SGA’s Graphite Suitable For Use In More High Value Markets
Our 2022 Small Cap pick of the Year Sarytogan Graphite (ASX: SGA) confirmed its graphite as suitable for yet another market.
We already know that SGA’s graphite project in Kazakhstan is:
- 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 $454M.
Right now SGA is working towards a Pre Feasibility Study (PFS) for its project, expected to be delivered by Q3 this year.
The PFS is where SGA will be able to show the market how its project stacks up from an economics perspective.
Naturally, an important input into the PFS is the type of products SGA plans to sell and how much revenues it will get for those products… SGA has been working on that for the last year or so…
So far, SGA had planned to sell its graphite into three markets:
- Micro-crystalline 80-85% graphite for traditional industrial uses
- Uncoated Spherical Purified Graphite (USPG) for use in Li-ion battery anodes
- UHPF graphite for advanced industrial uses like the Nuclear industry where products sells for more than US$25,000 per tonne.
Yesterday, SGA showed the market that its UHPF product is also suitable for use as a “cathode conductivity enhancer”.
SGA’s product was used to produce AA alkaline batteries and Li/CFx Batteries (used in implantable medical devices, aviation, and military applications).
In both test scenario’s the batteries produced using SGA’s graphite performed stronger relative to batteries produced using existing graphite products.
The significance of the news?
SGA is able to take every single bit of graphite that runs through its flowsheet and find a way to generate revenues from it.
The first stage of its flowsheet produces “microcrystalline graphite at 80-85%” at the mine site which is sold into the traditional industrial markets - think pencils, lubricants etc etc.
The other two thirds is then processed downstream where 54% becomes USPG and the remaining 46% is processed into UHPF.
SGA plans to sell its USPG product into the lithium ion anode market and its UHPF product into the nuclear (and after yesterday’s announcement) Li/CFx + alkaline battery markets.
Overall, it means that SGA is able to squeeze out as much revenue from the majority of the graphite it mines and process’, extracting as much value out of its graphite as possible.
All of this, we hope, will feed into strong project economics for SGA when its Pre Feasibility Study (PFS) is released later this year.
What we want to see from SGA next
Pre-Feasibility Study 🔄
We think the PFS could be a big catalyst for SGA.
IF the Net Present Value (NPV) numbers are big, then the market may start to factor that into SGA’s market cap.
This catalyst is expected in Q3 2024.
More Battery Testing Results 🔄
SGA is currently running long term tests for its Uncoated Spherical Graphite in batteries - we expect to see updates on longer term testing results over the coming months.
SGA confirmed the long term test results should be available in the coming weeks.
In addition, SGA mentioned yesterday that it had now manufactured Coated Spherical Graphite and was getting ready to start battery tests with that product which it expects to have even stronger performance relative to SGA’s USPG.
Offtake Agreements?
SGA has now shown multiple markets that its graphite is suitable for. It is still relatively early days but SGA could start offtake discussions based on the results it has been getting to date.
Complimentary Projects?
SGA has an established team in Kazakhstan, a jurisdiction that is very mining friendly.
Companies like Glencore, Fortescue, Rio Tinto and Chevron have assets in the country…
With a current downturn in sentiment for battery metals, SGA may be in a position to pick up an additional asset on the cheap in the country.
