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07-09-2014, 07:11 PM
Graphite resurgence tempts investors
PUBLISHED: 10 HOURS 15 MINUTES AGO | UPDATE: 3 HOURS 21 MINUTES AGO
JEMIMA WHYTE
KEY POINTS
Simon Hackett has bought shares in Australia’s only graphite-producing miner.
Valence Industries is raising debt to fund construction of a second processing plant.
RELATED QUOTES
VXL
VALENCE FPO (VXL)
$0.720$-0.01(-2.04%)
Volume 259350 Value 189835.0
NBN director Simon Hackett is the latest high-profile investor to get in on the graphite boom, which is being fuelled by the increasing use of battery-reliant technology such as smartphones and electric cars.
Mr Hackett, who is awaiting delivery of the latest Tesla electric car, told Nine’s Financial Review Sunday he recently bought shares in South Australia’s Valence Industries, the country’s only graphite-producing miner. Valance is among 20 or so ASX-listed graphite companies, most of which are only at the exploration phase, that have experienced surging share prices.
Graphite has seen an “enormous rebirth as a commodity with commercial value”, Mr Hackett said.
Valence is in the process of raising debt to fund construction of a second processing plant, which will cost about $34 million, according to managing director Chris Darby.
“We’ve had significant interest from United States investors and Asia Pacific investors,” he said. “They’re looking to get in to become cornerstone capital investors. If we were to get those people in, we would have to have them as fundamental industry partners to come along with us on the journey.
“We were the last producer in Australia about 25 years ago and we’re now back again; the first producer in Australia and the only one doing it.”
TWO-YEAR ‘HEADSTART’
The plant was closed in 1993, when it was the last graphite mine in the country. “They walked away – pens on desks, coffee cups left behind,” Mr Darby said. “The best part was, they left all the data behind, which we’ve been working our way off of now. So we have tonnes of electronic data and paper data which we’ve been using to help us understand how to process our material and how to move forward with the program.
“It really gives us a good 18 months, two years’ headstart on other projects. We don’t have to build all that stuff, we don’t have to think about that stuff, we simply have to get back into the processing of material that we know is proven for the market.
“It’s a very high-grade flake graphite. We have everything from the most pure material at about 98 odd per cent coming straight out of the ground once it’s been processed.
“We sell everything . . . all the way through to our high-end electronics,” Mr Darby said.
“The real change that’s come in the last few years has been the fact that graphite has . . . moved from this heavy industrial base that it’s always been used for to, increasingly, these higher-end electronics. So you’ve got a steady growth in your industrial applications of 3 per cent to 4 per cent a year. The higher-end products, all the way through to biomedical applications, are growing at 7 to 10 per cent a year.”
Gerard Anderson, the managing director of Adelaide-based Archer Exploration, is targeting graphite production within 18 months.
There’s no tradeable market for graphite, and Mr Anderson is hoping the company will be able to sell its graphite for $2000 a tonne.
“Our specific markets are for batteries – both alkaline, dry cell and lithium ion batteries,” he said. “But also for refractories, with our flake graphite, for brake pads for high-quality lubricants and greases.”
Shaw Stockbroking senior resources analyst Vincent Pisani plays down fears the market is overhyped, although he suggests a lower longer-term price for graphite. He predicts that will allow Australian producers to remain competitive on the global market.
“What I’m thinking longer term is the price may settle down towards that $700 to $800 a tonne,” Mr Pisani said.
“The higher-cost Canadians, because of their low grade, may not even get the financing to go ahead with their projects, so it will come down to probably seven to 10 globally that may actually get the funding in the next 12 to 18 months. China has supplied 80 per cent of the global market, but it’s reduced its supply by a third for domestic reasons.”
The Australian Financial Review
PUBLISHED: 10 HOURS 15 MINUTES AGO | UPDATE: 3 HOURS 21 MINUTES AGO
JEMIMA WHYTE
KEY POINTS
Simon Hackett has bought shares in Australia’s only graphite-producing miner.
Valence Industries is raising debt to fund construction of a second processing plant.
RELATED QUOTES
VXL
VALENCE FPO (VXL)
$0.720$-0.01(-2.04%)
Volume 259350 Value 189835.0
NBN director Simon Hackett is the latest high-profile investor to get in on the graphite boom, which is being fuelled by the increasing use of battery-reliant technology such as smartphones and electric cars.
Mr Hackett, who is awaiting delivery of the latest Tesla electric car, told Nine’s Financial Review Sunday he recently bought shares in South Australia’s Valence Industries, the country’s only graphite-producing miner. Valance is among 20 or so ASX-listed graphite companies, most of which are only at the exploration phase, that have experienced surging share prices.
Graphite has seen an “enormous rebirth as a commodity with commercial value”, Mr Hackett said.
Valence is in the process of raising debt to fund construction of a second processing plant, which will cost about $34 million, according to managing director Chris Darby.
“We’ve had significant interest from United States investors and Asia Pacific investors,” he said. “They’re looking to get in to become cornerstone capital investors. If we were to get those people in, we would have to have them as fundamental industry partners to come along with us on the journey.
“We were the last producer in Australia about 25 years ago and we’re now back again; the first producer in Australia and the only one doing it.”
TWO-YEAR ‘HEADSTART’
The plant was closed in 1993, when it was the last graphite mine in the country. “They walked away – pens on desks, coffee cups left behind,” Mr Darby said. “The best part was, they left all the data behind, which we’ve been working our way off of now. So we have tonnes of electronic data and paper data which we’ve been using to help us understand how to process our material and how to move forward with the program.
“It really gives us a good 18 months, two years’ headstart on other projects. We don’t have to build all that stuff, we don’t have to think about that stuff, we simply have to get back into the processing of material that we know is proven for the market.
“It’s a very high-grade flake graphite. We have everything from the most pure material at about 98 odd per cent coming straight out of the ground once it’s been processed.
“We sell everything . . . all the way through to our high-end electronics,” Mr Darby said.
“The real change that’s come in the last few years has been the fact that graphite has . . . moved from this heavy industrial base that it’s always been used for to, increasingly, these higher-end electronics. So you’ve got a steady growth in your industrial applications of 3 per cent to 4 per cent a year. The higher-end products, all the way through to biomedical applications, are growing at 7 to 10 per cent a year.”
Gerard Anderson, the managing director of Adelaide-based Archer Exploration, is targeting graphite production within 18 months.
There’s no tradeable market for graphite, and Mr Anderson is hoping the company will be able to sell its graphite for $2000 a tonne.
“Our specific markets are for batteries – both alkaline, dry cell and lithium ion batteries,” he said. “But also for refractories, with our flake graphite, for brake pads for high-quality lubricants and greases.”
Shaw Stockbroking senior resources analyst Vincent Pisani plays down fears the market is overhyped, although he suggests a lower longer-term price for graphite. He predicts that will allow Australian producers to remain competitive on the global market.
“What I’m thinking longer term is the price may settle down towards that $700 to $800 a tonne,” Mr Pisani said.
“The higher-cost Canadians, because of their low grade, may not even get the financing to go ahead with their projects, so it will come down to probably seven to 10 globally that may actually get the funding in the next 12 to 18 months. China has supplied 80 per cent of the global market, but it’s reduced its supply by a third for domestic reasons.”
The Australian Financial Review