US government recognises graphites importance with US$107M loan

This morning the US government announced a conditional US$107M agreement with ASX listed Graphite miner Syrah Resources. Very rarely do we see the US government step in and make loans directly to listed companies, and very rarely are they companies outside of the US.

The loan comes as the US government recently announced that it would be looking at financing critical minerals projects in a rush to try and secure its supply chains. The funds are expected to be used to build out a processing plant with enough battery anode production capacity to supply ~2.5m electric vehicles (EVs) per annum.

We think that the US government’s involvement in project financing is more recognition of the importance of graphite in the EV supply chain.

This was one of the many reasons we announced Evolution Energy Minerals (ASX: EV1) as our 2021 Wise-Owl Pick of the Year.

EV1’s graphite project is ‘shovel ready’ with a DFS completed in Jan 2020 demonstrating an NPV of US$323M. EV1 is looking to make a Final Investment Decision by the end of this year and will then look to get its project into construction.

EV1 is also committed to achieving best in class ESG credentials, which we think will be the key differentiator for its product when it is being marketed to EV battery makers.

Below is a screenshot from our 2022 EV1 Investment Memo, which details why we invested, what we want to see the company achieve in 2022 and the key risks to our investment thesis.

To check the memo out, click on the image below.