Promising Developments in Alaska’s Graphite Sector

Graphite One Inc. (GPH:TSX.V; GPHOF:OTCQX) has officially launched its 2024 field program at the Graphite Creek Property, located north of Nome, Alaska. The company aims to collect the remaining geotechnical data needed to complete a feasibility study. This initiative follows positive results from the 2023 drill program.

Three drill rigs are currently operating and collecting important geotechnical information needed to design the shaft walls and foundation structures for the processing plant, waste/waste rock storage facility and other infrastructure. Additionally, Graphite One reported that 22 summer positions were filled by residents of local communities such as Teller, Brevig Mission and Nome following successful job fairs.

The company is also conducting baseline studies, including surface and groundwater quality assessments, hydrogeological studies, and ecological studies, among others. This comprehensive fieldwork is an integral part of Graphite One’s plan to complete a feasibility study by December 2024 under the terms of Defense Production Act grant from the Department of Defense.

The World of Graphite Mining

According to the Global Graphite Mining Industry Report 2024-2030, published Yahoo finance On May 29, global natural graphite production was forecast to rise 4.3% to 1,677.4 thousand tonnes (kt) in 2024, driven by anticipated increases in supply from Madagascar, Tanzania, Mozambique and Canada.

In addition, global production was forecast to continue to grow in 2025, with a projected growth rate of 6.9% to 1,794.0 kt, supported by the start-up of two graphite projects in Tanzania. Looking further ahead, global natural graphite production was forecast to continue to grow at a compound annual growth rate (CAGR) of 10.2% to 3,007.9 kt through 2030, driven primarily by production from Tanzania, Mozambique and Canada. The report included historical and forecast data on graphite production by country, highlighting significant future contributions from emerging graphite suppliers such as Tanzania, Mozambique and Canada.

As reported by Statista in May, total global graphite production was estimated at 1.6 million metric tons in 2023. Statista also noted that China not only leads in graphite production, but also has the largest graphite reserves in the world, estimated at 78 million metric tons, closely followed by Brazil with an additional 74 million metric tons. China accounted for the largest share of graphite imported to the United States, accounting for 42 percent of total U.S. graphite shipments between 2019 and 2022. Graphite, due to its high conductivity, is used in electrodes, batteries, and solar panels, among other applications. Historically, graphite was first used in the Neolithic era as paint, and since its discovery in England around 1565, its uses have expanded significantly.

Global Data released a report in April that forecast graphite production to reach 1,677.4 kt in 2024, supported by anticipated increases in supply from Madagascar, Tanzania, Mozambique and Canada. Additionally, Graphite One Resources’ Graphite Creek deposit has been identified by the U.S. Geological Survey (USGS) as the largest high-grade, large-flake graphite deposit in North America and has been designated a priority infrastructure project by the U.S. government as of January 2021.

Catalyst Company

CEO Anthony Huston highlighted the importance of the 2024 Field Program in a company press release, stating, “The 2024 Field Program is a key milestone for our stakeholders as we advance our feasibility study with a scheduled completion date of December, consistent with the terms of our Defense Production Act grant from the Department of Defense.” Huston also emphasized the strategic importance of the Graphite Creek deposit, which, in addition to being recognized by the USGS as the largest graphite deposit in the country, is one of the largest in the world.

Graphite One’s strategy includes developing a complete U.S. graphite supply chain. This strategy is based on the Graphite Creek deposit and includes a production facility for advanced graphite and battery anode materials in Warren, Ohio. In addition, a recycling facility for the recovery of graphite and other battery materials will be located at the same site in Ohio, a key part of Graphite One’s circular economy strategy.

Huston noted in a press release, “With the U.S. government’s U.S. Geological Survey designating Graphite Creek as the nation’s largest graphite deposit and “one of the largest in the world,” we are confident that this year’s program will further demonstrate the importance of Graphite One’s complete supply chain strategy in meeting demand for a material that is critical to the 21st century technology economy and U.S. national security.”

Expert analysis

Technical analyst Clive Maund highlighted in his May 6 analysis that the escalating debt crisis is likely to lead to a flight of capital from debt and fiat currencies into tangible assets, particularly commodities such as graphite, which are expected to appreciate in value. This trend indicated a favorable buying point for Graphite One Inc. Maund noted that the stock has reacted in a zone of strong long-term support over the past year, as seen on the 20-year chart. He noted that despite the superficial appearance of a breakout from a trading range, the stock has not fallen below strong long-term support dating back to 2008-2009, suggesting a potential major turnaround to the upside.

Maund’s analysis of a five-year chart showed that Graphite One was characterized by a pattern of sharp increases followed by long periods of cooling.

He highlighted that the current downtrend reaction has been ongoing for over a year now, bringing the price back into a strong long-term support zone. This support level, combined with the recent increase in the accumulation line and improving momentum indicators, suggested a good time for the stock to break out of the downtrend and into a new uptrend.

Maund believed that the current price area was a very good entry point to buy Graphite One. He expected the stock to break out of its downtrend soon and noted that if it were to revisit its recent highs, it could result in a gain of more than three times from the current price.

Ownership and share structure

According to Reuters, about 0.07% of the company is owned by institutions and about 28% by strategic investors. The rest is retail.

Reuters reported that the largest shareholders include Taiga Mining Co. Inc. with about 28.24%, CEO Huston with 0.5%, director Patrick R. Smith with 0.36%, chairman of the board Douglas Hampton Smith with 0.25%, Kevin Greenfield with 0.04% and Purpose Investments Inc. with 0.07%.

Its market capitalization is approximately CAD 95.09 million and the number of shares outstanding is 137.81 million. The company’s prices are in a 52-week range of CAD 1.73 to CAD 0.64.

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