President, CEO and Executive Director Don Baxter explains how the company’s recent PEA, battery results and pilot plant test results intersect.
It’s only been about seven months since Don Baxter joined Alabama Graphite (TSXV:ALP,OTCQX:ABGPF) as co-CEO, but in that time the company has already achieved several key milestones.
Most notably, it’s released a preliminary economic assessment (PEA) for the Alabama-based Coosa graphite project, produced coated spherical graphite (CSPG) for use in lithium-ion batteries and reported positive pilot plant test results for Coosa.
Speaking to the Investing News Network, Baxter, who’s now Alabama Graphite’s president, CEO and executive director, explained that those three pieces of news — the last of which came out just last week — are all connected. “The PEA, the battery results and the pilot plant complete the circle on our process,” he explained. “Here’s what we plan to do, here’s our business model and here’s the data to show we can do it.”
Connecting the dots
But what exactly is it that Alabama Graphite plans to do?
Investors who’ve been watching the company will no doubt recall that the PEA for Coosa, released at the end of November, looks at “both primary and secondary processing to produce specialty, ultra-high-purity graphite products.”
What that means is that unlike most juniors in the graphite space, Alabama Graphite will not be selling any flake graphite. Instead, it will be producing and selling CSPG and purified micronized flake graphite. As mentioned, the former is used in lithium-ion batteries; applications for the latter include polymer, plastic and rubber composites and more.
That all sounds pretty promising, but as Baxter emphasized, simply having a good PEA in hand was no guarantee that the company could actually successfully produce CSPG that would work in lithium-ion batteries. “We showed with the PEA that we’re going to make battery-ready graphite,” he said, “so how does your graphite work in batteries?”
Alabama Graphite explored that question by completing downstream lithium-ion battery tests on CSPG produced from Coosa graphite, releasing the results midway through January. As it turns out, the company’s graphite does indeed work in batteries. In fact, said Baxter, “it works very well.”
Those results filled in a key blank for Alabama Graphite. However, it still needed to prove that it’s able to produce the high-grade graphite concentrate needed to make CSPG.
That’s where pilot plant testing came in. As Baxter explained, generally when graphite juniors do pilot plant tests they’re “looking to see the percentage of large flake and the carbon content. Those are the main economic drivers of the project.” But for Alabama Graphite the key metric was concentrate grade. That’s because making CSPG requires high-grade graphite concentrate.
“[Percentage of large flake and carbon content] don’t matter for us because we’re going to micronize and spheroidize it all anyway,” said Baxter, adding, “so our main target was to get as high of carbon content across all size ranges as possible.”
And, as the company’s pilot plant test results ultimately showed, that target was achievable. The pilot plant was able to produce a high carbon grade averaging 96.7 percent across all flake sizes. More specifically, all size fractions over 325 mesh yielded between 96.2 and 97.2 percent total carbon; meanwhile, even -325 mesh material yielded 94.6 percent total carbon.
Summing up the information in the three releases, Baxter said that they “all represent critical de-risking milestones and are all interrelated.”
It’s clear that Alabama Graphite has made major progress since Baxter’s arrival at the company, and particularly in the last few months. However, there’s still a lot more work to be done, and the company is already looking ahead.
“Obviously we’re on the path now to go out and look at doing a feasibility study,” he said. “At the same time, we’re making kilogram quantities of our CSPG for our potential customers.”
Those potential customers are, of course, lithium-ion battery manufacturers. Tesla Motors (NASDAQ:TSLA) is currently the most-discussed name in that space, but as Baxter pointed out there are plenty of other companies making lithium-ion batteries. And there are lots of reasons for all of those producers to consider Alabama Graphite’s CSPG.
“When you look at some of the ‘buy American’ policies that we can benefit from it puts us in a pretty strong position to be a preferential supplier to almost all US-based producers,” said Baxter. He also pointed out that Coosa’s vicinity to an Alabama port opens up the gateway to Europe, where companies like Porsche (ETR:PAH3) and Volkswagen (ETR:VOW3) also require lithium-ion batteries.
Overall, he believes the company is quickly putting itself in a position where it will be able to make in-demand products. “We’re not just a mining company, we’re a fully integrated mine to green energy company,” he asserted. “With a secondary process we’re not just making raw material for someone else to make battery ready — we’re doing it ourselves.”
“We’re fast tracking this project as quick as we can and … if we’re able [we’ll be] first to production,” Baxter concluded.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
Alabama Graphite is a client of the Investing News Network. This article is not paid-for content.
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