Alabama Graphite: The Future is Bright Green

In the middle of a wounded junior resource market those companies with superior management and realistic business strategies present the greatest opportunities. Alabama Graphite Corp. (V.ALP) may very well be one of those companies.

Alabama Graphite has a resource: an enormous graphite deposit within the mining friendly state of Alabama; a skilled management team: President and CEO Don Baxter, P.Eng. and his team have significant graphite mining and processing experience; along with a truly unique business strategy: to make a finalized battery-ready graphite product, instead of producing a primary-processed concentrate as almost every other graphite companies are pursuing. An apt analogy could be if Alabama Graphite were in the petroleum business, it would be producing 94 Octane premium gasoline, while its competitors were producing barrels of oil.

Alabama Graphite’s core strength, delivered to the organization when Mr. Baxter came on board, is its corporate technique to move directly to the production of battery-ready coated spherical purified graphite or CSPG.

Every graphite deposit is exclusive and presents its very own group of advantages and challenges. There is actually no such thing like a perfect deposit, and that is why specific experience with graphite and CSPG is so critical for graphite juniors. To be able to successfully develop any project, it is vital that management possess the knowledge and the skill-set necessary to maximize advantages and to determine an audio strategy for meeting the business’s objectives.

“By time I joined AGC, it was quite obvious in my experience that the graphite development space as a whole was facing some tough challenges. It was clear that the entirely new strategy was required C one that recognized three things. First, demand is currently being driven by growth in CSPG for lithium-ion batteries (not run-of-mine concentrate). Second, a project should have a minimal initial CAPEX that’s fundable in the present market. Lastly, a project must start small, with the ability to scale-up as demand increases.”

With this in mind, Baxter based AGC’s Preliminary Economic Assessment (PEA) positioned on secondary manufacture of CSPG. Alabama Graphite recently published its PEA, but instead of vast sums, the proposed Alabama Graphite CAPEX is around the order of $43 million, including both primary and secondary processing plants.

Baxter stated, “AGC is built on a foundation of three pillars, such as the PEA, our CSPG battery performance results and also the pilot plant results. The PEA (announced November 30, 2015) suggests that the economics from the project are sound according to diverting 100% of primary production to secondary manufacture of higher-value CSPG. Notably, the byproduct of CSPG is purified, micronized graphite (to be used in polymer, plastic and rubber composites, powder metallurgy, energy materials, materials, among other applications), which provides us with another salable product at no extra cost for producing it. The second pillar is the successful independent testing in our 99.95% Cg CSPG in lithium-ion batteries (announced January 19, 2016). Alabama Graphite manufactured 60 coin-cell batteries. These results demonstrated that we could produce our CSPG to battery manufacturers’ specifications which performs much better than costlier and environmentally damaging synthetic graphite. The 3rd and final pillar is our pilot plant (announced February 3, 2016), which demonstrates that we are able to acquire a high carbon grade, averaging 96.7% across all flake sizes. What this means is 100% from the concentrate to become produced via primary processing from the Coosa Graphite Project is expected to be ideal for secondary processing. Further, upgrading from 96.7% towards the 99.95% Cg required for CSPG should not be problematic whatsoever.”

Perhaps the important take away from the company’s accomplishments up to now is that AGC has changed from a mining story right into a technology story. Specifically, a green-energy technology story when it comes to batteries. The lithium-ion battery marketplace is growing. Demand comes from electronic devices (for example smart phones and laptops), electric vehicles (which utilize up to 200 pounds of CSPG per vehicle), and most significantly, from stationary batteries (meaning, energy storage for electrical grid, residential and commercial buildings; solar, wind and traditional power storage and peak shaving). In fact, the Panasonic Corporation forecasts exponential development in stationary batteries, with a 74% CAGR (2014-2025). All of these applications require finished CSPG, not conventional graphite concentrate. Additionally, it is important to note that, typically, there is 10 to 30 times more graphite than lithium utilized in a lithium-ion battery (CSPG can be used because the anode in a lithium-ion battery).

The mining side of the Alabama Graphite story is extremely straight forward. “We have what is called an ‘above surface’ deposit,” explained Baxter. “The graphite is heavily oxidized and is a ridge.” In other words, the particular mining could be completed with backhoes and trucks, meaning that the extraction costs from the Coosa deposit are very low.

The successful li-ion battery electrochemical testing allows Baxter to position Alabama Graphite like a solution to the technical challenge of creating batteries in the United States, using all American, environmentally sound, inputs. “There is only one graphite project within the contiguous Usa,” commented Baxter.

For the likes of Tesla Motors, sourcing the critical recycleables for its batteries is really a major problem. Graphite produced outside North America has an awful environmental record. It’s also, obviously, not “Made in America” (or sourced from America). Building “clean”, “Made-in-America” batteries to power clean, made-in-America electric vehicles requires graphite that may be traced back to a plant which uses up-to-the-minute, environmentally sound technology.

By being able to supply battery-grade, value-added graphite in an eco-friendly manner, Alabama Graphite is able to get in touch with alternative funding sources – a vital advantage in the current horrendously depressed mining market.

“Our survival depends upon adaptation,” said Baxter. “We’ve had discussions having a quantity of institutions which are interested in engaging in the availability chain for battery technology. In Europe, I’ve spoke with numerous institutional investors. They are looking at non-traditional investments. They’re already purchasing lithium. They do know the battery technology and the growing future demand.”

As well as the ecu institutions, Baxter can also be beginning to speak with various U.S.-based ‘green’ funds.

The company’s mine-to-green-energy-markets business strategy puts Alabama Graphite in the head of the pack of potential graphite miners.

Alabama Graphite was trading at $0.13 sometimes of writing with 115.7 million shares outstanding for a market cap of $15.02 million.