Kibaran Resources Limited (ASX: KNL) is a battery graphite producer headquartered in Australia that intends to build a sustainable, eco-friendly global graphite business. The company is engaged in the production of spherical graphite (SpG) in Western Australia (WA) using a new environment friendly process to sell the product directly to lithium-ion battery producers.
Kibaran has developed a vertically integrated graphite business, which involves an upstream business, TanzGraphite and downstream graphite business, EcoGraf project, to produce battery graphite for the lithium-ion market. EcoGraf proposes the establishment of a graphite processing plant in WA’s Kwinana, to produce spherical graphite for direct export to battery anode manufacturers across the world.
Kibaran Progresses with Pre-development Activities for Proposed Kwinana Production Facility
The company has recently released an update on the EcoGraf confirmation testwork being continued as a part of pre-development activities for the proposed Kwinana battery graphite production facility.
The company notified that the testwork results have validated the environment friendly nature, provided no harmful emissions were logged for solid, gaseous or aqueous residues.
Kibaran’s engineering partner GR Engineering Services Limited is managing the independent testwork on the EcoGraf purification process flowsheet.
Source: Company’s Report (5th November 2019)
The testwork results have also provided the engineering partner with the information needed to conclude the thorough design of the process flowsheet comprising equipment specific design data and waste streams.
The company aims to obtain independent verification of the process flowsheet with the testwork and produce suitable samples for third party vendor testwork. The company expects to complete testwork in late November and make a Final Investment Decision for Kwinana in the first half of 2020, as scheduled.
Besides EcoGraf testwork, other pre-development activities for the proposed Kwinana manufacturing facility that are currently underway include:
- Technical documentation for government approvals, permitting and lease arrangements.
- Equipment testing campaign by suppliers which is likely to be finalised during the December quarter.
- Final feedstock benchmarking to finalise binding purchase agreements and ascertain the preferred feedstocks.
Economics of Kwinana Manufacturing Facility
Kibaran has planned to build the Kwinana battery graphite production facility based upon engineering and feasibility studies completed by GR Engineering.
The company’s proposed production facility has a forecast up-front capital cost of USD 22.8 million for an initial 5,000tpa, followed by an additional USD 49.2 million to expand production to 20,000tpa of battery graphite. The pre-tax net present value of the proposed plant is USD 141 million, generating an internal rate of return of 36.6 per cent and EBITDA of USD 35 million.
Source: Company’s Presentation (16th September 2019)
The company has planned the commencement of commercial production of an initial 5,000tpa in 11 months after the Final Investment Decision, and expand to 20,000tpa to meet the projected growth in demand.
Anticipated Benefits of Production Facility
The development of Kwinana production facility is expected to contribute significantly in WA on both strategic and an economic front. The project is likely to employ over 125 direct employees and more than 250 construction workers during production.
Kwinana production facility is expected to support WA’s industrialisation plans in the following ways:
- Supporting WA as a location for specialized lithium-ion battery manufacturing.
- Potential production of battery anode material, which is consistent with WA’s Future Battery Industry Strategy and is the precursor for battery anode production.
All battery graphite is currently produced in China using hydrofluoric (HF) acid to attain 99.95%C with Shandong and Hubei the largest producing areas and increasingly dependent on environmental regulation.
There is a robust demand from automobile and lithium-ion battery manufacturers in Europe, Japan, South Korea and other countries that are looking to diversify battery mineral supply chains towards an alternate eco-friendly supply of battery graphite, in order to reduce their reliance on Chinese supply and to diminish environmental impacts.
The company has spent over 3 years and millions of dollars in developing a new environment friendly chemical process that offers a cost competitive alternative to present Chinese supplies.
EcoGraf’s non- hydrofluoric method is both eco-friendly and cost competitive relative to Chinese supply.
The Kwinana production facility is likely to import natural flake graphite from existing producers and transform it into battery (spherical) graphite using EcoGraf process. The transformed product (battery graphite), which is used to manufacture anodes for lithium-ion batteries, is planned to be exported to lithium-ion battery customers in Asia, Europe and the United States.
KNL is currently trading at $0.098 on 8 November 2019 (1:17 PM AEST).
With the positive development, KNL closed the day’s session at $0.094 on 5th November 2019, with a significant rise of 14.6 per cent relative to the last closed price. A day before, the stock climbed 17 per cent following the release of its September 2019 quarter report, closing at $0.082.
Since 4 November, the stock has rallied to $0.105, up by 50%.
KNL Stock Performance (Source: Thomson Reuters)
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