Leading Edge Materials Corp. (TSXV: LEM) (OTCQB: LEMIF) has initiated an internal review focused on the potential to restart production at the company’s fully-owned Woxna graphite mine in Sweden.
Highlights:
- Strong market conditions with European flake graphite prices up around 40% over the last year.
- Internal review to restart production at the Woxna graphite mine.
- Woxna Graphite is one of the few built and permitted graphite mines in the western world.
- Important step towards planned fully integrated production of graphite anode materials
The permitted and fully-built Woxna graphite mine and processing plant was restarted by the company in 2014 but production was halted due to adverse market conditions at the time. The site has since been kept on care and maintenance whilst the company has focused on developing the planned downstream processes to produce an upgraded graphite anode material for the lithium-ion battery industry.
Improved market conditions for traditional flake graphite products have been recognised as an additional potential opportunity with the asset offering a relatively short time to production compared with other graphite developers. The company sees the current market conditions as an attractive opportunity to investigate this in more detail.
A recent assessment by Fastmarkets show flake graphite prices in Europe at US$775 to US$1,395 depending on flake size, which is around 40% higher compared with the same period last year.
These price assessments also show that there is an increasing premium for flake graphite pricing in Europe compared with China. Prices have been driven by growing demand with concurrent supply disruptions and soaring shipping costs.
CEO, Filip Kozlowski, said that in this context, an alternative supply from Sweden, where products could be shipped by truck to potential customers in continental Europe, could be a key competitive advantage for the company and could offer the company a potential opportunity for revenue generation in the near-term.
“Restarting production at the Woxna graphite mine opens up a number of key opportunities for the company,” Mr Kozlowski said.
“Current and expected strong fundamental market conditions not only offer attractive potential cashflow, but also opens up access to graphite users. Furthermore, this is the first essential step toward the fully integrated production of graphite anode material as laid out in our 2021 PEA.
“Owning one of the few built and permitted graphite mines in the western world, we are very excited to be able to rapidly respond and benefit from the accelerating strength in flake graphite prices. With natural graphite being classified as a critical raw material by the European Union, it would also demonstrate Europe’s capability to disrupt its dependency on raw material supply from other regions.”
The review will now perform a detailed market assessment for its potential production through engagement with potential customers in Europe, evaluate required and preferred equipment upgrades at the processing plant, recruitment needs for restarting production and associated timelines. Decision whether to proceed with the restart of production expected to be made within a few months.
Last year, the company filed a positive preliminary economic assessment (PEA) for a vertically integrated production of graphite anode materials using Woxna flake graphite as a feed material for a planned anode material factory demonstrating a post-tax NPV (8%) of US$248m and post-tax IRR of 37.4%.
Subsequently the company announced a non-binding Heads of Agreement with Sicona Battery Technologies Pty Ltd for a 50/50 JV for the planned downstream anode factory and the production of silicon-graphite composite anode materials. These downstream value-add business opportunities are still the main strategy of the company due to their outsized economic potential compared with only producing lower value flake graphite products. However, these downstream plans are ultimately dependent on the production from the Woxna mine and as such, restarting production of flake graphite concentrate is a key deliverable to enable those future plans.
For further information please visit: https://leadingedgematerials.com/
