The Ecograf Ltd (ASX: EGR) share price went through big moves today, opening at 18 cents and soaring to 24 cents at midday before dropping again to close at 18 cents. This follows today's presentation at the Benchmark Minerals Battery Day, and comes in the wake of Tesla's Battery Day in the US yesterday.
What did Ecograf announce?
Ecograf reported that its vertically integrated graphite business was poised for development. The company plans to produce 20,000 tonnes per annum of purified graphite for lithium-ion batteries.
With each electric vehicle requiring 27 kilograms of purified natural graphite, Ecograf cited a claim that the electric vehicle market is forecast to drive 700% growth in graphite demand by 2025.
Ecograf said it produced a high quality, cost-competitive alternative to existing battery graphite, which uses toxic materials.
As a result, the company is producing the first commercial battery graphite purification facility outside China. The initial commercial production plant will produce 5,000 tonnes per annum of graphite, which will be expanded to 20,000 tonnes by 2022.
What's the plan?
Ecograf's initial graphite production facility will be constructed in Western Australia. The company said that Australian government funding support and debt financing was in progress.
The company has a long term sales plan through thyssenkrupp AG, a German conglomerate that supplies car manufacturers.
When Ecograf reaches production of 20,000 tonnes of graphite per year, it anticipates annual earnings before interest, tax, depreciation and amortisation (EBITDA) of US$35 million.
Ecograf also explained a plan for recycling waste generated during the lithium battery production process into usable materials. The company cited a report from Tesla Inc (NASDAQ: TSLA) which said battery cell manufacturing could result in production losses of up to 30%. Ecograf plans to recover and reuse these materials. The company has goals to lower the cost of battery production while lowering carbon emissions.
It is currently awaiting the outcome of a US$60 million debt financing proposal for the development of 60,000 tonne per annum natural flake graphite mine in Tanzania. The mine is expected to produce EBITDA of US$44.5 million per year.
About the Ecograf share price
The graphite production and processing company has been listed on the ASX since 2019. The Ecograf share price is up 500% since its 52-week low of 3 cents, and has increased 125% since the beginning of the year. The Ecograf share price is up 100% since this time last year.
