BlackEarth Minerals NL (ASX:BEM) is set for a very busy three months ahead as it finalises its Memorandum of Understanding (MoU) with Urbix Inc and moves ahead with its agreement with Luxcarbon GmbH - key milestones on a fast-track to development of its high-grade graphite properties in Madagascar.
The company has cash available for immediate exploration and project development needs following a successful capital raising exercise in October, raising $1.4 million via placement and $1.7 million through an SPP.
The newsflow catalysts for the next three months include:
- Finalise arrangements with Urbix (up to 180 days);
- Maniry graphite pilot plant update;
- Exploration activities at Donnelly River (nickel-copper-platinum group elements (PGE);
- Exploration results at Razafy NW high-grade area (Maniry Graphite Project);
- Downstream value add product development works (graphite – coarse flake);
- Continue Bankable Feasibility Study (BFS) activities (graphite); and
- Continue offtake arrangements/discussions (graphite).
BlackEarth signed a collaborative MoU in February 2021 with leading downstream graphite processor Urbix to initially supply its high-grade graphite concentrate to Urbix’s downstream processing facility in the US, once the facility is completed.
The company will also source other high-grade graphite concentrate to supply to Urbix.
These parties also plan to develop an operational joint venture in the future – combining Urbix’s technical excellence with BlackEarth’s substantial market, commercial and graphite operational experience.
They are proposing a joint venture plant that includes the potential development of a facility in Madagascar or Western Australia to produce a substantial supply of purified graphite for the growing battery and alternative energy (EV) markets.
BlackEarth executives have commenced the process of site selection and assessing the most efficient and cost-effective location for the proposed joint venture plant.
Urbix is one of the premier providers of refined graphite powders, pristine graphene, and specialty graphite products in the world.
The company’s advanced technology includes environmentally and cost conscious purification methods and significant intellectual property developments in a wide range of applications, including proprietary li-ion battery cells, electrolyte, graphene products, cement, and other composites and energy storage materials.
Urbix’s proprietary technology purifies graphite in an efficient and environmentally sustainable production method without the use of hydrofluoric acid or high-temperature ovens.
The company is building what will be one of the largest natural graphite purification facilities in North America, which on completion, can purify up to 24,000 metric tonnes annually.
The MoU is for a term of 180 days, which may be extended by the parties.
BlackEarth is in the process of concluding concentrate supply agreements to meet Urbix’s intital demands and the proposed JV’s initial production demands.
This includes offtake agreements for the supply of downstream products to a range of global buyers
BlackEarth has also signed an agreement with German-based Luxcarbon for the procurement, supply and marketing of concentrate and downstream products, into the fast-growing European graphite market.
The deal further positions the company as a supplier of graphite concentrate and downstream graphite products to electric vehicles (EV) and alternative energy markets.
Luxcarbon is one of Germany’s major suppliers of graphite and carbon products to top tier suppliers of Volkswagen, Mercedes, Ford and to major chemical corporations.
The supply arrangement will continue while BlackEarth fast-tracks the development of its own high-grade, large-scale graphite properties in Madagascar, which will then form a regular supply to its proposed downstream graphite operations.
This agreement also provides that BlackEarth will sell up to 25,000 tpa of downstream products from its operations and JV operations into the European market to meet the growing demand for high-quality graphite products.
Maniry Graphite Project
BlackEarth has successfully fast-tracked its flagship Maniry Graphite Project in southern Madagascar to the BFS stage in under two years for a total cost of less than $6 million, including full overheads.
Graphite from the Maniry Project has met specifications consistent with those required by Tier 1 end-users.
There is significant upside potential, with the focus of current BFS activities covering grade, optimising flake size distribution, recovery, resource size and power costs, among others.
Madagascar has over 100 years of graphite production history, being the largest supplier of graphite into China and the second-largest supplier into India. It is the top five supplier to the US.
Donnelly River Project
BlackEarth completed its first program of field exploration on the Donnelly River Project, about 240 kilometres south of Perth in Western Australia.
Encouraged by the results, it has decided to proceed to the next phase.
The Donnelly River Project adjoins the Thor and Odin Nickel-Copper-PGE prospects identified by Chalice Mining Ltd (ASX:CHN) (OTCMKTS:CGMLF) and Venture Minerals Limited (ASX:VMS) (OTCMKTS:VTMLF) at their South West joint venture.
Demand for downstream products
Demand for energy storage and use is expected to surge over the next few decades and the production of critical commodities such as graphite will have to jump to unprecedented levels just to meet demand.
According to a new World Bank Report, just to meet the increasing demand from this segment, graphite output will need to jump by nearly 500% by 2050.
The marketing and sales components of this agreement allows BlackEarth to supply its refined product to meet this growing demand from EV manufacturers, as well as related industries that require expanded and purified graphite products.
Further, the BlackEarth executive team has extensive experience with developing supply and logistical networks in Europe and other markets, and the company’s relationship with Luxcarbon is expected to assist in positioning the company as a preferred supplier in the early stages of the anticipated strong demand for downstream graphite products.
Expanding EV and battery markets
BlackEarth’s focus, with the help of Luxcarbon, will be to develop supply chain logistics and sales channels for the initial supply of downstream products for use in the rapidly expanding EV and battery market.
Europe has seen significant EV growth with sales increasing 44% in 2019 with Germany and the Netherlands contributing nearly half of overall EV-market growth in Europe.
In both countries, these strong EV sales resulted from increased demand for new models, the availability of existing models with larger battery sizes, and changed government incentives.
The strong regulatory tailwinds and high purchase incentives in several European countries could dampen the impact of the COVID-19 pandemic and further boost the EV market.
Notably, the EU’s new emissions standard - 95 grams of carbon dioxide per kilometre for passenger cars - could boost EV sales as 95% of the fleet must meet this standard in 2020 and 100% in 2021.