Flinders Resources Limited (TSXV:FDR) is a graphite producer focused on becoming Europe’s primary domestic supplier of high-quality graphite products. The company’s main asset, the Woxna Graphite Mine and processing facility, is located in central Sweden. Woxna is the only publically listed modern full-scale, fully permitted operational graphite production facility.
Flinders is currently focused on developing value added products for the graphene and battery markets. The company is working with 2D Fab AB, a Swedish graphene company, to produce graphene from Woxna graphite on an industrial scale. 2D Fab’s proprietary low environmental footprint manufacturing technology uses a low energy, hydro-mechanical exfoliation process to produce high conductivity graphene.
Flinders has also partnered with a Chinese technology firm to produce high purity battery grade graphite. The flow sheet is now being finalized and will use processing technology based on the world’s only commercially proven purification methods.
The company recently announced it’s in discussions with Tasman Metals (TSXV:TSM) regarding a potential merger to form a new company, Kinetic Materials Corporation. Tasman holds the Norra Karr REE deposit in Sweden. A 2015 preliminary feasibility study on Norra Karr confirmed the project has the capacity to be a long-term producer of heavy REEs and other critical metals. Recent testwork shows Norra Karr has the potential to supply materials to Europe’s paint, building product, ceramic and glass markets.
The Investing News Network recently spoke with Flinders CEO & President Blair Way to discuss the company’s repositioning into new markets.
Investing News Network: Can you tell us what this latest news about the merger with TSM means for FDR investors?
Our experience in critical materials in Europe has given us a clear focus on where to direct the business and it really made sense to combine our assets and skills sets with Tasman. The combined company will own one of the world’s most significant REE projects, and a fully permitted graphite mine. Additionally, it brings together a team with a unique range of skills and contacts in Europe. Both companies have great networks in Europe and this is critical in regards to these specialty materials. Most traditional miners expect the customers to come to them. We are building a business where we will be in a stronger position to work with the customers throughout the supply chain.
INN: Based on recent news of the last 6 months ,Flinders is now working to position itself as a supplier of graphene and high-purity, battery-grade graphite. How does this integrate with your current graphite operations at Woxna?
Blair Way: That’s a good question. Some people have asked, you’re already a graphite producer supplying refractory markets so why would you change focus? Both these endeavors are part of our value adding strategy. We’ve identified that the refractory grade materials currently do not have a great deal of profitability due to the downturn in the resource sectors and the steel sector more specifically.
We’ve used this time to explore how we can upgrade to value added products and also better protect our sales from the ups and downs we see in the steel sector, which is a direct driver of the refractory market for traditional graphite. So we’ve been taking this downturn time to explore graphene and high purity, battery grade graphite. It’s a natural step from producing floatation grade material which is in the mid 90s in terms of grade and then taking it up to the high purity grade for batteries which is the 99.9 plus range. As the press releases have indicated, we’ve been quite successful in achieving that. Now we’re just continuing down that path of securing various customers for that value added graphite.
INN: You recently announced that you’re working to finalize a flow sheet for the production of high purity, battery grade graphite at the Woxna facility. Can you tell us more about the purification technology you will be using?
BW: Sure. The processing technology we’re using is based on the world’s only commercially proven purification methods and that comes from China. In fact, China is currently the only source for natural flake graphite processed to a quality suitable for battery manufacturers. Now, synthetic graphite is used in other regions but the majority of synthetic graphite is also produced in China.
When we decided to pursue a high purity flow sheet we researched various engineering firms for both capabilities and experience. While there are many engineering firms with the necessary technical capabilities, we decided to pursue those with experience and those engineering firms are in China. We have partnered with a Chinese engineering firm that has been involved with the construction, commissioning and operation of a high purity process plant. So, yes, the purification technology that we’re using has been proven commercially and we are confident in that.
It’s certainly also important to make sure that the purification technology we’re using is environmentally compliant and would be a good fit with our operations here in Sweden. That was quite easy to achieve and our engineers in China were receptive to understanding the criticality of our waste streams. All that has been incorporated into the preliminary design of our purification flow sheet.
INN: It seems in this space a lot of claims are made in regards to high purity spherical graphite. What sort of questions should investors be asking of companies to test those claims?
BW: The answer to my previous question is sort of leading to that, and certainly the first question you want to ask is who is actually designing and developing the high purity flow sheet. Do they have experience with the purification of graphite? More specifically, have they ever been involved with the production of high purity graphite for the battery market?
The flow sheet isn’t ever definitively proven in the bench scale test work. There’s still a high risk that a lot more work will be required to take the process to the commercial level. From there it would still have to be determined if it can actually be executed in terms of capital and operating costs.
INN: You recently had a nice rise in share price following the latest news. Why do you think investors are supporting FDR again?
BW: While it’s never completely clear why investors jump on the ship one day and maybe jump off the next, I’d like to think it’s because people recognize that we’ve managed to solve some of the issues related to producing into a refractory market which has been in decline for some time.
We’re exploring avenues to define a more resilient business model that will survive the ups and downs that we’ve seen in this part of the sector. We’re also targeting value adding in graphene which has a lot of blue sky value. We’re now working with a very well regarded graphene research and development program funded under the Svenskt Grafen, a Swedish government initiative for the production of graphene from Swedish sourced graphite.
We’ve been working hard to define a more robust business model that includes value added products, specifically high purity graphite for batteries and graphene. I think the investment community these days is looking for more in a company than just digging resources out of the ground, putting it in a truck and sending it to someone else.
INN: Could you tell us more about your graphene project and your latest results?
BW: Well, we’ve partnered with a company here in Sweden called 2D Fab AB. There’s a lot of firms out there performing graphene R&D, but 2D Fab is funded by a larger program called SIO Grafen in Sweden which is also tied in with Chalmers Technical University.
They’ve developed an environmentally friendly technology that can be scaled up and turned it into a commercial business. We’re proud to be working with a Swedish company that’s focused on commercializing graphene from Woxna’s Swedish flake graphite.
Ultimately, the goal of this program is to commercialize graphene made from our concentrate product. 2D Fab is currently exploring potential commercial applications through research and testing. So that is one of those blue sky value adding processes that’s important to us in order to expand our business model.
INN: Are there opportunities on the horizon for graphite and graphene that investors should keep an eye on?
BW: I think as far as the market for value added graphite products, we’re probably still a number of years away before there could be genuine commercial benefits for a company like ours as far as selling our graphene products. However, with the projects 2D Fab is working on, it could happen sooner. Investors need to be realistic about the timeline for getting to the point where graphene does have a positive impact on the bottom line. But there’s such a broad range of applications for graphene that it’s certainly something to be watching for and there’s lots of news on it.
I think it will start out as more simple applications such as coatings and additives to other chemical processes and then over a number of years it may evolve into some of the more high-tech applications like rollable display cellphones.
For the battery-grade graphite market, there’s of course the construction of battery cell factories—Tesla’s Gigaplant, for example— and these companies are busy sourcing raw material needs for those plants. Also in Europe there is a great deal of talk about similar facilities being built here.
It’s certainly gratifying for us to be in the position to have a high purity flow sheet that could potentially feed one of these battery manufacturing plants with Woxna graphite and in a much shorter timeframe than might be possible in the graphene space.
INN: Have you been able to identify costumers for your proposed value added product lines?
BW: We have been able to speak to many parties in Europe and fairly recently we’ve been on a bit of a marketing tour in order to talk with not only potential buyers of our raw material, but also with battery end-users. These customers dictate the supply source, meaning the battery manufacturers will be required to source material to match certain criteria in regards to sustainability. And Woxna is a great example of a sustainable, low environmental footprint operation.
So for our discussions it’s certainly been very positive, and although there’s still lots of work to do in order to pin down the customers, there are indicators that EU-sourced high purity graphite is desirable for battery manufacturers in the EU.
INN: You have a unique insight into the supply chain there. How is the projected growth of the electric vehicles market going to impact the graphite market from your perspective?
BW: Certainly the projected growth for electric vehicles will lead to a greater demand for raw materials, including graphite in addition to lithium, cobalt and even copper. Our expectation is that there is a high probability of growth in the short to medium term for all of these value added raw materials.
INN: Would you be able to give us a brief summation of the battery manufacturing process in regards to the cell manufacturing versus battery pack assembly?
BW: Yeah, this is a question that people ask a lot and it’s probably not that well understood at present. The raw materials are used to build a cell and then a number of cells are used to make a battery pack to suit the end user’s specific requirement, be it in a car, stationary storage or a cell phone.
It’s a distinction that is important for people to understand. Battery packs can be assembled anywhere, but right now the cells are for the most part exclusively manufactured in Asia, either in Japan, China or Korea. That’s primarily were all of these lithium-ion batteries are coming from. Now Tesla is talking about opening their gigafactory and they do intend to manufacture cells at some point in time, but I think initially they probably will be ordering cells from Asia and then assembling the cells into battery packs.
There are currently no companies that are manufacturing cells in Europe, nor in North America. There is some talk about battery manufacturers in Europe, but to date, there are none who have broken ground. We expect that cell manufacturing will eventually come to North America and Europe and we hope to be well positioned in order to be part of that process.
INN: Finally, what can investors expect to see in the next six to twelve months?
BW: We will continue our focus on serving the specialty materials customers while working through the merger with Tasman. The merger will see us rebranding the company to better match our endeavors – a specialty materials customer providing solutions to the end users from the mine to the battery cell factory. We will continue working on the graphite specialty materials and will be seeking out additional assets and capabilities to grow the company aggressively in this energy storage technology arena. This is an exciting time for the company as we evolve beyond just mining into producing value added products suited to the end users. We will be working with the end users to find the best business model for our value added products. We expect to have lots to tell investors over the next six to twelve months.
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