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Ceylon Graphite looking to build production and sales as it mines the highest grade graphite in the world

Snapshot

The company holds a total land package of 121 square kilometres in Sri Lanka, which contains historic vein graphite deposits

Ceylon Graphite Corp -

Quick facts: Ceylon Graphite Corp

Price: 0.26 CAD

TSX-V:CYL
Market: TSX-V
Market Cap: $31.8 m
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  • Developing graphite mines in Sri Lanka
  • Targeting areas of historical production dating back to the 1920s and 1930s.
  • Experienced management

What Ceylon Graphite Corp does:

Ceylon Graphite Corp (CVE:CYL), established in 2017, is developing graphite mines in Sri Lanka (and is now in production) to feed the battery metals industry.

The company holds a total land package of 121 square kilometres (sq km), which contains historic vein graphite deposits - as opposed to flake type graphite deposits.

These unique and comparatively higher margin vein (lump) deposits currently make up less than 1% of world graphite production and Ceylon's package represents the majority of known historic graphite resources in Sri Lanka.

Serious mining and exportation of graphite in Sri Lanka, formerly known as Ceylon - largely for use as lead in pencils - began in about 1824, but the unusual deposits of the country have been used locally since the middle of the 1600s.

Sri Lanka is the only country to export commercial quantities of vein graphite and so it recognizes the mineral’s value in creating significant foreign investment, yet few areas are fully of the purity of Sri Lanka vein graphite. It is extremely high grade at over 90% carbon.

K1 is Ceylon Graphite’s first exploration and flagship project in Karasnagla (K1) where commercial production of graphite started in December 2019.  The group also has the M1 development site; the H1 site (over 50 acres) in Hakbewa. It has the P1 development site in the Pasyala district as well.

The company describes graphite as the 'new oil' as the world moves away from hydrocarbons and needs alternative energy storage systems, namely batteries, which are made from graphite. Around 60% of a lithium battery (the anode) is made from graphite.

The firm has noted that the anode market has grown to over 160,000 tons in 2018 compared to 85,000 tons in 2015.

How is it doing:

On December 1, Ceylon Graphite reported material news, in that it has resumed production at its K1 site after local coronavirus (COVID-19) restrictions were eased.

The company's K1 and M1 sites in Sri Lanka have now returned to full operations, it said, adding that active discussions with international vendors for equipment to enhance capabilities underground were in train and that the group was close to restarting drilling at its third site, known as H1.

The group also said it was talking to graphite processors and end-users around the world in a bid to strike further sales deals.

In February this year, the group confirmed the high quality of the vein graphite extracted from its K1 mine, at 99.9997% purity using a thermal purification process (lithium-ion batteries require a minimum purity of 99.95%).

And then in June, Ceylon Graphite revealed it had sold one ton of vein graphite with a carbon content of 95% to 97% to Singapore’s 2D Materials Pte Ltd, which aims to use the graphite in its graphene production. It was the first sale made from the K1 mine.

The same month, the company entered the South Korean market after selling 300 kilogrammes of its vein graphite to Elves Graphite Co, Ltd of Seoul.

On the financing front, in August, the miner announced plans to raise C$8.1 million (US$6 million) through a private placing of units with a consortium of four international investors to advance its mining assets. As well as accelerating production at K1 and completing development work at the M1 site, Ceylon said it would be using the funds to commission new mining sites to ramp up production.

Upon closing, the investment consortium will collectively own around 55% of Ceylon Graphite, though individually no one subscriber will hold more than 15%, it revealed.

Inflection points:

  • Uptick in output from K1 mine
  • More graphite sales deals
  • Start of drilling at H1 site

What the boss says:

In late October, when Ceylon Graphite closed the first tranche of its up to C$4.5 million private placing, bringing in about C$2.6 million, chief executive Bharat Parashar said: "The challenge for small-cap mining companies is the initial capital to see it through discovery to production.

"We are producing and have booked our first sales, making Ceylon Graphite a unique story in the graphite mining and energy storage space globally. Most junior companies raise money on the hopes of reaching production someday. We are already there, and this new investment simply increases our market advantage."

Contact the author at giles@proactiveinvestors.com

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Ceylon Graphite readying for first production in early 2020

Proactive Research analyst Christopher Ecclestone updates on the development of Ceylon Graphite Corp's (CVE:CYL) mines in Sri Lanka. Ecclestone says they've received environmental approvals for its K1 mine and has recently gained an industrial mining licence with first production likely in...

on 8/10/19

4 min read