GRAPHITE

Graphite is a naturally occurring form of crystalline carbon. It is a native element mineral found in metamorphic and igneous rocks. Graphite is a mineral of extremes. It is extremely soft, cleaves with light pressure, and has a very low specific gravity. In contrast, it is extremely resistant to heat and nearly inert in contact with almost any other material. These extreme properties give it a wide range of uses in metallurgy and manufacturing. It is a good conductor of heat and electricity. The material’s high conductivity makes it useful in electronic products such as electrodes, batteries, and solar panels.

Seruwila Graphite

Sri Lanka has a long history of producing the world’s purest graphite, but the existing mines are located on the Western side of the island. Previously known graphite deposits on the island consist of narrow veins (usually no more than a couple of feet thick) deep below the surface requiring expensive underground mining. Finding a significant new source of easily accessible, high purity graphite on the Eastern side of the country was unanticipated and exciting.

Quality

Core samples were immediately sent to an independent lab in Sri Lanka for analysis and the graphite was found to be of extremely high purity (99.9%). Samples were then sent to the lab of Saint Jean Carbon in Canada. Testing at Saint Jean Carbon and then Actlabs further confirmed the results.

In addition to the remarkable natural purity, the graphite was also notable for the size of the flakes. Over 85% of the flakes were either large or X-large. Both of these characteristics ensure that the graphite is excellently suited for the anodes of electric vehicles and graphene – two markets with tremendous growth forecasts over the next decade.

A further significant advantage is that the graphite was found to immediately break away from the host rock upon impact (no intercalation). This characteristic is very important because it not only significantly reduces the costs of production but eliminates many of the damaging processes that the graphite must be subjected to in order to obtain the qualities required. Canadian graphite ore for example tends to be highly intercalated in the hard host rock requiring expensive processing to liberate it. All of these factors combine to place Seruwila graphite in an extremely strong position compared with other sources to meet the growing needs of the EV battery market.

Seruwila Graphite Sample

Quantity

Given the size of the veins (one was 14 metres thick), the structure is projected to extend 3 kilometres and contain 2 million tonnes of high crystalline graphite.

Seruwila Graphite Core Sample Results: Based Upon Internal Reports. Not Yet NI 43-101 Compliant.

Competitive Advantages

There are currently several other graphite projects being developed around the world to help meet the anticipated demand - most notably in Eastern Africa. However, the combination of world class natural purity, low mining and processing costs, and comparatively low environmental impact places Seruwila graphite in a strong position to capture market share (see Competition).

Low Cost of Mining

Mineralization is relatively shallow
Graphite veins are wide, long, and easily followed
Suitable for open pit mining and therefore low extraction costs

Low Cost of Processing

Because the graphite immediately releases upon impact (no intercalation with host rock), it has very favourable implications to the milling process
Proof of operation complete (see Processing Diagram)
On-site crushing (toggle and roll) will obtain ore grade of 85%
Piloting demonstrated that graphite powder of 99.9% purity can be obtained using an air classification system and just one float
All the metals and heavier material can be separated and stored for future processing

Low Environmental Impact

Processing on an industrial site provides access to existing utilities and allows for the use of closed systems, i.e. recycled water
Because less ore is running through the system, smaller processing facilities are required
Reduced tailings result in lower costs for environmental remediation
Because the graphite wants to separate from the host rock, less water, energy, and harsh chemicals are required to process the material.

Demand

Japan was the largest importer of natural graphite powder or flakes in 2018, accounting for a 21 percent share of global imports of power or flake natural graphite. Other Asian countries, such as China and South Korea, were also among the leading natural powder or flake graphite importing countries in the world.

The natural graphite market can be broadly categorized in two segments: high grade and low grade. The majority of the world’s reserves supply the lower grade requirements of the industrial market - primarily for refractory purposes such as crucibles, electrodes, and insulators. Demand for this category of graphite is expected to remain relatively constant. Only a small percentage of the current graphite supply is commercially capable of meeting the specifications required by the manufacturers of EV batteries. Accordingly, there is a significant premium for graphite powder suitable for this need and demand is expected to increase 25%/year.

Despite discussions surrounding changes in battery chemistry, graphite will remain a key element in EV batteries for at least the next decade

The natural purity of graphite is essential for two reasons. i) cost of processing and ii) quality of finished product. Not only does additional processing adds costs, it can also scratch and otherwise damage the graphite reducing its qualitative features and desirability to end users

Seruwila graphite is among the purest in the world and therefore preferable over other sources for the requirements of battery manufacturers.

Distribution of natural graphite powder or flakes importing countries worldwide in 2018

Global share of natural graphite importing countries 2018

Supply

Current supply chains will struggle to meet anticipated demand
China currently produces 70 % of the global graphite supply, however, there are concerns regarding the depletion of China’s ore reserves and stricter enforcement of environmental regulations. In addition, only a small proportion of China’s graphite supply is large flake – which is optimal for lithium-ion batteries
Although there are some new African sources in development, the graphite is of lower quality and will require additional processing to meet required purity
Synthetic alternatives are extremely expensive in comparison
U.S. government has identified graphite as amongst 35 minerals critical to countries economic and national security

Graphite production worldwide from 2010 - 2019 (in 1000 metric tons)

Global graphite production volume 2010-2019

Graphite Project Timeline

Process Flow Feasibility

Project Scope and Achievement Plan (Estimation)

Q2/3 - 2023

Permit planning & utility applications
Environmental Studies
Other Permits - Water, Infra & Utilities
Complete design & start planning manufacture
Begin mine infrastructure & layout
Set up exploration areas for continuation of testing and drilling
Sign additional off-take agreements
Track graphite veins using advanced thermal inertia mapping (ATIM)

Q4/1 - 2023

Accept Delivery of Graphite Processing Plant
Establish Program for completion
Begin Intake process Ore material
Start up plant and implement QC protocol

Q2 - 2024

Establish Production Ramp Up & QC testing and acceptance
Training and Onboard Full Implemented operations team
Relocate construction teams to phase 2 construction
Set up logistics for transport to market