Peninsula Mines Ltd’s (ASX:PSM) is diligently progressing a strategy to become a graphite producer in South Korea by the end of 2020, working to add to its resources and demonstrate concentrate from its fine flake can be converted into high-purity spherical graphite for lithium-ion batteries.
The company already proved it can produce flotation concentrate grading more than 95% total graphitic carbon (TGC) from its fine flake, meeting the required standard for batteries.
Peninsula is now moving to the next stages of its development plan, undertaking drilling to firm up resources while also proving its spherical graphite will meet battery specifications.
Yesterday the company unveiled an exploration target for graphite drilling at its three wholly-owned projects in South Korea.
These include its flagship Gapyeong project northeast of Seoul, its most advanced project, the Eunha North Graphite Project where drilling is already underway, and its secondary project, the Yongwon Graphite Project.
The significant and high-grade graphite target is 13 to 17 million tonnes grading 8-11% TGC and containing 1.1 to 1.7 million tonnes of graphite for the three wholly-owned flake-graphite projects, with most of the tonnes being from Gapyeong.
Peninsula managing director Jon Dugdale told Proactive Investors Australia today: “It’s a dual process very much focused on proving up the resources that you need, as well as proving downstream metallurgical processing capacity of resources to supply the product that the lithium-ion battery industry in Korea needs and doing it right on their doorstep.”
Most of the targeted tonnes come from Gapyeong where the collective exploration target for Gapyeong South, Middle and North is 10.5-13.75 million tonnes grading 7-12% TGC for 960,000 tonnes to 1.44 million tonnes.
West Perth-based Peninsula is concurrently working with a German partner to prove concentrate from its fine flake can produce spherical graphite of more than 99.95% TGC, the final input to lithium-ion batteries.
Geologist MD Dugdale said: “The process we’re going through now is to do that metallurgy in Germany, using the latest technology, using sphericalisation machines and purification, potentially involving the CSIRO.”
The Australian Government science arm CSIRO may get involved in the German testing as the company is hoping to use an alternative purification to the “environmental nasty” hydrofluoric (HF) acid which is used in China in spherical graphite production.
Dugdale said: “We’re working with the CSIRO at the moment to produce non-hydrofluoric acid purification and we want to be able to drill the resources at the same time as we’re getting this next step — the spherical graphite work.”
Highlights from Gapyeong.
A staged approach
The company’s goal for the first stage of processing work is to generate more than 5 kilograms of high-purity concentrate of more than 97% TGC at Eunha and other projects such as Gapyeong, to use in the spherical graphite testing.
It will then purify the spherical graphite in tandem with its partners — targeting more than 99.95% TGC purity — then test the purified product in batteries.
Peninsula’s MD said: “That will get us to the second stage of our three-year plan to get into production, which will be the resource drilling, and then we can move through the graphite testing through to feasibility.”
That first stage, outlined for Year 1 — this year — also including establishing and developing offtake and development partnerships.
Year 2 involves the resource drilling it outlined yesterday, a feasibility study, then funding efforts.
The company has set production targets for that feasibility study based on feedback from offtake companies in Korea.
Dugdale said the company hoped to be able to “develop mine production up to say 60,000 tonnes per annum of flake graphite concentrate from which we can recover 36,000 tonnes per annum of spherical graphite, which is the demand that the offtakers have indicated they’ll take.”
Peninsula is also looking to fund and potentially list KGCL to develop graphite production capacity and partner with end-users for downstream processing.
Year 3 involves developing production that delivers 26-60 kilotonnes a year capacity at more than 95% TGC concentrate.
A processing facility to produce 12-36 kilotonnes a year of spherical graphite for use in Korean lithium-ion batteries would be a next step.
The company also plans to supply Korean end users with high-value spherical graphite and large-flake concentrate from several sources, including from offshore.
Peninsula targeting the first three parts of the supply chain.
A required demand
Fine-flake graphite pulls in about US$800 a tonne while spherical graphite price has been on an uptrend due to supplies being retained in China.
This means about a $1000 a tonne premium has been added in the past 12 months to what is now about a US$3000-4000 price.
Peninsula has already secured a site for a production facility in Korea located next to a steel plant that can take the inputs the company does not use in spherical graphite.
While the company will not be the world’s biggest graphite products producer, it will hold the competitive advantage of being in the country whose battery-makers are the biggest producers of lithium-ion batteries in the world.
Battery-makers will be able to bring their trucking miles down, at a time when more and more suppliers are likely to be on the hunt for alternative supply sources to China.