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Graphite Co. With Massive Graphite Deposit Meets With Biden

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Graphite One Inc.'s (GPH:TSX.V;GPHOF:OTCQX) President and Chief Executive Officer Anthony Huston met with the U.S. president to discuss job creation in critical mineral sectors needed for the energy transition. Read why one expert says the stock is a Buy.

Graphite One Inc. (GPH:TSX.V;GPHOF:OTCQX) President and Chief Executive Officer Anthony Huston was among a select group of company leaders who met recently with U.S. President Joe Biden to discuss job creation in critical mineral sectors needed for the energy transition, including graphite, the company said.

Production of the element is needed for batteries in electric vehicles (EVs). Last fall, China imposed export controls on the substance. This week, the battle escalated as Biden signed an executive order establishing a 25% tariff on Chinese imports, including natural graphite.

Graphite One is working to develop a complete U.S.-based graphite supply chain solution anchored by its Graphite Creek deposit in Alaska and a proposed battery anode active material production in Ohio.

"I was honored to represent everyone at Graphite One in the meeting with President Biden,"

Huston said of the meeting in the White House Rose Garden on May 14. "We appreciate his support for the renewable energy transition, and G1 is excited to continue pushing forward to create a secure 100% U.S.-based supply chain for natural and synthetic graphite. The White House meeting underscores that projects like Graphite One's are important in so many ways — from industrial investment and job creation to the renewable energy transition, technology development, and national security."

The Biden administration also clarified this week that mining projects focused on critical minerals like graphite are eligible for federal loan guarantees worth US$72 billion. Graphite One has already secured two major grants from the U.S. Department of Defense.

The Biden administration also clarified this week that mining projects focused on critical minerals like graphite are eligible for federal loan guarantees worth US$72 billion. Graphite One has already secured two major grants from the U.S. Department of Defense.

According to the company, the U.S. Geological Survey has recognized the Graphite Creek property, which encompasses 176 mining claims across more than 23,600 acres, as "one of the world's largest graphite deposits."

Technical Analyst Clive Maund wrote earlier this month  that "the intensifying debt crisis is expected to lead to a capital flight from all debt instruments and fiat generally into tangible assets, and specifically into commodities such as graphite, all of which are expected to soar."

Maund noted that activity on its long-term 20-year chart showed that "this is a very good point for it to make a major reversal to the upside" and that the shorter-term six-month chart suggested a "downtrend in force from March has run its course."

"The conclusion is that this looks like a very good price area to buy Graphite One, which is expected to break out soon from the downtrend shown on the five-year chart, which is 'getting long in the tooth,'" Maund wrote. "And if it does, it should be noted that, as on prior occasions, the resulting rally could be sharp, and even if it only makes it back up to the vicinity of its highs of recent years (this decade), it will still result in a more than three-fold gain from its current price."

Streetwise Reports reached out to Maund to see if he had any recent updates on his opinion. He told us, "Graphite One has just reversed to the upside from strong long-term cyclical support and, as is usual for this stock, when it moves it moves fast and it has risen swiftly in recent days. Since this move involved breaking out from a downtrend in force for over a year, it has considerable technical significance, and even though it may pause here or soon for a rest as it is short-term overbought, this advance is believed to be the first upleg of a strong uptrend that is expected to take it up to equal or exceed its highs earlier this decade. Early last year, it got to over CA$1.90, and in 2021, it got to CA$2.40 early in the year and CA$2.50 late in the year, so it is expected to advance quickly to the vicinity of these peaks."

Maund continued, "An important factor we should take into account that could see it exceed these earlier peaks, perhaps by a long way, is that unlike back then, we are now entering a major broad-based commodities bull market that will see metals and rare earths, etc. advance across the board with another big catalyst now coming into play being the newly announced heavy tariffs on Chinese imports that suddenly make domestically produced graphite much more competitive and attractive. So the outlook for stocks like Graphite One could scarcely be better, and it is accordingly rated a Strong Buy, especially on any minor dips."

The Catalyst: Supply Chains Are Vulnerable

The project's mineral processing plant would reduce more than 1 million tonnes of graphite (Cg) mineralization to 60,000 tonnes of graphite concentrate at 95% Cg annually, Graphite One said. More than 41,000 tonnes of battery-grade CSG would be delivered per year for use in EVs, lithium-ion batteries, and energy storage systems.

The company recently completed a 57-hole, 8,736-meter drilling program at Graphite One, including assays of 9.63 meters of 13.19% Cg and 9 meters of 14.89% Cg.

A National Instrument 43-101-compliant feasibility study on the project is anticipated this year.

"Concentration of critical minerals mining and refining capacity in China leaves our supply chains vulnerable and our national security and clean energy goals at risk," the White House said in a statement about the tariffs. "The tariff rate on natural graphite and permanent magnets will increase from zero to 25% in 2026."

"The outlook for stocks like Graphite One could scarcely be better, and it is accordingly rated a Strong Buy, especially on any minor dips," Technical Analyst Clive Maund said.

The 25% tariff on Chinese synthetic graphite is currently under an exclusion that expires at the end of May, Graphite One noted.

Maund noted that although graphite production in the U.S. is currently non-existent, Graphite One is working to bring a "sizeable deposit" to production.

"Its performance — up to now — has been unimpressive, as although there have been some tradable wild swings, it is still well down on its price in 2007," Maund wrote of the company. "In mid-2020, it broke out of a huge bullish Falling Wedge pattern that had formed over many years and proceeded to advance until late 2021 before rolling over again and dropping. This advance included a couple of big spikes, which are characteristic of this stock that could work to our advantage if it does another of them soon."

Everything From Batteries to Nuclear Reactors

While made of the same element as diamonds, carbon, graphite is very soft, relatively nonreactive, and has high electrical and thermal conductivity properties. It's made of stacked sheets of carbon atoms and occurs naturally in igneous and metamorphic rocks.

It has a greasy feel because its flexible flakes easily slide over one another, making it a good "dry" lubricant.

It's also used when a material is needed that will not melt or disintegrate — it's used to make the crucibles for the steel industry and in some nuclear reactors to slow down fast-moving electrons. In addition to batteries, it's also used for pencil lead and in brake linings for heavy vehicles.

According to a report by Fortune Business Insights, the global market size for graphite is projected to grow from US$14.83 billion in 2021 to US$25.7 billion in 2028 at a compound annual growth rate (CAGR) of 8.2%.

"We maintain the view that natural graphite prices will be rising sharply in the coming years reflecting surging demand from the EV sector, as well as rising power costs and increasingly stringent ESG (Environmental-Social-Governance) regulations," Fastmarkets noted. "This will push the market into a significant deficit without required investment in the graphite space."

Fastmarkets analysts noted that they "expect to see premium pricing structures emerge in ex-China markets to reflect higher costs associated with ESG friendly supply, but also to encourage the much-needed investment in the sector to prompt the development of localized and diversified supply. Without additional investment, the market will fall into a significant deficit beyond 2030."

According to Mordor Intelligence, "the increasing application of graphite in green technologies is likely to create lucrative growth opportunities for the global market soon."

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Graphite One Inc. (GPH:TSX.V;GPHOF:OTCQX)

*Share Structure as of 5/17/2024

The U.S. Geological Survey's list of 35 critical minerals for the new electric economy includes both graphite and another vital battery metal, lithium.

"China has a stranglehold on both metals, meaning it can use them as a cudgel in trade talks with the United States, or it could freeze shipments of them during a war," noted Rick Mills, author of the newsletter Ahead of the Herd. "Indeed, when it comes to raw materials for the electric vehicle industry, China is undisputedly the most dominant force on the planet. Almost every metal used in EV batteries today likely comes from there, either mined or processed."

Ownership and Share Structure

According to Reuters, about 0.07% of the company is owned by institutions, and about 27% is owned by strategic investors. The rest is retail.

Top shareowners include Taiga Mining Co. Inc. with about 26.5%, Executive Chair Douglas Hampton Smith with 0.2%, Director Patrick R. Smith with 0.15%, Kevin Greenfield with 0.04%, and Purpose Investments Inc. with 0.07%, Reuters reported.

Its market cap is about CA$119.72 million, with 137.61 million shares outstanding. It trades in a 52-week range of CA$1.73 and CA$0.65.

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Important Disclosures:

  1. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
  2.  This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 

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