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Investor Scene: Ceylon Graphite (TSX-V:CYL) (OTC:CYLYF) Interview with NEW CEO

Hey, everyone. Welcome back to Investors Scene. I’m Jeremy Szafron. Now, a very exciting show today. Because, obviously, we continue to see the sustainable revolution when it comes to EVs. Hundreds of millions of electric vehicles are expected to be on the roads in the coming years. And of course, that means that we’re going to need the materials to get into batteries.

The company on the show today is a company called Ceylon Graphite. It’s a very unique story. And here to tell us about it is the new CEO, somebody that’s just taking over the reins here, exciting trajectory for this one. Don Baxter joining us now. Don, thanks for being on.

– Thanks, great to be here. I appreciate that very much.

– Now, let’s talk a little bit about your role in this. It’s a new one. Although you aren’t new with the company. You’ve been there for quite some time. You’ve stepped up into the role of CEO. As, obviously, a mining engineer, you have the expertise to really take this company to the next level and optimize what we have. Before we get into all of that, let’s talk a little bit about what Ceylon is. It’s a company that has vein graphite, very high quality, inside of Sri Lanka. If you could talk to our audience a little bit about the company.

– Yeah, it is interesting. As I say, I jumped from the– as being an independent director to the CEO role. I just said, I’m a mining engineer. And I’ve been in the graphite space for quite some time. And so it was a perfect fit for me to step up and start capitalizing on Ceylon’s interesting situation in Sri Lanka with vein graphite, high grade, in the ground. It gives us a lot of advantages in order to take it from– my view, has always been from mine to battery.

So with the high-quality material we have in Sri Lanka, it gives us a head start to put it into our secondary processing to make the material that everybody wants and needs. As you said, with this EV revolution coming on stream, everybody needing batteries comes down to the critical supply of the materials to go into the battery. So a lot of people have overlooked that, OEMs especially. They’re starting to wake up to the fact that now we need to go upstream on the supply chain and look at these critical materials for a battery.

– It’s an interesting time. We’ve seen a huge amount of investment from a government perspective in terms of green infrastructure. Knowing that we’re positioning ourselves into this. It’s important– you think about vein graphite. It doesn’t sound like the sexiest thing. But what you actually have in Sri Lanka means that the end result here will be not only pure but a lower cost. So let’s break it down a little bit about the opportunity here.

– Yeah, very quickly, so vein graphite in the ground is 90-plus carbon. Graphite is pure carbon. So you’re trying to get it as high carbon as possible. So in comparison to flake mines– and we need many, many flake mines as well. They’re usually anywhere from 3% to 20%. So you have to have an entire processing step in order to get it to 95 carbon, which could be $100 million just to process.

We don’t have to do that. Because it’s already above 90. In our case, we’re at 97 carbon in one of our mining phases right now. So we can take it straight into our process to make batteries. We don’t have to go through the primary processing. We don’t have the environmental implications there as well. There’s no tailings involved, the waste rock, to deal with, or processing reagents, or whatnot. So it gives us that leg up. And each mine we put into play is about $2 million.

So our plan is to have multiple small mines, all underground. So there’s no open-pit mining that you have to deal with as a legacy issue later on in closure. We have a very low impact. And in today’s move to electric vehicles and green energy, the ESG footprint is the most important part of a lot of these OEMs in making a decision on where you get their graphite from.

– Right. It’s fascinating to me when you think about how almost– not easy, but how much this makes sense, how much we actually have to go into a place like this, like in Sri Lanka, where you and your team have great connections with the government and a great working relationship, to get this type of product. As Joe Biden was talking about at Ford– I think you were talking about this before. But as he was sitting at the Ford plant talking about electric vehicles, he said, “you know what’s in the ground doesn’t really mean anything, it’s the actual finished material.” So is that the game plan here for Ceylon?

– Absolutely. My view has always been, mine to battery. The world doesn’t need more unprocessed graphite. It needs processed graphite for batteries. So all the input materials into a lithium-ion battery are engineered. Graphite is no different. We have to purify it, [INAUDIBLE]. And in our case, we’ll be adding silicon, which is, I think, the anode of the future.

So we will take it from our own mines and take it through our own processing facilities in order to supply directly to the cell manufacturers, who are basically supplying to the OEMs. So we’re seeing the governments are taking more of a view to this, that they need to step up. The OEMs as well are looking to come up the supply chain as well in order to secure supply for their own cell manufacturers via the LG KEMs, or the SKIs, or whomever. They need to have– you can build a factory to make batteries. But if you don’t have the materials to go into them, it’s going to sit idle. So that’s a key thing we have to catch up on.

– Yeah. It’s an exciting time for the company. As I just mentioned previous to this, it’s been building almost to this point. So you’ve taken over the keys here. We’re going forward. We’re expecting to see more things. I know we can’t give everything away. But if we had a little bit of a crystal ball, what can we look like– what does it look like for the company over the next, say, three months?

DON BAXTER: Well, we’re looking to– I’m looking to fast track– again, with my background is mining, I’m eager to get into Sri Lanka. And I want to beef up some of the mine plans we have in place and look at, basically, getting things moving, say, a little faster, a little more developing, maybe. Instead of mining one mine then next, we have a second mine almost ready to go.

Let’s look at three, and four, and five, and some other partnerships, maybe, on the island that we can look at to help position ourselves further. And again, we’re having some more talks with OEMs. We’re making our own– getting ready to put our technical tactical data sheets out on batteries made with our graphite, the anode, with some of our enhancements we’ve done.

So I think we’ll see some of that in the future. And that’s going to just– each item or each event will just trigger the next one. And again, once we put out our technical data sheets, that’s going to further entice the OEMs we’re talking with. And whether we can talk publicly about some of that stuff, we’ll wait and see. But I think the wave of demand that’s coming for what we’re going to be doing is massive. And I think it’s happening faster than anybody has ever anticipated.

– Yeah, yeah. And I know that you have quite a bit of extensive industry experience. And I know that you’re having conversations that are likely to put a smile on your face. So exciting. Don Baxter, the CEO Ceylon Graphite, joining us. Exciting time. Great entry point. And as future news goes out, really am looking forward to having you on the show to disseminate that.

– I’m looking forward to it as well. It’s exciting times, for sure.

JEREMY SZAFRON: Great. Thanks, Don.

DON BAXTER: Thank you.

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