Ceylon Graphite Corp. operates as an exploration company. It engages in the exploration and development of graphite mines. The company was founded on April 3, 1986, and is headquartered in Vancouver, Canada.
Without Sufficient Graphite Supply, the EV Boom Could Sputter This Type of Demand Could Be a Generational Opportunity for Graphite Producers Like Ceylon Graphite (TSXV:CYL) (OTC:CYLYF)
- Demand for electric vehicles will accelerate in the coming years. Graphite is the key raw material for the anode of a lithium-ion battery that powers electric vehicles, therefore the need for graphite will only increase.
- With the possibility of 125 million EVs on the road by 2030, it could be a generational opportunity for graphite producers.
- Ceylon Graphite is a Canadian company with mining operations in Sri Lanka, a country known historically as a source of the world’s highest-grade vein graphite.
- Geographically, Ceylon Graphite is perfectly positioned to service the Asian, European, and North American markets and would provide diversity to the battery minerals supply chain, which currently obtains almost all of its graphite from China.
- Ceylon Graphite produces high-grade graphite more efficiently and cost-effectively than its competitors. Its total estimated cost of production per ton is US$220.
- It has four sites under development currently, a small fraction of its total of 121 grids of 1 square kilometre each.
- The company has a Sri Lanka Industrial Mining License Category A license at its K1 site, and it anticipates obtaining an IMLA for its M1 site during the second half of 2021, with more sites achieving licensing in 2022
- The stock has strong technical indicators and has surged since bottoming last April.
- A high-quality, experienced management team runs the company.
Graphite is an essential commodity for the continued growth of all types of energy storage – a key to reducing our reliance on fossil fuels and to meeting commitments for carbon reduction… Its use is crucial for electronic products such as batteries, electrodes, and solar panels due to its high heat tolerance and electricity conductivity.
But there’s one area where graphite is especially critical- electric vehicles (EVs).
Why? Graphite is the dominant element in EV batteries.
By 2030, we could potentially see 125 million EVs on the road. What does this mean for graphite? Massive growth for those who can supply the product, and the potential for materials shortages which will drive up prices for those with product to sell…
Currently, EVs account for 200,000 tpa of graphite demand in a market of between 700-800,000tpa. However, BMI forecasts the EV figure will soar to nearly 3Mtpa in 2030 in a 4Mtpa market, and consequently, growth in demand for graphite from the battery sector would rise 30% per year on average out to 2030.
However, because of skyrocketing demand, this level could potentially be hit as early as 2025.
In other words graphite is now seen by many as the “new oil.” If one compares the total amount of graphite required per EV to the growth in EVs plus the growth in larger energy storage needs, the demand for graphite will far outstrip the current ability to produce the product.
Yes — a shortage of supply could be a critical problem. Add to this the criticism over the environmental impact of upgrading facilities that use harsh chemicals such as acid leaching in their processing and it leads to major OEMs in the EV space like Tesla, GM, Volkswagen, etc. looking for both stable long-term supply, but also graphite from producers that help them meet their ESG commitments to their consumers and investors.
Knowing where to source their raw materials, and ensuring the low environmental impact is arguably just as important as the actual tech behind their vehicles. Just look, for example, at how much graphite, and other resources, a 30GWh battery mega factory consumes.
These factories use about 33k tons of graphite, which in reality, is about 45k tons of raw graphite depending on its purity. Because China controls the vast majority of the world’s graphite supply though, America has graphite listed as one of the 17 strategic minerals for its domestic needs. With 3 factories like this in America now and more expected to be built, the need to diversify graphite imports is crucial.
Thanks to this type of supply/demand imbalance, companies heavily involved in graphite production and refinement, such as Ceylon Graphite (TSXV:CYL) (OTC:CYLYF), could be well-positioned to take advantage of this once-in-a-generation opportunity.
Especially as Ceylon Graphite claims to have the highest-grade natural graphite on the planet.
As a result of this imbalance between supply and demand, commodity prices have surged — especially battery metals. For example, in the last two months, the cost of lithium has soared 68%.
There’s a great demand unlocking a generational opportunity. Investors need to focus on raw materials just as much as on the new tech. Without enough raw materials, this entire industry could sputter. But Ceylon graphite is able to meet multiple needs for those requiring graphite. It has low-cost, high-grade graphite that is easily upgradeable to battery quality while also ensuring a stable long-term supply with low environmental impact and a commitment to strong ESG standards. This is a win-win-win for the company, investors, and Ceylon’s customers.
The company’s especially excited for what’s in the works over the next 3–6 months.
- Being able to go down and have a storage full of graphite
- Was supposed to start significantly mining days ago, but has run into weather/operational issues. Could commence anytime now. We were supposed to start a few days ago but it has been raining, so waiting for geological issues, fair to say starting anytime
- Declared commercial production on mine and is ready to go
More on the Company:
Ceylon Graphite Corp. is a Canada-based public company listed on the TSX Venture Exchange, that is in the business of mining for graphite, and developing and commercializing innovative graphene and graphite applications and products.
Ceylon Graphite currently has two mines and two active exploration sites. However the company is prepared to greatly accelerate its mine development timelines as it raises more capital.
Ceylon holds a land package through its wholly owned subsidiary Sarcon Development (Pvt) Ltd, which includes 121 grids at 1 x 1 km with exploration licenses – with historical records of past graphite mining throughout its land package.
More on its Sites:
K1 is Ceylon Graphite’s first mining project with an estimated total indicated ore resource of 52,955 tons (local estimate) and operates under the Sarcon Development legal umbrella. This site has received an Industrial Mining License Category A from the Geological Survey and Mines Bureau. This license is the highest category license in Sri Lanka and grants exclusive rights to mine, process, and trade in graphite mined within the area specified in the license.
It also allows for underground multi-borehole blasting, commercial production, use of all mining machinery and equipment, and graphite export.
The graphite veins at the K1 site appear to be of high grade and of large size. The cost of developing the K1 mine is in the range of $2 /2.5 million.
M1 is an active exploration site in Malsiripura (near Kurunegella) and is operated under Ceylon Graphite’s subsidiary JADS Enterprises. Based on drilling /survey data and visible surface veins, this site promises to be highly successful and has a locally calculated resource estimate of 76,574 tons. JADS is applying for an Industrial Mining License Category A.
H1 is a new site in Hakbewa on which Sarcon has commenced exploration with VLF surveys and drilling. The site is over 50 acres and has a substantial surface graphite dump.
Ceylon Graphite — An Efficient Producer
Outside of Ceylon Graphite’s highest-grade graphite, guess what? It is also the most efficient when it comes to production. With graphite at 90+% cg, the fact that its estimated cost of production per ton is only US$220 is mind-blowing.
Conservative company estimates show production growth to 50,000 tons per year but additional capital will both accelerate timelines and allow for faster expansion to more of their 121 grids more rapidly, greatly increasing potential output from its properties.
Sri Lankan natural graphite sells at a premium to its closest competitors from other global locations. The current selling price for natural graphite mined in Sri Lanka is US$ 2000/2200 per ton. With the cost of production per ton being in the US$ 200/220 per ton, margins are exceedingly high.
Graphite Miner Now — Tech Company Tomorrow
This evolution could be an essential value proposition for the company and the most favorable tailwind. Ceylon Graphite is currently a producer of graphite, however, it is already taking concrete steps to plans to evolve into a developer of innovative technologies using graphite and graphene. The future is heading in the direction of tech rather than exclusively producing natural graphite. Ten years from now, graphite production could be just a small segment of the company’s revenue base as it moves to high value-added graphite-based products.
Ceylon Graphite recently hired two globally acknowledged value creators to take the company to the next level as a tech innovator. Together they have over 30 patents and many more tech applications to come through their work with Ceylon.
Ceylon Graphite plans to create next-gen graphene-enhanced technology applications to become a recognized IP developer for practical applications that may be commercialized.
Some of the areas Ceylon Graphite will focus on in its evolution into a tech innovator are:
- Few-Layer Graphene
- LiB Anode Silicon Graphene Composite Nanotechnology
- Smarter Paints/Coatings/Corrosion Protection
- Energy Storage applications — Stationary/fast charge
- Graphene-based Building Materials — High Strength and CO2 reduction
- Flow Batteries
- CFRC Composite Products for the Aerospace Industry
EV batteries could be an incredibly lucrative opportunity for the company’s pivot into tech. In a battery today, graphite is primarily used in the anode.
Without graphite, you will simply not get an optimized battery.
Strong Returns and Technicals
Ceylon’s stock has seen robust returns over the last year, and year-to-date. Since the stock bottomed last April 23 at $0.06, it surged to a high of $0.51 on February 8 for a gain of 750%.
Although it has somewhat retreated from that peak, the stock is still up a healthy 350% in the last 52-week period.
Ceylon, according to Barchart, is a “STRONG BUY” based on numerous bullish technical indicators such as its 20 Day Moving Average, 20–50 Day MACD Oscillator, 20–100 Day MACD Oscillator, 20–200 Day MACD Oscillator, 50 Day Moving Average, 50–100 Day MACD Oscillator, 50–150 Day MACD Oscillator, 50 – 200 Day MACD Oscillator, 100 Day Moving Average, 150 Day Moving Average, 200 Day Moving Average, and 100–200 Day MACD Oscillator.
The bullish signals are undeniable. Ceylon Graphite is a well-positioned company set to meet global demand for graphite and innovative uses of graphite and graphene. However, as with any investment, it’s essential to assess your risk tolerance.
1. Commodities Can Be Volatile Bets
Battery metals offer enticing opportunities. But remember — commodities can be volatile beasts. Metals can be very volatile and experience violent and unpredictable moves. If you can stomach the volatility, go for it. But just be aware.
2. Penny Stock Risks
Penny stocks are volatile animals as well. Yes, they have high risk and high reward potential. They aren’t boring to trade, that’s for sure. However, if you couple a commodity miner with a penny stock investment, you have a double whammy of sink or swim potential. Be mindful of the volume too. If you catch a penny stock with low volume, and it’s on the decline, you can catch a brutal falling knife.
3. Inflation and Interest Rates
Inflation and interest rates are macro-level risks. We know this by now. We will see what Jay Powell and the Fed have to say very shortly. But rising bond yields could spook investors—especially those looking for exposure to EVs and growth stocks. While commodity prices should rise from inflation, it’s anyone’s guess as to how battery metals will react.
Strong Leadership Team
Ceylon Graphite is led by an experienced team of professionals and technical staff with a long track record in financing, investing, and fundraising.
Sasha Jacob — Founder and Strategic Advisor
Sasha Jacob is the Chairman & CEO of Jacob Capital Management Inc. a merchant bank focused on the renewable power and infrastructure sectors. Sasha brings over 20 years of experience in the power sector, as the first investment banker to focus on renewable energy in Canada and having managed over 100 transactions valued at more than $8 billion. Sasha was recognized by Institutional Investor as one of the “5 Most Influential Emerging Players in Renewable Energy” globally. Mr. Jacob has served on the Boards of several charitable organizations including as Vice Chair of World Wildlife Fund (WWF Canada), Director of Plan International Canada, Past Chair of the Board of Young Presidents’ Organization (YPO Maple Leaf) and current Chair of the Board of Nature United (The Nature Conservancy in Canada).
Dr. Siva Bohm — Chief Scientific Executive
Dr. Siva Bohm has a Ph.D. in Chemistry from the University of Bath and is currently a Royal Society Industry Fellow at Imperial College London. He was also awarded the fellow of Royal Society of Chemistry (FRSC) and is an elected Faraday Council member and Fellow of Technical Surface Coatings (FTSC — OCCA). He has 16 years of experience in innovative product development at Tata Industries.
Dr. Mallika Bohm — Technical Director
Dr. Mallika Bohm has a Ph.D. in Physics from University College, London. She has been a project leader for Tata Steel in anti-corrosion technologies and the advancement of new products for galvanized wires and motor tire bead wire processes. She has also been a Technical Director at Talga Technologies in the area of graphene used in coating, composite, construction materials, and energy.
Donald Baxter, P.Eng. — Director
Don Baxter is one of the premier graphite experts outside of China, having built one of only two producing graphite mines in North America. Don is presently Chief Executive Officer and Director of Applied Graphite Technologies. Before this, Don served as President, CEO, and Executive Director of Alabama Graphite Corp, successfully completing the company’s disruptive Preliminary Economic Assessment (PEA) and introducing a new, battery-focused strategy.
Jody Lenihan — Director
Jody is one of the founding shareholders of Ceylon Graphite, and was Co-Founder and Chief Executive Officer of South Asia Energy Management Systems (SAEMS), formerly Sri Lanka’s largest independent hydropower producer. With Sprott Asset Management as its largest shareholder, SAEMS was involved in the development, construction, and operation of run-of-river hydropower facilities in Sri Lanka and Uganda including eleven projects totaling 40MW in Sri Lanka, and two totaling 27MW projects in Uganda, recently selling its business to multiple interests.
Jody has also served as co-founder of AtlasPower Inc., where he oversaw teams performing electrical acceptance testing, startup, commissioning, and power systems design around the globe, for generation facilities as large as 2,000MW, and for electrical switchyards of up to 500kV. He is currently also President & CEO, Renewable Solutions Partners Pte Ltd., Singapore, a company involved in the development, construction, and operation of run-of-river hydropower, solar, and biomass generation facilities in Thailand, Sri Lanka, Bangladesh, Nepal, Kenya, and Ghana.
Kevin Aylward — Director
Kevin Aylward is an Indigenous senior executive with both Public and Private sector experience. Kevin is a former Provincial Cabinet Minister with the Government of Newfoundland and Labrador, Canada, having served ten years in Cabinet. Kevin served 20 years as MHA in the House of Assembly of Newfoundland and Labrador and served as Leader of Liberal Party NL in 2011. He is Co-Founder of Beothuk Energy Offshore Wind group and Co Signatory to Beothuk Joint Venture with Copenhagen Infrastructure Partners.
Brett James — Director
Brett James is currently the Vice President of Sussex Strategy Group (“Sussex”). Before joining Sussex, Brett operated his own consulting practice servicing clients in government and the health care, finance, and energy sectors. He also spent two years as a Senior Associate at APCO Canada, part of one of the world’s largest public affairs agencies. Before entering the private sector, Brett worked for Ontario’s Minister of Health, Jim Wilson, serving as a senior advisor and Communications Assistant to the Minister.
Brett brings board governance, public relations and strategic communications and risk-management expertise to Ceylon’s Board.
Abbey Abdiye — CFO
Abbey Abdiye has extensive experience in the financial sector, in both public and private companies. He is a Chartered Professional Accountant (CPA) and current chief financial officer of reporting issuers, where he is responsible for all financial, fiscal management, regulatory compliance matters, and reporting aspects of company operations.
He also provides strategic guidance and direction in capital structuring and is engaged in innovative financing programs that leverage sales and development.
Key Takeaway for Investors
Given the growing EV space and the rising demand for affordable high-grade graphite, Ceylon Graphite is in a superb position to take advantage. The world faces a critical graphite shortage that could harm our efforts to become more climate-conscious and sustainable. That’s why Ceylon, with its quality of graphite, is facing a surging market with a premium value proposition.
It offers the cheapest and most efficient natural graphite facilities globally and produces the highest-quality natural graphite of Cg 90% + globally. Because Sri Lanka isn’t China, it could also have a significant opening as a leading graphite supplier for America, on top of being geographically well-positioned for lucrative Asian markets.
As it evolves into a tech company and continues to innovate, the upside is undeniable.