Comet Resources Ltd (ASX:CRL) has reached an agreement with International Graphite Ltd to form a vertically integrated high-technology graphite business in Western Australia to focus on the production of micronised battery anode material and other products for lithium-ion batteries.
Comet will gain its stake in the venture via the vend-in of its Springdale Graphite Project into International Graphite.
International Graphite will seek a listing on the ASX, with the transaction initially valuing the Springdale Graphite Project at $8 million in International Graphite shares.
The landmark arrangement will create Western Australia’s first vertically integrated graphite production business, from mine to customer.
Rationale
International Graphite has completed a definitive feasibility study for the Collie Project and the first equipment consisting of an ultra-high temperature furnace for graphite purification R&D is already on site, with a pilot spheroidising plant landed in Fremantle for transportation to the Collie facility.
International Graphite’s technology has been recognised by and received strong support from the WA Government, with a recent award of a $2 million grant to contribute to the development of the Collie facility
Comet’s Springdale Graphite Project is uniquely suited as a feedstock source for International Graphite’s facility in Collie, not only due to its location but also due to the amenability of Comet’s graphite to be processed into high value products, such as battery anode material, based on recent test work.
International Graphite plans to complete an IPO and seek admission to the ASX to join the relatively limited group of publicly listed lithium-ion battery anode material graphite companies.
Capturing opportunities in an emerging business
Comet managing director Matthew O’Kane said: “Comet’s participation in International Graphite’s vertically integrated graphite business, located in the tier one minerals jurisdiction of Western Australia, will provide the opportunity to not only unlock the value of Springdale as a mine, but to also participate in the high-technology downstream business of manufacturing high value micronised and Lithium-Ion battery anode material products.
“International Graphite’s business plan has already received endorsement from the WA Government by way of a $2M grant, and we believe the addition of Comet’s Springdale Graphite Project will also be very well received.
“International Graphite’s leadership team brings decades of experience in metallurgy and project development.
“We are confident in their ability to capture opportunities in the rapidly growing high-technology downstream graphite products business.”
Transaction structure and timeline
Comet will receive 40 million shares in International Graphite at completion of its IPO, initially valued at $8 million based on the proposed IPO issue price per share of $0.20, in exchange for the sale of tenements E74/612 and E74/562, which together form the Springdale Graphite Project.
Following the Transaction and IPO, Comet is expected to own about 25% of International Graphite.
Comet will also be entitled to nominate one person to International Graphite’s board of directors.
International Graphite plans to complete its IPO by raising $6-8 million by the end of the first quarter of 2022 calendar year.
“One of the highest grade graphite ores internationally”
International Graphite chairman Phil Hearse said: “International Graphite’s acquisition of the Springdale resource will cement our vision as WA’s first fully integrated graphite producer.
“Control of this high quality resource will close the supply loop ensuring we have consistent feed for our new downstream processing facility, at Collie, and ‘chain of custody’ oversight of our product, from mine to customer.
“This will be critical to building WA’s reputation as an ethical and reliable graphite supplier to the massive global battery market and strengthen Australia’s sovereign capability in the critical minerals space.
“The Springdale Graphite Project’s high-grade zone of 2.6 Mt @ 17.5% JORC compliant Inferred Resource is one of the highest grade graphite ores internationally and test work has shown that the concentrate can be purified to grades of greater than 99.95%, which is needed to produce battery anode material.”