Graphite One Positioned for Looming
Graphite Supply Crunch with Strong 2022 Completed
Objectives
VANCOUVER, BC, Dec. 30,
2022 /CNW/ - Graphite One Inc.
(TSXV: GPH) (OTCQX: GPHOF) ("Graphite One", the "Company",
or "G1") is pleased to provide the Company's 2022 year in
review and provide objectives for 2023.
2022 Highlights
- 2022 Pre-Feasibility Study
-
- Pre-tax NPV of US$1.93 bilion,
IRR of 26% using an 8% discount rate, and a payback of 4.6
years
- Post-tax NPV of US$1.36 billion,
IRR of 22% using an 8% discount rate, and a payback period of 5.1
years
- Project life (Including Graphite Mine and Advanced Materials
Manufacturing Facility): 26 years based on 1 square km of 16 km
geophysical anomaly
- Measured plus indicated resources and inferred resources
increased 197% and 177% over 2019 results
- Total capital raised of CA$15.1 million and settled an
outstanding debt of CA$8.8 million (US$6.8 milion) by completing a shares for debt
transaction
- President Biden Declares Graphite as 1 of 5 Battery Materials
"Essential for National Defense"
- U.S. Defense Appropriations Bill Includes Funding for Graphite
Rechargeable Battery Applications & Natural Graphite Foam Fire
Suppressant
- U.S. Geological Survey Cites the Company's Graphite Creek
Resource as Largest Known U.S. Deposit
- Washington State Selected as
Site for the Proposed 2nd and 3rd Links in Graphite One's Complete
U.S.-Based Supply Chain
- Completed a 2,090 meters drilling program to expand resources
to be included in the Feasibility Study
- Battery anode active materials now being produced as samples
for EV manufacturers using the Company's graphite concentrate from
Alaska.
"With the support of our shareholders, local community and
management, Graphite One had a tremendous year in 2022, progressing
the largest known graphite deposit in the
United States one step closer to producion," said
Anthony Huston, Graphite One CEO.
"We delivered a highly robust inaugural PFS, completed the 2022
drilling program in support of our Feasibility Study, raised more
than CA$15 million in capital, completed a shares for debt
transaction to settle an outstanding debt of US$6.8 million, and advanced our plans to secure
our graphite manufacturing facility in Washington State. Additionally, the U.S.
Government recognized Graphite Creek as the nation's largest known
graphite deposit, instituted a new federal tax credit for domestic
battery material production, and declared graphite an essential
U.S. Defense Production Act material. It's a testament to our
strategic plans, and we have the resource and the team that can
quickly develop a domestic supply chain to meet the United States' need for battery anode
materials for many years into the future."
As Graphite One moves forward with its Feasibility Study ("FS"),
the Company reported progress in 2022 along the following
fronts:
2022 Financing
From January 1, 2022 to date,
total gross proceeds raised from equity financings plus the
exercise of options and warrants[1] exceeded CA$15.1
million[2]. The Company also settled an outstanding debt
of US$6.8 million through a shares
for debt transaction by issuing 9,296,328 common shares at a deemed
price of CA$0.90 per share. "Our 2022 financing is a strong signal
that capital markets are recognizing the Graphite One Project as
the largest natural graphite deposit in the United States, with very robust economics
presented by the inaugural PFS," said Mr. Huston.
Graphite One Prepares Sample
Battery Material for EV Manufacturers' Analysis
As 2022 draws to a close, Graphite One's Alaska graphite concentrate is being used to
prepare sample battery anode materials for two major Electric
Vehicle (EV) manufacturers, while an artificial graphite anode
sample is being prepared for a third EV company. Results are
expected in the first of quarter of 2023.
Completion of Graphite One
Pre-Feasibility Study (PFS)
Graphite One completed the PFS for its U.S.-Based Graphite
Supply Chain Solution, demonstrating a Pre-tax US$1.9 billion NPV (8%), 26.0% IRR and a 4.6
years payback. The post-tax basis, US$1.4 billion NPV (8%), 22.3% IRR and 5.1 Years
Payback on its Integrated Project. The PFS, prepared
by JDS Energy & Mining Inc. with assistance from various
independent technical consultants, is available on our website:
https://www.graphiteoneinc.com/pfs/.
On average, Graphite One would produce about 75,000 tonnes per
year of products. About 49,600 tpy would be anode materials,
7,400 tpy purified graphite products, and 18,000 tpy of unpurified
graphite products.
With the August 2022 passage of
the U.S. Inflation Reduction Act (the "Act") – for which U.S.
federal tax guidance will be issued in March
2023 – domestic content tax credits are available which
could benefit Graphite One. The Company expects to issue
projections of the new federal tax credit impact once the guidance
is published.
The Act instituted, among other things [3]:
- A tax credit to producers in the U.S. of anode materials equal
to 10 percent of the costs incurred with respect to the production
of anode materials commencing December 31,
2022 and reducing to 75%, 50%, 25%, and 0% in 2030, 2031,
2032 and thereafter, respectively.
- A tax credit equal to 10 percent of the costs incurred with
respect to production of graphite purified to a minimum purity of
99.9 percent graphitic carbon by mass ("Purified Graphite")
– the phase out provisions in 1 specifically do not apply.
- Only production in the United
States qualifies for the tax credit.
Graphite One's production is expected to qualify under the Act
for tax credits in both categories as it plans to produce both
anode materials and Purified Graphite in the United States, as defined in the
Act.
While the geophysical expression on the Graphite Creek property
spans more than 16 km, the PFS was based on an assessment of about
1 square km -- or less than 7% of the anomaly. Drill results
to date indicate the resource remains open down dip and along
strike to the East and West.
Given rapidly rising graphite demand, G1's Feasibility Study is
expected to focus on expanding annual production significantly from
the 50,000 tonne projection in the PFS.
Graphite elevated into select
group of "Critical Minerals" after receiving DPA Title III
designation
Graphite and other battery minerals – lithium, manganese, cobalt
and nickel – join rare earth materials as the only U.S.
Government-listed Critical Minerals eligible for the comprehensive
support provided by the Defense Production Act ("DPA"). Unlike
Presidential Executive Orders, designations under the DPA, first
passed during the Korean War, carry the full force of U.S. federal
law.
"With this new defense designation under U.S. law, graphite
joins a select group of 'super-critical minerals' that are
essential to commercial technology and national security
applications," said Anthony Huston,
CEO of Graphite One. "This action by President Biden validates
Graphite One's strategy of creating a full supply chain for
advanced graphite materials located in the United States."
2023 Defense Appropriations
Bill
The annual Defense Appropriations Bill, passed December 15, 2022, includes funding for graphite
as a rechargeable battery material, as well as natural
graphite-based foam fire suppressant.
While Graphite One's PFS suggests that 66% of Graphite One's
products are for the support of the EV and lithium ion battery
sectors including energy storage systems in the form of
battery-anode active materials including Coated Spherical Graphite,
2022 saw continued progress in materials development for evolving
markets for advanced graphite material.
"With the World Bank and International Energy Agency (IEA)
projecting graphite demand to rise by 25 times between 2020 and
2040 (IEA) or more than 490% from 2020 to 2050 (World
Bank[4]) -- and new efforts to simultaneously
build out energy storage systems underway, multiple uses of the
same renewable battery technologies are beginning to compete for
the same material supply," Mr. Huston noted. "As a result,
global graphite shortfalls initially projected for 2024 or 2025 are
now predicted to begin now, as we reach the end of 2022."
Graphite Foam Fire
Suppressant:
Test Work at
the U.S. Naval Air Warfare Center
While Graphite One's primary focus remains the production of
lithium-ion battery anode materials, the Company's foam fire
suppressant work is a prime example of the advanced graphite
material opportunities in markets outside of the renewable energy
sector. The newly-passed Defense Appropriations bill indicates the
importance of this application for emergency response, safety and
environmental impacts.
Graphite One is well positioned for this high-priority defense
application. In 2022, test work was completed at the U.S.
Navy's Naval Air Weapons Station China Lake in California ("NAWS China Lake"), to pursue the
Pre-feasibility Study-level validation of technology using a
biodegradable fire retardant foam made with a composite of
materials from Graphite One in extinguishing Class B fuel
fires. The foam was developed by Graphite One's technology
development partner, American Energy Technologies Company of
Arlington Heights, Illinois. Test
results of experiments indicate that the foam formulation
containing Graphite Creek material can extinguish Class B fires and
therefore could meet the firefighting standards defined in U.S.
Government Military Specifications.[5]
New liquid foam fire suppressants are critical to saving
lives and safeguarding the environment and we are honored by the
interest shown in the Company's material by the U.S. Navy and other
U.S Government departments and agencies." noted Mr. Huston. "The
global fire suppression market for systems and their related
materials is expected to reach $18.3
billion by 2026[6] so this milestone
represents an exciting opportunity for Graphite One to be part of
this rapidly-expanding market".
This development work is especially timely, given that the 2020
National Defense Authorization Act (NDAA) ordered that aqueous film
forming foam (AFFF) must be phased out of use by October 2024 due to the dangers the material
poses to the environment and human health. As of the 2024 deadline,
AFFF agents will not be available for use in the event of an
aircraft emergency involving Class B fires at any military
installations or airfields.
"Our advanced graphite material work is driven by Graphite
One's commitment to serve the broad range of tech material
applications that depend on graphite engineered to exacting
specifications," said Mr. Huston. "Battery grade anode
material for EVs and lithium ion batteries will be the core of our
commercial value, but we know that there is even more graphite can
do to meet urgent demand in sectors ranging from
environmentally-safe fire suppression to transformational
technologies in the semiconductor sector and the new world of
graphene. Each one of these product lines reinforces the
value of Graphite One's integrated supply chain solution – as well
as our belief in the mission of our Company to provide the tech
materials that drive global ingenuity."
USGS Recognizes Graphite Creek as
U.S.'s Largest Known Graphite Deposit
In March 2022, G1's Graphite Creek
resource was cited as the largest known graphite deposit in
the United States by the U.S.
Geological Survey ("USGS") in its updated U.S. Mineral
Deposit Database ("USMIN")[7].
Graphite One Selects Washington
State, Announces MOUs for its Complete U.S.-Based Supply Chain
Solution
In spring 2022, Graphite One made a series of announcements
advancing its plan to construct and operate a complete U.S.-based
graphite supply chain,
In March 2022, Graphite One
announced it had identified Washington
State as the preferred location for the Company's planned
advanced materials processing plant, which it intends to bring
production of battery anode active materials to the United
States.
"This is a major step towards our proposed 100% U.S.-based
advanced graphite supply chain," said Anthony Huston. "Washington State offers the opportunity for
Graphite One to use a green energy source – Washington state hydro – to manufacture a
green energy material. That's core to our commitment at Graphite
One to make our project a model of ESG in action."
In April 2022, Graphite one signed
a memorandum of understanding ("MOU") with Sunrise New Energy
Material Co., Ltd., a Chinese lithium-ion battery anode material
producer. The intent is to develop an agreement to share
expertise and technology for the design, construction, and
operation of Graphite One's proposed U.S.-based graphite material
manufacturing facility in Washington
State – the second link in Graphite One's planned U.S.
supply chain solution for advanced graphite products.
Also in April, Graphite One entered into a non-binding initial
MOU with battery materials recycler Lab 4 Inc. of Nova Scotia, Canada ("Lab 4"), whereby
Graphite One and Lab 4 propose to collaboratively work together to
design, develop and build the planned third link in G1's complete
supply chain; a recycling facility for end-of-life EV and lithium
ion batteries, to be co-located at the Washington State advanced graphite materials
facility.
2022 Drill Program
With exploration to date, the Graphite Creek resource
continues to show potential to be an essential long-life component
of the graphite supply chain.
G1's 2022 Field Program included infill and step-out core
drilling in the resource area. Additional core and sonic
drilling were completed for geotechnical data collection at the
proposed mill site, planned dry tailings/waste rock storage areas
and the access route. A total of 2,090 meters were drilled,
including infill drilling and exploration drilling on the
geophysical anomaly. Core drilling in the deposit area continued to
encounter visible graphitic mineralization over wide intervals
consistent with previous drilling results as reported in
2021.
"With only about 7% of our 16 km geophysical anomaly
incorporated in the PFS, which shows an after-tax NPV of
US$1.4 billion, our 2022 Field
Program gives us confidence the Graphite Creek Project is truly a
generational strategic resource," said Anthony Huston, CEO of Graphite One. "It is
anticipated that the 2022 summer drilling program data will be
incorporated in the feasibility study to advance Graphite Creek
during this critical time of under supply for U.S. strategic
materials such as graphite." Drill results for the 2022 Field
Program will be released when data analysis is completed. The
deposit remains open along strike at depth and to the east and
west.
In the Community
When emergencies arise, neighbors step up. In September,
after Typhoon Merbok hit the Bering Strait region with 90 MPH winds
and heavy rain, the Graphite One Alaska team partnered with Norton
Sound Health Corp. to deliver frozen and perishable food to the
Nome Food Bank, pallets of water, hand wash stations, clean up and
sanitation supplies to the village of Teller, and drinks and canned
food to Unalakleet, Shaktoolik and Golovin, coordinating the emergency deliveries
with Bering Strait Native Corp. and the Red Cross.
Grant of Stock Options and
Restricted Share Units
The Company announces that the board of directors has approved a
grant of stock options and restricted share units ("RSU") to its
employees, officers, directors and consultants in an aggregate of
1,141,830 stock options with an exercise price of CA$1.08 being the
closing price of the Company's common shares on the TSX Venture
Exchange on December 23, 2022 and
3,070,559 RSUs at a deemed price of CA$1.12 pursuant to the
Company's Omnibus Plan. The stock option and RSU grants to
employees, officers and consultants vest over a three-year period
and the stock options expire 5 years from the date of grant.
The RSU grants to the directors vest 12 months from the date
of grant and each vested RSU entitles the holder to receive one
common share of the Company. The stock option and RSU grants
are subject to the terms of the Omnibus Plan which was re-approved
by the shareholders of the Company at the annual meeting of
shareholders held on June 29, 2022,
the applicable agreements and the requirements of the TSX Venture
Exchange. These grants were made to appropriately reward the
previous and ongoing contributions of the recipient employees,
officers, directors, and consultants to encourage them to continue
contributing significantly to Graphite One's success in the
future.
Following the grant, the Company had approximately 109,476,879
issued and outstanding common shares, 8,989,259 stock options
issued and 3,070,559 RSUs issued.
Mr. Huston commented "With the added diversity of non-executive
directors to the Board and to the committees, the Company adopted a
new compensation program, which changed from granting in arrears to
granting on a prospective basis, beginning in the first quarter of
2023".
About Graphite One Inc.
GRAPHITE ONE INC. (TSX‐V: GPH; OTCQX: GPHOF) continues to
develop its Graphite One Project (the "Project"), with the goal of
becoming an American producer of high grade anode materials that is
integrated with a domestic graphite resource. The Project is
proposed as a vertically integrated enterprise to mine, process and
manufacture high grade anode materials primarily for the
lithium‐ion electric vehicle battery market. As set forth in
the Company's 2022 Pre-Feasibility Study, potential graphite
mineralization mined from the Company's Graphite Creek Property is
expected to be processed into concentrate at a graphite processing
plant. The proposed processing plant would be located on the
Graphite Creek Property situated on the Seward Peninsula about 60 kilometers north of
Nome, Alaska. Graphite anode
materials and other value‐added graphite products would be
manufactured from the concentrate and other materials at the
Company's proposed advanced graphite materials manufacturing
facility expected to be located in Washington State. The
Company intends to make a production decision on the Project upon
the completion of a Feasibility Study.
On Behalf of the Board of Directors
"Anthony Huston" (signed)
For more information on Graphite One Inc., please visit the
Company's website, www.GraphiteOneInc.com
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
This release includes certain statements that may be deemed
to be forward-looking statements. All statements in this release,
other than statements of historical facts, are forward looking
statements including statements relating to the timing, scope and
completion of the anticipated Feasibility Study, receipt of
regulatory approvals, possible impacts upon the Company of
government grants and incentive programs, results of anode material
testing, possible success and acceptance of advanced graphite
material development and testing, exploration drilling,
exploitation activities, future production, establishment of a
processing plant and graphite manufacturing facility, conversion of
MOUs into completed agreements, and events or developments that the
Company expects. Although the Company believes the expectations
expressed in such forward-looking statements are based on
reasonable assumptions, such statements are not guarantees of
future performance and actual results or developments may differ
materially from those in the forward-looking statements. Factors
that could cause actual results to differ materially from those in
forward-looking statements include market prices, exploitation and
exploration successes, continuity of mineralization, uncertainties
related to the ability to obtain necessary permits, licenses and
title and delays due to third party opposition, changes in
government policies regarding mining and natural resource
exploration and exploitation, and continued availability of capital
and financing, and general economic, market or business conditions.
Readers are cautioned not to place undue reliance on this
forward-looking information, which is given as of the date it is
expressed in this press release, and the Company undertakes no
obligation to update publicly or revise any forward-looking
information, except as required by applicable securities laws. For
more information on the Company, investors should review the
Company's continuous disclosure filings that are available at
www.sedar.com.
[1] See
News Releases - "Graphite One Announces Closing CA$10 million in
Financings and Awarding of Options" (February 23, 2021),
"Graphite One Announces Closing of $10.23 Million in Private
Placement Offering" (August 12, 2021) and "Graphite One Announces
Closing of Second Tranche of $998,000 in Private Placement
Offering" (September 24, 2021).
|
[2] G1 raised a total of
CA$15,103,000 (US$11,590,000) on the issuance of 14,626,264 common
shares at an average price of CA$1.03 (US$0.79) per share as well
as the issued 9,296,328 common shares at a deemed Price of CA$90
per share to settle the Taiga Mining
loan.
|
[3] Section 13502. Advanced
Manufacturing Production Credit of Inflation Reduction Act of 2022;
-
https://www.congress.gov/117/bills/hr5376/BILLS-117hr5376enr.xml
|
[4]
https://pubdocs.worldbank.org/en/961711588875536384/Minerals-for-Climate-Action-The-Mineral-Intensity-of-the-Clean-Energy-Transition.pdf
|
[5] https://www.graphiteoneinc.com/graphite-one-advances-foam-fire-suppression-test-work-at-the-u-s-naval-air-warfare-center/
|
[6] https://www.reportlinker.com/p06095157/Fire-Suppression-Market-Report-Trends-Forecast-and-Competitive-Analysis.html
|
[7] https://www.usgs.gov/news/technical-announcement/usgs-updates-mineral-database-graphite-deposits-united-states
|
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