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A Potential Electric Vehicle Market of Roughly $3 Trillion Depends On Graphite(1)

With Substantial Demand, Ceylon Graphite (TSXV:CYL)(OTC:CYLYF) Could Supply the Industry with the World’s Highest Grade Graphite  

“Our Cells should be called Nickel-Graphite, because primarily the cathode is nickel and the anode side is graphite with silicon oxide [there’s] a little bit of lithium in there, but it’s like the salt on the salad”

– Elon Musk(2)

Electric vehicles have become one of the hottest sectors around.

With demand appearing to show no signs of slowing, the need for high-quality metals (energy minerals) such as graphite could increase.

Why?

Graphite is a crucial material for producing the anode of lithium-ion batteries (any battery or energy storage cell) used in electric vehicles and energy storage (anodes are a key part of any energy storage cell).

Its demand could only be scratching the surface.

By 2030, the world could see approximately 125 million EVs on the road, which means we will likely need a good deal of graphite.(3)

“This is because the anode, consists primarily of graphite in the lithium-ion batteries that power these EVs, not to mention the growing number of portable tools and electronics that use the same type of battery/energy source.”(3)

However, the problem the industry is facing is that the supply does not seem sufficient to meet the demand over the next 10 years and thereon.

The shortage appears to be so severe that the USGS has included graphite on its list of 35 critical minerals and metals for the United States. “USGS also sees a major spike in U.S. demand for graphite when Tesla Motor’s Gigafactory, an enormous lithium-ion battery facility being constructed in Nevada, is fully operational.” (4)

Demand for graphite may only explode from here…

In the U.S., there appears to be a broader push for more electric vehicles.

For example, in California, Gov. Newsom seems to have signed an executive order that may ban the sale of gas-powered passenger cars in the state starting in 2035. That means that EVs and EVs alone could be available for purchase within the next 15 years.(5)

But once again- for that to happen, we must have far more graphite supply.

Or the industry could grind to a halt.

That’s how a company like Ceylon Graphite (TSXV:CYL) could potentially help.

The Top 10 Reasons to Consider Ceylon Graphite (TSXV:CYL)(OTC:CYLYF)

  1. With demand for electric vehicles appearing to show no signs of slowing, the need for high-quality energy minerals such as graphite seems to have increased. Graphite is critical for producing the anode of lithium-ion batteries used in electric vehicles and energy storage.
  2. We could need more graphite than we currently have, with possibly around 125 million EVs on the road by 2030.(3)
  3. Graphite could be the “new oil.” The decarbonization of the energy storage and transportation sectors appears to be quickly gaining momentum worldwide.(6)
  4. Ceylon Graphite claims to have access to the highest grade natural graphite in situ on the planet.(6)
  5. Graphite demand seems to outweigh the supply on hand significantly.(6)
  6. Ceylon Graphite appears to be geographically well-positioned for robust Asian markets such as China, Japan, and Korea, as well as Canada and the U.S.(6)
  7. Ceylon Graphite claims to have the rights to mine nearly 2.5 million tons of natural high-grade graphite over the next 50 years at a rate of approximately 5,000 tons per mine annually. (This is a conservative estimate and based on 10 mines. The Company has 121 Grids and with additional capital could easily double the number of mines it has available to mine. Another 10 mines would still leave 100 Grids available for exploration and development.)
  8. The company appears to have recently added two of the world’s leading researchers and innovators in graphite and graphene product innovation to its management team.(7)
  9. Ceylon expects to mine about 317,000 tons of high-grade natural graphite over the next ten years and earn aggregate revenues of more than approximately US$618 million in that period.(6) Please note though that the Company does not intend to be a seller of natural graphite. It will start processing and upgrading the graphite into value added products like spherical/expanded graphite/graphene. The company will evolve from a high-quality low-cost graphite producer to an innovator of upgraded products in the fields of technology, paints and coatings, construction and battery and energy storage. Revenues by year could be close to US $ 300 million per anum at current prices.
  10. The company’s average cost of production claims to be in the range of approximately $220 per ton, which is seemingly far lower than its contemporaries in Tanzania, Mozambique, Canada, Madagascar, etc.(3)

Ceylon Graphite (TSXV:CYL)(OTC:CYLYF) May Have Attractive Technicals  

In recent weeks, the CYL stock appears to have bounced from double bottom support at around 20 cents to a high of approximately 39 cents – good for a return of about 95%.  Since then, the stock seems to have pulled back to about 32 cents, where it appears to have once again caught double bottom support. With graphite demand seemingly outweighing supply at the moment, any positive mining news could move the stock.

In addition, the stock also appears to be displaying bullish indicators such as its 20 Day Moving Average, 20 – 50 Day MACD Oscillator, 20 – 100 Day MACD Oscillator, 20 – 200 Day MACD Oscillator, 50 Day Moving Average, 50 – 100 Day MACD Oscillator, 50 – 150 Day MACD Oscillator, 50 – 200 Day MACD Oscillator, 100 Day Moving Average, 150 Day Moving Average, 200 Day Moving Average, and 100 – 200 Day MACD Oscillator.

Just Who is Ceylon Graphite (TSXV:CYL)(OTC:CYLYF)?

Ceylon Graphite is involved in the exploration and production of graphite in historic resource jurisdictions in Sri Lanka. It claims to hold a land package constituting approximately 121 km² grids containing historic vein graphite deposits. These unique and comparatively higher margin vein (lump) deposits currently make up less than around 1% of the world graphite production.

It also could be well-positioned to grow shareholder value as demand for graphite grows because:

  • Graphite could be the “new oil.”  The decarbonization of the energy storage and transportation sectors appears to be quickly gaining momentum worldwide.(6)
  • As seen in the above chart, it claims to have access to the
  • highest-grade natural graphite in situ on the planet.
  • It can potentially get high grade graphite to market cheaply and quickly.(6)
  • Graphite demand seems to outweigh the supply on hand significantly over the next 10 years.(6)
  • Ceylon Graphite appears to be geographically well-positioned for robust Asian markets such as China, Japan, and Korea, as well as Canada and the U.S.(6)

Ceylon Graphite (TSXV:CYL)(OTC:CYLYF) Has Major Projects Under Way

  • K1 is Ceylon Graphite’s first mining project and operates under the Sarcon Development legal umbrella. This site claims to have received an Industrial Mining License Category A from the Geological Survey and Mines Bureau. An Industrial Mining License Category A is the highest category license in Sri Lanka and grants exclusive rights to mine, process and trade in graphite mined within the area specified in the license. It also allows for underground multi-borehole blasting, commercial production, use of all mining machinery and equipment and export of graphite.(8)
  • M1 appears to be an active exploration site in Malsiripura (near Kurunegella) and is operated under Ceylon Graphite’s subsidiary JADS Enterprises. Based on drilling /survey data and visible surface veins, this site shows potential. A NI 43-101 seems to have been completed and posted on SEDAR. M1 also is in process of applying for an Industrial Mining License Category A. An Industrial Mining License is issued by the GSMB under the Mines and Minerals Act no 33 of 1992.(8)
  • A new site in Hakbewa on which Sarcon has commenced exploration with VLF surveys and drilling. The site is over approximately 50 acres and appears to have substantial surface graphite dump. In addition, P1 is in the Pasyala district. VLF work appears to have commenced and drilling is expected to start shortly.(8)

Geopolitical Tensions Give Sri Lanka, And Ceylon Graphite An Edge

Ceylon Graphite could gain an advantage in the context of the growing geopolitical tensions between China and the U.S. China’s relations with many other countries also appear to be fraught with tension.

After all, China currently controls about 71.3% of global natural graphite supply, approximately 65% of synthetic graphite supply, and roughly 100% of spherical graphite supply.  All of which could put the rest of the world in a pinch over supply.(9)

That’s a key reason why we may need sources outside of China. Ceylon could possibly hold the key to safer, more reliable supply outside that region.

(US Department of Geology Survey 2020)

If trade tensions between China and developed economies continue to worsen, China could potentially place a permanent ban on the export of graphite.

Given the crucial nature of graphite to a sustainable future, developed economies such as the U.S., U.K., and others, along with large emerging markets such as India, will have to import high-quality graphite from other global sources.

This scenario could play very well into Ceylon Graphite’s hands since Sri Lanka is strategically positioned to serve major economies in the western hemisphere like India, Australia, Malaysia, New Zealand, and others. It could also enjoy demand from western nations and Russia.

Strong Management, Strong Results – Ceylon Graphite (TSXV:CYL)(OTC:CYLYF)

Ceylon Graphite (TSXV:CYL)(OTC:CYLYF) certainly seems to be led by a strong management team.

Bharat Parashar
Chairman and Chief Executive Officer

Bharat Parashar has over 42 years of experience in Asia and the United States in a variety of fields including Mining, Private Equity and Investment Banking. He is currently Chairman and Chief Executive Officer for Ceylon Graphite Corporation, a company involved in the exploration and mining of Graphite in Sri Lanka. He is also concurrently the Managing Partner for Clove Capital Partners LLC a private investment firm.

Bharat has over 18 years of experience in the Private Equity business investing in a variety of companies in Asia and formerly was Chief Executive Officer for EMP Daiwa Capital Asia Ltd and Managing Director for EMP Global’s Asian Private Equity business. Prior to the private equity business, he served at Citi Group’s (Salomon Smith Barney) as Managing Director and Co- Head of Investment Banking for South and South East Asia, where he raised over US $ 8 billion in debt and equity for regional corporations and governments. He was also Chief Executive of American Express’s business in India and Head of Chemical Bank’s Investment Banking business in Asia (ex- Japan).

Mr. Parashar is currently a Trustee and Board Member for the Asian Institute of Management’s Scientific Research Fund. He has a MBM from the Asian Institute of Management and a BA(Hons) in Economics from Delhi University in India.

Kevin Aylward
Director

Kevin Aylward has extensive public/private sector management experience in the resource and transportation sectors. Most recently Mr. Aylward has worked in the oil sands industry and with First Nations groups on business development and environmental technology issues. Previously, he served as CEO of the Goose Bay International Airport and Nunacor Development Corporation.

He also served as a Provincial Cabinet Minister for nine years with the Government of Newfoundland and Labrador including the Environment, Labour and Forestry portfolios. Mr. Aylward also served as Leader of the Liberal Party of Newfoundland and Labrador during the Provincial Election in 2011.

Abbey Abdiye
CFO

Abbey Abdiye has extensive experience in the financial sector, in both public and private companies. He is a Chartered Professional Accountant (CPA), and current chief financial officer of reporting issuers, where he is responsible for all financial, fiscal management, regulatory compliance matters and reporting aspects of company operations. He also provides strategic guidance and direction in capital structuring and is engaged in innovative financing programs that leverage sales and development.

Brett James
Director

Brett James is currently the Vice President of Sussex Strategy Group (“Sussex”). Prior to joining Sussex, Brett operated his own consulting practice servicing clients in government as well as in the health care, finance and energy sectors. He also spent two years as a Senior Associate at APCO Canada, part of one of the world’s largest public affairs agencies. Before entering the private sector, Brett worked for Ontario’s Minister of Health, Jim Wilson, serving as a senior advisor and Communications Assistant to the Minister.

He was involved in the development and roll-out of several government initiatives ranging from hospital restructuring, dialysis and MRI expansions, to physician negotiations and drug regulatory reform. Prior to and through the 1995 provincial election, Brett held several different positions in the office of former Premier Mike Harris where he played a key role in developing the party’s outreach capabilities, as well as providing event and issue briefings to the Leader. Brett remains heavily involved in local, provincial and federal politics.

Donald Baxter, P.Eng.
Director

Don Baxter is one of the premier graphite experts outside of China, having built one of only two producing graphite mines in North America. Don is presently Chief Executive Officer and Director of Applied Graphite Technologies. Prior to this, Don served as President, CEO and Executive Director of Alabama Graphite Corp, successfully completing the company’s disruptive Preliminary Economic Assessment (PEA) and introducing a new, battery-focused strategy. As President and Chief Operating Officer of Focus Graphite Inc., Don led Focus Graphite to wide recognition in the graphite industry, updated the company’s PEA and advanced the company to a completed Feasibility Study. He was also responsible for rapidly advancing the development of value-added graphite products, namely coated spherical purified graphite for the lithium-ion battery sector. Don served as President of Northern Graphite Corporation and was responsible for all technical aspects relating to the Bissett Creek graphite project, including the company’s Feasibility Study, metallurgical test work, environmental and mine permitting, as well as developing battery-related graphite products. Don also served as Mine Superintendent at the Kearney Graphite Mine and was Director of Mining at Ontario Graphite Ltd. Don holds a degree in Mining Engineering from Queen’s University, is a past member of the Board of Directors of the National Association of Advanced Technology Batteries International and is a ‘Qualified Person’ as defined by National Instrument 43-101 (NI 43-101) guidelines.

The Top 10 Reasons to Consider Ceylon Graphite (TSXV:CYL)(OTC:CYLYF)

  1. With demand for electric vehicles appearing to show no signs of slowing, the need for high-quality energy minerals such as graphite seems to have increased. Graphite is critical for producing the anode of lithium-ion batteries used in electric vehicles and energy storage.
  2. We could need more graphite than we currently have, with possibly around 125 million EVs on the road by 2030.(3)
  3. Graphite could be the “new oil.” The decarbonization of the energy storage and transportation sectors appears to be quickly gaining momentum worldwide.(6)
  4. Ceylon Graphite claims to have access to the highest grade natural graphite in situ on the planet.(6)
  5. Graphite demand seems to outweigh the supply on hand significantly.(6)
  6. Ceylon Graphite appears to be geographically well-positioned for robust Asian markets such as China, Japan, and Korea, as well as Canada and the U.S.(6)
  7. Ceylon Graphite claims to have the rights to mine nearly 2.5 million tons of natural high-grade graphite over the next 50 years at a rate of approximately 5,000 tons per mine annually. (This is a conservative estimate and based on 10 mines. The Company has 121 Grids and with additional capital could easily double the number of mines it has available to mine. Another 10 mines would still leave 100 Grids available for exploration and development.)
  8. The company appears to have recently added two of the world’s leading researchers and innovators in graphite and graphene product innovation to its management team.(7)
  9. Ceylon expects to mine about 317,000 tons of high-grade natural graphite over the next ten years and earn aggregate revenues of more than approximately US$618 million in that period.(6) Please note though that the Company does not intend to be a seller of natural graphite. It will start processing and upgrading the graphite into value added products like spherical/expanded graphite/graphene. The company will evolve from a high-quality low-cost graphite producer to an innovator of upgraded products in the fields of technology, paints and coatings, construction and battery and energy storage. Revenues by year could be close to US $ 300 million per anum at current prices.
  10. The company’s average cost of production claims to be in the range of approximately $220 per ton, which is seemingly far lower than its contemporaries in Tanzania, Mozambique, Canada, Madagascar, etc.(3)
Source 1: https://www.globenewswire.com/news-release/2018/07/25/1541707/0/en/Global-Market-for-Battery-Electric-Vehicles-2018-2032-A-3-Trillion-Market-Opportunity.html
Source 2: https://www.benchmarkminerals.com/elon-musk-our-lithium-ion-batteries-should-be-called-nickel-graphite/
Source 3: https://www.miningnewsnorth.com/page/ev-batteries-to-drive-9x-graphite-growth/5754.html
Source 4: https://www.marketwatch.com/press-release/graphite-demand-set-to-increase-as-125-million-evs-expected-to-hit-the-road-2021-01-15-121973025?siteid=bigcharts&dist=bigcharts&tesla=y
Source 5: https://www.gov.ca.gov/2020/09/23/governor-newsom-announces-california-will-phase-out-gasoline-powered-cars-drastically-reduce-demand-for-fossil-fuel-in-californias-fight-against-climate-change/
Source 6: https://www.ceylongraphite.com/wp-content/uploads/2020/12/Corporate-Presentation-Dec-2020.pdf
Source 7: https://www.ceylongraphite.com/news/ceylon-graphite-establishes-position-as-a-leading-innovator-in-graphite-graphene-product-innovation-with-addition-of-global-leaders-in-graphite-research-ip-development-and-product-commercialization/
Source 8: https://www.ceylongraphite.com/work-sites/
Source 9: The-Graphite-Supply-Chain-A-Strategic-View-George-Miller.pdf from Benchmark

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Ceylon Graphite Corp

Ceylon Graphite Corp is a graphite mining company. It is engaged in the exploration and production of high-grade graphite. The company owns the K1 production site and several other sites advancing towards production including M1, H1 and P1.