Graphite junior Evolution Energy raises $13m: Final investment decision on the horizon

Evolution Energy (ASX: EV1) received firm commitments to raise $13m to advance the company’s Chilalo Graphite Project in Tanzania, including the extraction of 500 tonnes of ore for product qualification initiatives with battery manufacturers. 

“We are seeking to bring the Chilalo graphite mine into production as soon as possible and to establish downstream processing facilities to produce expandable graphite and graphite foil using Chilalo’s coarse flake graphite and battery anode materials using Chilalo’s fine flake graphite," said Evolution's Managing Director, Phil Hoskins.

The raise takes place across two tranches, both at 32 cents per new share, which represents a 13% discount to its last close.

• Tranche one: $7.7m (24.28m shares), representing 15% of issue capital

• Tranche two: $5.23m (16.34m shares), representing 10% of issued capital

  • Subject to shareholder approval

  • ARCH Sustainable Resources Fund LP will be issued 10.04m new shares to maintain its 24.7% interest in Evolution

Use of funds

Progress towards final investment decision

The proceeds of the placement will be used to complete the pre-requisites for a final investment decision (FID) for Chilalo including front end engineering design work and an updated feasibility study.

A 2020 feasibility study for Chilalo demonstrated a mine life of 18 years, average graphite concentrate production of 50,000 tonnes per annum and a net present value of $323m.

It will be interesting to see how the financial metrics change given the rise in graphite prices, ongoing exploration activities and cost inflation.

Extend mine life and project economics

In parallel, Evolution has a drill program lined up for the second-half of 2022 to support a material expansion in Chilalo's mineral resource.

An electromagnetic survey back in March identified over 33km of targets that represent near-surface, high-grade and thick graphite deposits.

Evolution said a discovery would further enhance the project's economics by reducing mining costs, extending mine life and provide scope for future production expansions.

Lucrative downstream processing

Graphite from the Chilalo Project has passed several stages of testwork to qualify for use in advanced battery materials, including those used by EV manufacturers.

Evolution is currently collecting data for the long-term performance of cell batteries which use Chilalo Graphite. As well as site selection and technology considerations for lucrative downstream strategies.

Evolution Energy share price chart

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