Ceylon Graphite Corp (CYL.V) hold high purity graphite assets in Sri Lanka. CYL.V specializes in mining lump vein graphite for the development and commercialization of innovative graphite products.
CYL.V's graphite is easily upgradable for a range of applications including electric vehicle and battery storage markets as well as construction, healthcare and paints and coatings sectors.
The Government of Sri Lanka has granted the Company’s wholly own subsidiary Sarcon Development (Pvt) Ltd. an IML Category A license for its K1 site and exploration rights in a land package of over 120km². These exploration grids (each one square kilometer in area) cover areas of historic graphite production from the early twentieth century and represent a majority of the known graphite occurrences in Sri Lanka.
Coverage was initiated on January 2018 with notes on July 2018, January 2019 August 2019. and May 2020.
News releases
June 2 - Announces First Commercial Sale of 95-97% Natural Graphite. CYL.V wholly owned subsidiary, Sarcon Development (Pvt) Ltd sold 1 ton of vein graphite with Carbon content of 95-97% to 2D Materials Pte Ltd of Singapore.
2D Materials purchased the graphite to evaluate it for its graphene production needs.
June 4 -Enters Korean Market: The sale, which was for 300 kgs of vein graphite with carbon content of 95-97%, was to Elves Graphite Co, Ltd of Seoul, South Korea. The graphite was purchased to evaluate its suitability for battery manufacturers and other industries who use high-grade graphite in their manufacturing processes in South Korea.
Aug. 6 - Announce Proposed Placement of units: To a consortium of four international investors. Upon the closing of the Offering, the consortium will, collectively, own approximately 55% of the issued and outstanding shares of the Company, though individually no one subscriber will hold more than 15% of the issued and outstanding shares.
Aug. 26 - Updates Private Placement: Granted an extension for its proposed private placement by the TSX Venture Exchange. The extension was granted to permit CYL.V to obtain the requisite disinterested shareholder approval.
CYL.V intends to raise through a non-brokered private placement of units a gross proceeds of up to C$ 8.1M or US$ 6.00M (US$1= C$1.35) through the issuance of an aggregate of 90M units at $0.09 cents (Warrant, $0.15 cents).
Oct. 2 - Ceylon Updates Private Placement: Pursuant to its press release of August 6, 2020, CYL has been granted a further extension to close its proposed private placement by the TSX Venture Exchange. The small delay is needed by certain measures instituted in the domicile of our investors in response to COVID-19 and other health related issues.
Oct. 19 - Announces New Equity Offering: Intend to complete a private placement pursuant to which it will issue and sell up to 51,428,566 units at a price of $0.0875 per Unit (Warrant 0.15 cents) for aggregate gross proceeds of $4.5M.
Oct. 23 - Announces Closing of the First Tranche of Its Private Placement: An aggregate of 30,163,566 units (“Units”) at a price of $0.0875 per Unit for gross proceeds of $2,639,312 (the “Offering”). The second closing for the balance of the Offering is anticipated to occur on or about October 28th, 2020, or such other date as the Company may determine.
Net proceeds of the offering will be use to accelerate the commercial production initiated earlier this year at its K1 site, finish development and attain mining licensing approval for its M1 site, advance development of additional sites and for general corporate purposes. All securities issued are subject to a statutory hold period of four months and one day.
Oct. 29 - Announces Closing of Second Tranche of Private Placement: issued an additional 21,265,000 units at $0.0875 per Unit for gross proceeds of $1,860,687.50 in connection with the closing of a second tranche. In aggregate, Ceylon Graphite issued an aggregate of 51,428,556 units for gross proceeds of $4,500,000 pursuant to its private placement.
Nov. 19 - Announces Granting of Options and Debt Conversion: granted an aggregate of 7.25M stock options to its directors, officers and employees. Each option is exercisable at $0.215 at any time until November 18, 2023.
Pursuant to the terms of the Debt Agreement, the Company has agreed to issue an aggregate of 750,000 common shares (“Debt Shares”) to the non-arm’s length party in exchange for the cancellation of $150,000 in debt owing to the party.
The Debt Shares are being issued at a deemed price of $0.215.
Dec. 1 - Resumes Production: K1 and M1 sites in Sri Lanka have returned to full operations following easing of local COVID-19 related restrictions. CYL.V's primary near term objective is to accelerate the commercial production volumes at its K1 site which first began production this year. The Company is also advancing towards development completion at its M1 site and is in the process of attaining mining licensing approval for production at this site.
“The capital from our recent successful financing has allowed us to aggressively target increased production,” said Bharat Parashar, Chairman and Chief Executive Officer. “We are in active discussions with international vendors for equipment that will enhance our capabilities underground and are close to restarting drilling at our third site (H1)".
Dec. 3 - Announces approval for OTCQB Under Symbol "CYLYF": Approved for trading on the OTCQB Venture Market effective December 3, 2020. The Company's U.S. listing will trade under the symbol "CYLYF" while the Company's primary Canadian listing will continue to trade on the TSX Venture Exchange under "CYL".
Dec. 4 - Announces Corporate Update Webinar and Participation in Upcoming Investor Conferences: Virtual Metals Investor Forum: January 14-15, 2021 and Mines and Money Online Global Conference: March 23-25, 2021.
Dec. 8 - Hallgarten & Company Initiates Coverage of Ceylon Graphite.
Dec. 8 - Updated Press Release: To clarify the information disseminated with respect to the research report prepared by Christopher Ecclestone of Hallgarten & Company.The Company has removed the link to the report from its website and does not endorse the buy recommendation contained in the Report. The market price for the Company’s shares could be subject to wide fluctuations and CYL.V does not provide any guidance or assurance of the future price.
Hallgarten & Company has acted as a strategic consultant to Ceylon Graphite and has been compensated for those services in the past, including the preparation of the Report, but it does not hold any stock in the company, nor does it have the right to hold any stock in the future.
Dec. 18 - Announces New Appointments: Mr. Janaka Rathnayake and Dr. H.M Ranjith Premasiri to new roles within the Company. Mr. Rathnayake will be General Manager of Operations for Sarcon Development (Pvt) Ltd. and will be responsible for all of the Company’s exploration and mining related business in Sri Lanka. Dr. Premasiri will be Senior Consultant Geologist and will guide and lead Sarcon’s team of geologists.
Jan. 4 - Announces Proposed Amendment of Convertible Debentures: 1. extending the maturity date of the Convertible Debentures by six (6) months from May 23, 2021 to November 23, 2021. 2. increasing the interest rate from 6% to 8%. 3. convert all of the accrued and future interest into common shares in the Capital of the Company at a price of $0.165 per shares (the “Debt Shares”); and extend the Warrants issued on May 23, 2018 from May 23, 2021 to Nov 23, 2021.
Issue an aggregate of one million (1,000,000) warrants (the “Compensation Warrants”) to the debenture holders. Each Compensation Warrant will entitle the holder thereof to acquire one (1) common share in the capital of the Company at an exercise price of $0.22 per share for a period of one (1) year from date of issuance.
Dr. Siva Bohm and Dr. Mallika Bohm collectively bring extensive experience in product development for graphite and graphene applications in anti-corrosion coating, nanotechnologies, energy storage, and fuel cell advancement. The newly appointed executives experience includes previously leading scientific teams at Talga Resources Limited a leading battery anode and graphene additives company and senior scientific roles with the Tata Group of Companies.
Jan. 20 - Participation in O&M Town Hall Webinar and Upcoming Investor Conference Schedules.
Summary
Commercial Sale
In June, CYL.V announced a one ton graphite sale to 2D Materials Pte Ltd in Singapore, along with another of 300 kg to Korea based (Elves Graphite). Both orders were for evaluation purpose. As such, these were sample sales.
Financing
In August, CYL.V disclosed a private placement from four investors. The initial terms of the financing were up to $8.1M at $0.09 cents. The terms were revised in October to $4.5M at $0.0875 cents (Warrant $0.15 cents).
Net proceeds of the offering will be use to accelerate the commercial production initiated earlier this year at its K1 site, finish development and attain mining licensing approval for its M1 site, advance development of additional sites and for general corporate purposes. All securities issued are subject to a statutory hold period of four months and one day.
The placement eventually closed in late October; fully subscribed at $4.5M.
Options, Debt Conversion
In November, CYL.V issued 7.25M stock options to its directors, officers and employees. Each option is exercisable at $0.215 at any time until November 18, 2023. Also announced in the same release is a debt conversion deal.
Pursuant to the terms of the Debt Agreement, the Company has agreed to issue an aggregate of 750,000 common shares (“Debt Shares”) to the non-arm’s length party in exchange for the cancellation of $150,000 in debt owing to the party.
The Debt Shares are being issued at a deemed price of $0.215.
Mining Activities
In December, Ceylon Graphite disclosed that K1 production and M1 exploration activities had resumed. K1 initiated commercial production earlier in the year but these efforts were suspended due to Covid-19 restrictions. As for M1. CYL.V continues to work toward obtaining a mining license.
Convertible Debentures
Recently, CYL.V announced a proposed amendment to a set of convertible debentures; extending the maturity date (from May 23, 2021 to Nov 23, 2021), and increasing the interest rate from 6% to 8% with a strike price of $0.165. Also...
Issue an aggregate of one million (1,000,000) warrants (the “Compensation Warrants”) to the debenture holders. Each Compensation Warrant will entitle the holder thereof to acquire one (1) common share in the capital of the Company at an exercise price of $0.22 per share for a period of one (1) year from date of issuance.
Appointment
The hiring of a GM of Operations and Consultant Geologist (Sarcon Development (Pvt) Ltd is significant. It enables continuity and adequate management of personnel and resources especially if CYL.V intends to increase the number of site. The Chief Scientist & Technical Director are critical for bringing "value added graphite products" to market.
In Short
In the last eight months, CYL.V experienced a significant increase in valuation. The closing of the $4.5M financing, and a change in the graphite prices (Graphite -100, 90-93% C, FOB China up 13.2%)1 appears to be material.
“China acts as an early warning system for the rest of the world. Historically, price rises that occur in China are usually experienced in the rest of the world 3 to 6 months later.” - Benchmark’s Managing Director, Simon Moores1
Note that the movement of the graphite price has impacted many graphite junior and not only CYL.V.
In a recent interview, CYL.V disclosed targeting 5,000 tones per year per sites. At $2000 per tones, it represents $10M per year in gross revenue per site. CYL.V expects ramping up to two sites this year, and more in future.
Hallgarten & Company (paid consultant of CYL.V) issued a 12 month price target of $0.76 cents. While reaching this target is plausible, the recent valuation increase, the terms of convertible debentures, options and a debt conversion strike price are a factor. Exploration and mining are capital intensive activities, should CYL.V intends to bring additional sites to productions faster more funds will be needed.
In previous notes, it was indicated that potential catalyst were: a) articulation of cumulative volume (capacity) for K1 and M1, b) processing and marketing partnership, and c) Offtake agreements. Both a) and b) are underway. However, c) an offtake agreement (or consistent customers orders) are still lacking although the recent appointment of a Chief Scientist and Technical Director are promising to drive the latter. For now, CYL.V trades roughly at R2; $0.33 cents.
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