SGA’s graphite now suitable for the Nuclear industry

Our 2022 Next Investors Small Cap Pick of the Year, Sarytogan Graphite (ASX: SGA) just showed the market its graphite is suitable for use in the nuclear industry.

The big news today:

• SGA produced graphite with five nines purity levels - purity up to 99.9992%, which is more than 50x purer than levels needed for use in batteries.
• SGA’s graphite is now expected to be suitable for use in the nuclear industry - where graphite products sell for more than ~US$25,000 per tonne.

The market has always understood the EV battery story for graphite…

Graphite is one of the most important inputs in an EV battery.

Graphite makes up ~50% of the raw materials in every lithium-ion battery and over 95% of every battery anode.

We think the market is less aware of the nuclear angle of graphite.

Graphite is a critical raw material in nuclear reactors.

Graphite is used for a number of things in the nuclear industry but one of the most important is to surround uranium fuel rods to prevent neutrons from escaping a reactor - the primary function is to control the release of energy from the reactor.

To be suitable for nuclear reactors graphite needs to have very high purity (≥99.999%) AND low impurities.

SGA managed to produce 2.2kg of graphite that meets these requirements purity up to 99.9992% and low impurities (0.032ppm of boron whereas the max limit for nuclear is 2ppm).

The significance of today’s news is that it adds another potential market that SGA can look to sell its graphite into - a market where prices fetch significant premiums.

Context on SGA’s graphite project:

SGA’s graphite project in Khazakhstan is already the:

• The highest grade resource on the ASX - In mining grade is king. Higher grades typically lead to lower costs of processing a resource into a final saleable product.
• The second largest graphite resource on the ASX in terms of contained graphite - Second only to Syrah Resources, which is capped at $469M.

We went on a site visit to the project in 2022 and were literally walking on top of the graphite resource - see our site visit write up here.

Right now SGA is working toward a Pre Feasibility Study for its project with the study expected to be delivered in Q3 2024.

What’s next for SGA?

Pre-Feasibility Study 🔄

This catalyst is expected in Q3 2024.

At this point, the project economics are largely unknown to the market.

We think if the Net Present Value (NPV) numbers are big, then the market could be wrong footed, depending on where SGA’s market cap is at the time.

More Battery Testing Results 🔄

SGA recently put out preliminary battery testing results which we wrote about here: SGA’s graphite tested in batteries - consistently outperforming synthetic graphite

Battery testing is still ongoing so we expect to see updates on longer term testing results over the coming months.

On top of that SGA mentioned that it would run further tests with Coated Spherical Graphite which should mean performance improves.

Offtake Agreements?

SGA is looking to appoint a marketing manager which could mean we start to see progress on the offtake front.