Ceylon Graphite Corp (CYL.V) specializes in lump vein graphite. CYL.V hold high purity graphite assets in Sri Lanka.
Coverage was initiated on January 2018 with notes on July 2018, January 2019 and August 2019. Below is an update.
Aug. 22 - M1 Assay Results Show 99.2% Carbon Content. Received assay results of laboratory testing of graphite samples taken downhole in the shaft at its M1 site in the Malsiripura area in Sri Lanka. The result indicates a naturally occurring carbon content (Cg) of 99.2% which is vastly superior to most other natural graphite sources globally.
The laboratory testing was done by the Sri Lanka Government’s Geological Survey and Mines Bureau’s laboratory. Tests were conducted from the 1st to the 15th of August 2019.
Ceylon Graphite is looking forward to additional testing from its excavation efforts, as bedrock extracted Graphite at lower depths from this site is expected to produce even higher purity than the Cg of 99.2%.
Aug. 26 - Announces Mining License for K1. Sarcon Development (Pvt) Ltd has been granted an Industrial Mining License Category A for its K1 Graphite Mining Project. It 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.
Sep. 19 - Proposed Private Placement of Units and Proposed Amendment of Convertible Debentures. To complete a non-brokered private placement at a price of $0.08 for gross proceed of up to $1,25M; warrant at $0.15 cents.
The Convertible Debentures currently entitle the holders thereof to convert the principal balance thereof into common shares of Ceylon Graphite at a price of $0.25 per share. The Company intends to amend the conversion price of the Convertible Debentures to $0.15 per share.
Oct. 17 - Closed the first tranche of its previously announced non-brokered private placement of units. The Company has issued a total of 10,000,000 units (“Units”) at a price of $0.08 per Unit for aggregate gross proceeds of $800,000.
Nov. 11 - Announces Environmental Protection License for Sarcon Development’s K1 Project.
CYL also announces that a subsidiary of Sarcon, BPA Lanka (Private) Ltd has purchased land next to the K1 project that will allow the company to construct an adit from the main shaft. This adit will facilitate the removal of graphite from the mine, aid with ventilation and help with dewatering of the shaft area.
Mr George Smitherman has resigned as a Director of the Company. The Board thanks him for his tenure as a Director.
Dec. 13 - Sarcon Development’s K1 Project Announces Commencement of Commercial Production.
“We are finally in commercial production mode and look forward to selling our first container of Sri Lankan vein graphite- today we have brought 2 tons of raw graphite to the surface,” said Bharat Parashar, Chief Executive Officer.
The Company is presently in discussions with several end users and processors of natural graphite regarding sales contracts. The Company also announces that Sarcon’s drilling and exploration program will increase in its momentum as the Company looks to increase its footprint to at at least 5 mine sites over 2020.
In accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects, of the Canadian Securities Administrators, Ceylon Graphite advises that it has not based its production decision on a feasibility study of mineral reserves demonstrating economic and technical viability of the K1 Project, and that the mineral resource estimate for the K1 Project is comprised predominately of an inferred mineral resource.
Jan. 6 - Veteran Graphite Mining and Upgrading Executive Don Baxter Joins the Board of Ceylon Graphite.
Jan. 10 - Announces Closing Non-Brokered Private Placement. Issued a total of 2,500,000 units (“Units”) at a price of $0.08 per Unit for aggregate gross proceeds of $200,000, which brings the aggregate proceeds to $1,000,000.
Jan. 28 - Announces Proposed Private Placement of Units. Intention to complete a non-brokered private placement at a price of $0.25 (Warrant $0.30 cents) or gross proceeds of up to $3,500,000. To date, the company has received subscriptions for 10,000,000 shares amounting to $2,500,000.
“We are grateful for such strong investor support,” says Bharat Parashar, Chairman and Chief Executive Officer. “These funds will accelerate our production at K1 and will be enough to complete work at the M1 site.”
Feb. 11 - Achieves 99.9997% Graphite Purity, Exceeding Lithium Ion Battery Requirements - Utilizing a thermal purification process with vein graphite from our K1 Mine.
It is important to note that Thermal Purification is environmentally responsible and sustainable and does not utilize acids that are commonly regarded as dangerous and environmentally harmful. (I.e. Hydrofluoric acid – as is a standard used in Chinese graphite purification for spherical graphite for battery grade graphite).
Flake Graphite Projects aspiring to produce purified graphite for various secondary applications require Primary Processing of mined graphitic material which typically grades less than 20% Cg in the ground. This adds to higher OPEX and CAPEX requirements. Ceylon Vein Graphite requires no primary processing. “As mined” vein graphite grading > 90% Cg in the ground only requires sizing prior to the purification furnace.
Feb. 26 - Achieves Excellent Results For Sri Lankan Vein Graphite Meeting Lithium Ion Battery Requirements. Spheronization test work carried out at an independent facility with vein graphite from our K1 mine were positive.
Ceylon has not yet undertaken electrochemical characterization of our vein graphite, however published papers indicate that vein graphite exhibits “many favourable characteristics such as high reversible capacity… Among the natural graphite varieties, vein graphite typically possesses very high crystallinity together with high natural purity, which in turn reduces the cost of purification.” Half-cell testing carried out with vein graphite and “Galvanostatic charge-discharge, cycle voltammetry, and impedance analysis revealed a high and stable reversible capacity of 378 mAh/g, which is higher than the theoretical capacity of flake graphite at 372 mAh/g”. The study also observed low irreversible capacity acquiesces to high columbic efficiency of over 99.9%. It concludes “highly crystalline developed natural vein graphite can be presented as a readily usable low-cost anode material for Li-ion rechargeable batteries.”
Also announces that Robert Marvin has resigned as a Director of the company. Donald Baxter, P.Eng., Director of Ceylon Graphite Corp., is the new Qualified Person as defined by National Instrument 43-101 ("N.I. 43-101") guidelines.
Summary
Milestones
Significant achievements were reported in the period.
In August 2019, CYL.V disclosed that its subsidiary Sarcon Development Ltd had been granted an Industrial Mining License Category A for its K1 Graphite Mining Project. This was followed by the reception of an Environmental Protection License for K1 in November 2019. Also reported at the time was that a Subsidary of Sarcon, BPA Lanka (Private) purchased land next to the K1 project that will allow the company to construct an adit from the main shaft to facilitate the graphite removal, aid with ventilation and help with dewatering of the shaft area for the K1 Project.
On December 2020, CYL.V declared that the K1 Project was beginning commercial production. Also mention was:
The Company is presently in discussions with several end users and processors of natural graphite regarding sales contracts. The Company also announces that Sarcon’s drilling and exploration program will increase in its momentum as the Company looks to increase its footprint to at at least 5 mine sites over 2020.
Also noteworthy, the January 6 2020 release in which CYL.V reported that Don Baxter was joining its Board of Director and subsequently announced (February 2020) that he would become the new qualified person under 43-101 guidelines.
Purification
In August 2019, CYL.V reported that M1 Assay Results Showed 99.2% Carbon Content. Test were conducted by the Sri Lanka Government’s Geological Survey and Mines Bureau’s laboratory.
February 2020, CYL.V announced that it achieved 99.997% graphite purity (exceeding Lithium Ion battery requirements). The findings relates to product from its K1 Mine and the purity obtained was through a thermal purification process. CYL.V did not disclosed whether this was done internally or using a third-party organization. The company stated:
Ceylon Vein Graphite requires no primary processing. “As mined” vein graphite grading > 90% Cg in the ground only requires sizing prior to the purification furnace.
Shortly thereafter CYL.V reported positive spheronization results for its K1 vein graphite by an independent facility (unnamed). While the company has not done electrochemical characterization, it referred to "published papers" with source (not provided) that indicated that “highly crystalline developed natural vein graphite can be presented as a readily usable low-cost anode material for Li-ion rechargeable batteries". Substantiating that its product met this requirement.
Financing
In the past nine months, CYL.V conducted three financing rounds.
September 2019; $1.25M at $0.08; warrant $0.15 cents. In the process, it amended its Convertible Debenture from $0.25 originally to $0.15 cents per shares. One month later, it closed nearly two-third ($0.8M) in its first tranche. Finally, four months later it reported an incremental $0.2M for a total of $1M which is about (80%) of the original targeted amount.
January 2020; roughly two weeks after closing the first two rounds, CYL.V announced a more ambitious third round. This time for $3.5M at $0.25; warrant at $0.30 cents for which it reported that $2.5M (71%) was already accounted for!
“We are grateful for such strong investor support,” says Bharat Parashar, Chairman and Chief Executive Officer. “These funds will accelerate our production at K1 and will be enough to complete work at the M1 site.”
In Short
CYL.V made substantial progress on its K1 site in this period. Despite the reported milestones, valuation trended downward from August until the announcement of Commercial Production (December). CYL.V went from $0.06 on December 13 (date of release) to $0.18 cents on January 2 ,2020. The reported 80% completion rate ($1M out of $1.25M) of the private placement on January 10, had a some selling pressure which was countered by the news of a subsequent round of financing for almost triple the amount; $3.5M (January 28th) of which $2.5M (71%) was accounted for already.
Alas, that too seems short-lived. In fact, the announcements of February 11 and 26 were not successful in maintaining valuation. It is also noted that these positive accomplishment lacked details. For instance, in the Feb. 11 2020, 99.9997% graphite purity release, CYL.V did not disclosed if it was done internally or using a third-party organization. For the Feb. 26 announcement (positive spheronization), the independent facility was unnamed which limits validity and CYL.V also refers to "published paper" (without sources) as a rationale for not doing electrochemical characterization.
Having not issued a news release in almost three months has not helped either, until today; it closed at $0.09 cents.
CYL.V continues to be attractive at the current price knowing that outstanding warrants are present at $0.15 and $0.25 cents, as well as, convertible debenture at $0.15 cents. Also, are the bids suggesting than an update might be incoming?
In previous notes we indicated that potential catalyst were a) Articulation of cumulative volume (capacity) for K1 and M1, b) Processing and marketing partnership, and c) Off take agreements. Processing (b) is very much underway but (a) and (c) are still outstanding. However, the initiation of commercial production at its K1 site makes CYL.V still promising.
DISCLAIMER: The work included in this article is based on current events, technical charts, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The content of rally is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions - rally cannot take responsibility for your investment decisions.
