Hey, everyone. Welcome back to Investors Scene. I’m Jeremy Szafron. Now, we have a fascinating story today, because we’re introducing you to a company that is really, really helping out with this whole supply and demand issue when it comes to battery metals. And that company is called Ceylon Graphite Corporation. The CEO of that company is joining us now, Bharat Parachav. Thanks for being on the show.
Now, Ceylon trades on the TSX under CYL. That is, of course, the ticker. It’s a really interesting story here, because you have a mining company that’s based in Sri Lanka, where we know that there’s a huge amount of supply here, and a huge demand for what is in the ground there. Your company obviously focused here on high grade graphite, vein graphite. So let’s talk a little bit about Ceylon, Bharat.
– Yeah. We are a company that was started 2017 when we did a RPO of an existing shell in the Toronto Stock Exchange Venture Board. But basically, we are a company who saw the potential for graphite a couple of years ago and started developing graphite mines in Sri Lanka. The difference we bring to the table is, starting off from the top, is we have– instead of having one large megamine, like most of the other people do, we will have multiple smaller mines. And the reason for that is the whole infrastructure, the way it is set up in Sri Lanka, the Sri Lankan government basically gives you– the country is split into one-square-kilometer grids, and you can go and get these grids that you can get. The government gives you concessions on the grids and then you go and explore them. If you find graphite, you can set up a mine.
So what we did, basically, is we went there, and I don’t know whether your viewers will know this, but Sri Lanka was the largest producer of graphite in the world before the Second World War. And funnily enough, the GSMB, who’s the local regulator, the Geological Society of Mines Bureau of the government, has immaculate records of where previous mining was done.
So our whole hypothesis when we went into this was simply, if we find locations where previous mining was done, there’s a pretty good chance that we go and we should be able to find the graphite. And everyone says, why? And we said, simply because in the old days, graphite was [INAUDIBLE] overburdened. Everybody dug, the graphite came up to the surface, you follow the mine– the veins, sorry– all the way to the rock. When you hit the rock, in the old days, they couldn’t really go to the rock for economic reasons and technological reasons. [INAUDIBLE]
In today’s world, it’s a slightly different event, in the overburdened [INAUDIBLE] where they’re not as pure. So when you hit the rock, you get pure graphite. So our basic theory is we’ve got these 121 grids all around Sri Lanka. 95% of which had previous production. So we are pretty sure that we have lots of graphite in the ground. All Sri Lankan mining is underground. So these mines, too, underground, 2,000-plus feet underground, and are still going strong. We are on the same geological plate as these mines. So we have a pretty reasonable conviction that there’s graphite out there, and there’s lots of it.
And we’ve started off with our first two mines– K1, which, as you know, in commercial production work, and the M1, which we’ve applied, almost applied, for a mining license, a full mining license, and the various levels of these. But we want the creme de la creme, the [INAUDIBLE] license here. And we’re almost there. And take a few months more, and then we’ll go into the second half.
– Yeah. Let’s talk about those results, because I know that some pretty, pretty interesting things here were found. So let’s talk about what you’re seeing in Sri Lanka here.
– Sri Lanka– so graphite, as you know, it’s all about purity of the graphite. It’s the carbon content in the graphite. Because graphite, while usable at less than optimal, is used for various things in today’s world. But the key usage for graphite today is the energy storage business. And the energy storage business– and so most of your listeners will understand– battery, battery, battery. It is a battery of some sort. And this, to be able to optimize, and get into the battery well, you need pure graphite, 99.99% carbon. So graphite is an electron of carbon. It’s six molecules in a hexagonal shape. So the purer the graphite, the better conductivity of energy, or electricity, or heat, or whatever you call it. And the better ability to give you power.
– You know, I want to talk to you a little bit about this, because one of the IP’s here that I’m thinking is a bit of a differentiator for this particular company is the fact that you’re able to supply this very high grade graphite to a market that just doesn’t have enough supply. And you’re able to actually undercut it a little bit by keeping your costs a lot lower than most of the comparables. So let’s just talk a little bit about what the future holds here. Where do you think Ceylon will be this year?
– That’s a million-dollar question. But let me step back a bit, give you a little more basic information. So the majority of the graphite in the world is what they call flake graphite. So flake graphite is a boulder with flakes on it, like gold, typically. It’s found in today’s market. So you’re going to churn the stone and take off, then separate the stone from the flakes, then float it through a flotation process, then you concentrate it, then you purify it, and then you move it up.
Our graphite is a little different. Our graphite is like, it’s called vein graphite. It’s like the veins in your arm. It’s just solid graphite vein, which originally came up from the center of the Earth liquid, and after millions of years, solidified. And we don’t– we are underground miners, so we don’t cut all the rocks. Yes, we do cut the rock to get into the graphite, to get to the graphite, but we basically can mine bricks of graphite. We don’t mine flakes and then put them together. So that, number one. So we already– and our graphite in situ, which is in the ground, is around 90%-plus carbon, and by to the rest of the world’s graphite, which in the ground, is 10% to 30%. So yes, by the time they’re all brought out, and purified, and upgraded to 99.999%, they’re all the same. But the cost of taking something from 90% to 99%, or 30% with stones on it to 99%, is dramatically different.
So you ask the question. Yes, our cost of production is about $200 to $220 a ton. Yes, when we go lower down into the Earth it would become more expensive. But at the current level of our K1 mine, that’s what we think, the costs are based on our calculations in a year’s time.
So when are we going to be in a year’s time? In a year’s time, God willing, we will have K1 producing graphite, and M1, which is our second mine, also producing graphite. The objective is initially– I think I’ve said this to everybody that– we are initially– objective and a goal, mission statement, whatever we want to call it the sexy language– is to be a producer of premium quality natural graphite.
But that goal will change. As we move forward, we want to become a technology company. And you might say, what the hell are you saying? I said, no. We are going to focus on using graphite in high-tech products. So that’s the kind of stuff that we’re going to get into. One of our patents with the anti-microbial– again, using the previous patent, which was SLG and few-layer graphene– we decided to come up with this anti-microbial product, which is an additive, and it’s like a coating. So you use it in paints, which are all to line ships and aeroplanes. And the uses are huge. So we’re going to take the graphite from natural graphite into [INAUDIBLE].
– Oh, fascinating, fascinating.
– That’s going to be hopefully the plan over the next four or five years.
– That’s great. Well, I mean, I appreciate it. As that all happens, we look forward to welcome you back on the show, so that we can talk about what that means for the shareholders and to the business. Bharat Parashar, the CEO of Ceylon Graphite. Thanks for joining us today.
– You’re most welcome.