receive an A rating?

Phil Hoskins (02:40):

Yeah, might not have enough time to answer all of these, but certainly I get one thing that sets us apart, there's a lot of companies out there and investors are I guess a little bit sick of it, all claiming to have sector leading ESG credentials and to be doing the best in that space and with the substantial cornerstone investor and ESG fund coming onto our register, the ARCH Sustainable Resources Fund, they were adamant that we needed to have a transparent and independent assessment of our ESG performance. That's something we're committed to on an ongoing basis.

Phil Hoskins (03:15):

The process we did be involved, there's 42 different international standard centres with standards that impact the mining industry and we self-reported against that. ESG consultants visited site and essentially audited our performance against all of the multitude of questions and things that you need to do to have your house in order.

Phil Hoskins (03:39):

I think the scoring system went from sort of D, triple D, double D, C, double C, all the way up to A's and triple A's. On average, it was a B rating. Yeah, it's hard to say why we ended up there. As a new company with still many policies and procedures to put in place. We're updating our relocation action plan for resettlement of people. We knew that there would be plenty of things that we could do to improve and in terms of how do we get to that A rating, I think in our announcement we spoke about exactly that putting some of those policies and procedures in place. Making some of our ESG information more available to stakeholders, both in country and globally, and a handful of other things as well. We know where they are. There's a lot of quick wins for us but as I said earlier, I guess what sets us apart is we've submitted ourselves to that process. We're going to be very transparent with how we handle these things and we are in pursuit of being best practice in this place.

Neesha (04:45):

Within the next six months, what do you see in the pipeline for Evolution Energy?

Phil Hoskins (04:50):

Yeah, we're targeting final investment decision in the second half of this year and there's a lot of things that need to occur for us to reach that milestone. On the graphite market, its sales and offtake agreements for our concentrate and downstream products. Project financing is obviously the big one and with ARCH as a supportive investor on board, they'll really be there to underwrite and drive that project financing with us. On the project side, they'll be optimizations to our DFS. We believe that's going to bring about a reduction operating costs and also lowering of our carbon footprint.

Phil Hoskins (05:29):

There's all of those ESG things that we just spoke about. We need to work through that framework to be able to get that A rating and to be able to bring in other like minded investors like ARCH into the company and from a Tanzanian point of view, we want to execute a framework agreement with the Tanzanian government that gives us a certainty and fiscal stability to be able to make a significant investment in country. All those things are all happening in parallel where we're very busy. There's going to be a lot of news coming out of those things and also very highly confident we're going to achieve those. I guess the share rise and market capitalization will follow.

Neesha (06:11):

Thank you Phil for joining us and for all of your insights. Phil Hoskins, managing director of Evolution Energy Minerals. Thank you for joining us on Market Index today and we do wish you all the best moving forward.

Phil Hoskins (06:22):

No worries. Thanks for having me.

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DISCLAIMER: Market Index helps small-cap ASX listed companies connect with Australian investors through clear and concise articles on key developments. Evolution Energy Minerals Ltd 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. Consider consulting a qualified financial adviser before making an investment decision.

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Market Index Corporate

Thu 03 Mar 22, 4:41pm (AEST)

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