In the increasingly lucrative EV and energy storage market, there is perhaps no emerging company more deserving of investor attention than Graphite One (TSXV: GPH | OTC: GPHOF). Not only is $GPHOF capitalizing upon a battery metals sector that is seeing more activity than ever, but they are doing so more efficiently than many of their senior competitors.
As a matter of fact, the company's expansion over the past six months has brought more significant developments than many competing businesses have accomplished in years, and Graphite One is prepared to elevate itself even further from the pack. That's a result of $GPHOF doing the right things at the right time, focused on earning the lion's share of the EV vehicle and energy storage industries' soaring demand for graphite, an essential component in the production of lithium-ion batteries. In doing so, Graphite One has positioned itself to reap the rewards of becoming an early supplier to one of the most profitable industries of today and the future.
Keeping Up With Soaring Graphite Demand
Just how high has the demand risen for graphite in recent years? Simply put, the material is set to become one of the most valued commodities in an industry that is certain to continue growing as EV technologies reach the mainstream consumer. In fact, the World Bank has estimated graphite production will need to increase by 500% over the next 30 years to meet the demand for battery metals if it continues growing at its current pace. If that sounds hard to believe, know this: CNBC has predicted that as many as 125 million electric vehicles will be on the road as soon as 2030. It's not just headline names like Tesla ($TSLA) and Nio ($NIO) needing the metals to survive. These days there are over 20 major EV manufacturers, and they are all bidding on a scare graphite metal.
Therefore, imagine what that number could look like by 2050 and beyond – and how much graphite will be needed to sustain it. Clearly, the EV and energy storage sectors aren’t going anywhere, and it isn’t too late to become a leading supplier of these industries’ critical production materials. In fact, while Graphite One’s recent expansion justifies a higher valuation right now, an investment at current levels could bring substantial gains as they solidify their position over the next few years.
Indeed, there’s more driving the near- and long-term opportunity than rising demand. The US has strongly supported the expansion of electric vehicle technologies, introducing legislation designed to incentivize their development and secure essential production components. For example, a new $1 trillion infrastructure bill seeks to build over 500,000 charging stations, hoping to make half of the vehicles on the road electric as soon as 2030.
To achieve this goal, the industry will need substantially more graphite than what is currently being manufactured, and the government – and Graphite One – recognize this. The White House signed an executive order in 2021 that sought to strengthen the nation’s reserve of battery metals, with the United States Geological Survey categorizing graphite as one of the 35 minerals and metals considered critical to the United States. Furthermore, the US Department of Defense stated in 2021 that there would be an 83,000 metric ton shortfall of graphite supply in a potential conflict scenario.
It is clear that the US government has identified graphite as an essential asset to national security and the technology economy, cementing the material's demand for decades to come. And by building a solid foundation now, Graphite One is in a position to become a leading provider in one of the most active sectors in the world, the electric vehicle sector.
Graphite One Could Support The Nation’s GraphiteNeeds
The EV industry desperately needs more graphite to support its current expansion rate, and Graphite One is looking to provide an optimal solution to meet this demand. The company is currently focused on developing its Graphite One Project, a venture that could transform this small-cap stock into one of the EV industry’s largest suppliers of essential battery metals.
The Graphite One Project is a vertically integrated initiative to mine, process, and manufacture high-grade coated spherical graphite, or CSG. It would primarily serve the lithium-ion electric vehicle battery market, with additional revenue opportunities stemming from other graphite-related applications.
One of the most exciting assets powering the opportunity is Graphite One's 100%-owned Graphite Creek project in Alaska. Located about 60 kilometers north of Nome, Alaska, the property covers 23,680 acres and boasts 135 State of Alaska mining claims and 41 State-selected mining claims. What makes this such an invaluable asset? First of all, Graphite One’s preliminary economic assessment of the area indicates a potential 40-year mining life for the Graphite Creek deposit, supporting an annual production of 41,840 metric tons of coated spherical graphite and 13,500 metric tons of graphite powder.
Better yet, the graphite found in Graphite Creek has been noted to naturally exhibit the morphological characteristics of an already-processed material, a property that could bring significant efficiencies when producing the Coated Spherical Graphite required by Li-Ion and EV batteries. These unique characteristics have led the company to brand Graphite Creek's graphite by the acronym "STAX" or "Spherical Thin Aggregate Expanded." Preliminary research on STAX Graphite has indicated that it could even be helpful for applications beyond EVs, such as high-purity nuclear-grade graphite, fire suppressant graphite foam, and industrial diamonds for next-gen semiconductor substrates.
Its extraordinary properties and high yield might sound promising enough, but here’s where its potential is amplified even further: the United States graphite supply has been 100% dependent on imports since 1990, with China supplying the vast majority of the materials. The government imported 58,000 metric tons of natural graphite in 2020, almost identical to Graphite One’s potential annual output. Therefore, Graphite One and its Alaskan Graphite Creek project are in a position to quickly become the largest domestic producer of graphite, an unprecedented title that would bring about record-high revenues and investor attention. And, it's not just investors that are excited about what Graphite One could be on the verge of accomplishing.
Government Favorability Expedites Expansion
As stated earlier, the US government has emphasized strengthening the development and production of battery metals and minerals to incentivize cleaner energy sources and correct an over-reliance on foreign sources for these critical materials. In February, the White House reiterated its vision to expand the domestic mining, production, processing, and recycling of essential minerals and materials. This means that not only does Graphite One have 100% ownership of a domestic property rich in graphite, but they are conducting their operations under a government that is eager to support their efforts.
Graphite One themselves have also built a strong relationship with the Alaska US Delegation, the State of Alaska and other relevant State Agencies, and the local Alaska Native Entities. In fact, Alaska Governor Mike Dunleavy nominated Graphite One as a High-Priority Infrastructure Project in 2019, stating, "Graphite Creek is the largest deposit of graphite in the Nation, and would be a superior domestic supply of this critical mineral, which is necessary for modern batteries, renewable energy technology, and many other high-tech uses.”
This nomination allowed the company to present its project to the Federal Permitting Improvement Steering Council (FPISC), in which its operations were found to qualify under both the “renewable energy” and “manufacturing” sectors. All of this provides Graphite One a green light to continue the development of their Graphite Creek property in Alaska, having secured CDN $21 million in funding last year to support the recent completion of a pre-feasibility study for what could potentially be the most lucrative graphite deposit in the nation.
Looking Ahead To A Breakout 2022
While many mining prospects might face a litany of regulatory issues, Graphite One has a clear path ahead to become one of the first graphite producers in the United States. Better yet, not only would they be one of the first in the domestic market, but early surveys of their owned land show that they could do so at a scale that nearly matches the entire nation’s annual demand for graphite.
Renewable energy, tech manufacturing, and national security all rely on a consistent source of graphite, meaning that the United States' 100%-dependency on imports as of 2021 is an unsustainable model for an industry of its size and importance.
Moreover, the demand for graphite is expected to rise by nearly 500% by 2050 as the development of EVs and other battery technologies outpace the current rate of graphite production. This, coupled with supportive US government legislation, makes domestic graphite production a lucrative and timely venture. And with Graphite One’s Graphite Creek project showing the signs of being one of the largest deposits of the material in the nation, the company is in a strong position to reap the rewards of being one of the country’s first suppliers.
Much data indicates the long-term prospects of Graphite One’s operations are excellent. And while $GPHOF certainly fits the description of a buy and hold stock, there is much in play in the near term. The graphite market is expected to soar to $29.5 billion in 2022. Being one of the first graphite producers within the United States could allow Graphite One to seize a considerable portion of that market. Remember, mining and explorations are especially susceptible to trading at a discount until they prove their prospective location is asset rich.
$GPHOF's current share price is no exception. Still, with results from its 8-hole core holes expected to be released in Q1 2022, today's valuation may present a massive opportunity for the early investor. Thus, investors may want to dig into prices at current levels.
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