Graphite One (TSXV: GPH | OTC: GPHOF) stock is higher by over 29% since the start of July. While impressive, that trend may continue. And for excellent reason. Foremost is that GPHOF just scored a massive value driver, an over $37 million investment grant from the Department of Defense (DoD) to “perform an accelerated Feasibility Study to modernize and expand domestic production capacity and supply for graphite battery anodes necessary for electronic vehicles and alternative energy batteries, as an essential national defense technology item.”
That news should have sent GPHOF stock appreciably higher. Since it didn’t, something important is exposed: opportunity. In fact, with a fortified bank account, which added another $5 million through a loan facility on Wednesday, Graphite One is better positioned to become a larger company faster than at any time in its history. Those already following GPHOF have had that expectation for some time, supported by updates showing GPHOF’s position to deliver graphite doing more than strengthening; it’s helped them separate from the pack of other explorers hoping to cash in on a multi-billion dollar supply opportunity.
Here’s the deal: while others are trying, GPHOF is already on the path toward turning ambition into revenues. And Wednesday’s $1.12 share price exposes a value investment proposition worth seizing. Immediately.
Appreciate what’s in play.
Graphite One Earns DoD’s Attention And Cash
Even the GPHOF bulls probably didn’t account for the value inherent to its major announcement on Tuesday, when GPHOF announced earning a whopping $37.5 million investment agreement grant from the Department of Defense (DoD) to explore ways to make the country independent from relying on foreign contributions for graphite and other much-needed battery metals.
For GPHOF, it’s an exciting event, noting that the DoD has turned to one of the smallest exploration companies to get some critical answers- and hopeful solutions. That’s called, in a word, validation. And for GPHOF and its investors, it exposes a value proposition too attractive to ignore. After all, that funding represents more than a milestone reached; it will likely become a catalyst for near- and long-term growth.
Consider this: the DoD grant to GPHOF follows the designation of graphite as one of the battery materials deemed under the DPA law to be “essential to the national defense.” Currently, the US is 100% import-dependent for graphite, with China being the world’s leading producer. The idea and funding are to help GPHOF usher in change by facilitating a feasibility study covering its Graphite Creek Project 35 miles north of Nome, Alaska. As previously announced, Graphite Creek was confirmed by the US Geological Survey to be the country’s largest known graphite resource and, better still, “among the largest in the world.”
Indeed, GPHOF management is excited, as they should be, with Anthony Huston, founder, and CEO of G1, saying, “Graphite One is honored to receive this award from the Department of Defense, funded by the IRA, and we look forward to advancing our Feasibility Study program,” He added, “This Department of Defense grant underscores our confidence in our strategy to build a 100% U.S.-based advanced graphite supply chain – from mining to refining to recycling. The World Bank Group reports that the production of minerals, including graphite, could increase by nearly 500% by 2050, to meet the growing demand for clean energy technologies.”
The investment to secure domestic graphite supplies isn’t only intended to benefit GPHOF. The US government is also in it to win it, with the investment to increase domestic capabilities for graphite. It exemplifies the Industrial Base Policy’s commitment to building a resilient industrial base to meet current and future national defense requirements. Here’s something rarely seen- a penny stock company getting touted by the DoD. GPHOF just was.
Dr. Laura Taylor-Kale, Department of Defense Assistant Secretary for Industrial Base Policy, said, “The agreement with Graphite One (Alaska) is in furtherance of the Defense Department’s strategy for minerals and materials related to large-capacity batteries.” And the better news is that more money could follow. Not only from the DoD but also from others like Tesla (NASDAQ: TSLA, Ford (NYSE: F), and GM (NYSE: GM), who would also like to see homegrown graphite production to mitigate supply chain risk and reliance on others, which are at times less than hospitable to outsiders needs. The situation today called for actions to be taken.
GPHOF Hoping To Change 100% Import Dependency For Graphite
The United States is currently 100% import-dependent for natural graphite. GPHOF intends to change this state by developing a complete U.S.-based, advanced graphite supply chain solution anchored by the Graphite Creek resource. Graphite One’s project plan includes an advanced graphite material and battery anode manufacturing plant expected to be sited in Washington State integrated with the development of the property. The plan includes a recycling facility to reclaim graphite and other battery materials, co-located at the Washington State site, the third link in Graphite One’s circular economy strategy.
That’s not been a secret and was a value driver well ahead of this week’s news. And it’s not the only one. GPHOF’s expansion over the past six months has brought more significant developments than many competing businesses have accomplished in years, with the goal of not only separating from the competitive pack but also laying the necessary groundwork to earn 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. By completing a good portion of the work, Graphite One had positioned itself to reap the rewards as an early supplier to one of the most profitable industries of today and the future.
The prize is substantial, noting that graphite is set to become one of the most valued commodities in the clean energy and electric vehicle industries, which is still in the early innings of market penetration capability. But the game’s pace is accelerating. 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.
Serving A Long Term Appreciating Market Opportunity
And that trajectory won’t slow anytime soon. 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. Thus, ahead of the investment grant news, Graphite One’s recent expansion justified a higher valuation. That case is now stronger.
There was positive writing on the wall to call attention to the United States ‘ commitment to securing its own graphite stash. Legislation was introduced and passed to incentivize development and ensure essential production components. For example, the $1 trillion infrastructure bill seeks to build over 500,000 charging stations, hoping to make half the vehicles on the road electric as soon as 2030.
That goal can only be achieved with graphite. To its credit, the industry, the government, and Graphite One recognize that. For its part, 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.
In other words, while not earning front-page headlines, the US government has always appreciated graphite as an essential asset to national security and the technology economy, cementing the material’s demand for decades. And by establishing a reliable supply chain now, they have elevated Graphite One’s position to become a leading provider in one of the most active sectors in the world, the electric vehicle sector.
Graphite One Positioned Than Ever To Increase Shareholder Value
Facts say it all: the EV industry desperately needs more graphite to support its current expansion rate. And GPHOF is ideally positioned to deliver an optimal solution to this demand. The company is currently focused on developing its Graphite One Project, a venture now likely to transform this company into one of the EV and clean energy industry’s largest suppliers of essential battery metals. That can happen quickly and efficiently.
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 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? Foremost is that 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, the graphite found in Graphite Creek has been noted to naturally exhibit the morphological characteristics of an already-processed material. This property 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 sound promising enough. Still, its potential is amplified even further: As noted, 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, of course, investor attention. And more than just investors are excited about what Graphite One could be on the verge of accomplishing.
This $37.5 Million Investment Grant Expedites Expansion
As mentioned 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 translates to Graphite One conducting its operations under a government eager to support its efforts.
Graphite One is doing its part, creating solid relationships 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.
Milestones That Can Become Catalysts In 2H/2023
The market stars have aligned to favor GPHOF for a tremendous back half of 2023. Remember, Graphite One is not a newbie to the space. They already have a clear path ahead to become one of the first graphite producers in the United States, a mission supported by early surveys of their owned land showing that they could do so at a scale that nearly matches the entire nation’s annual demand for graphite.
Remember- 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.
That’s excellent news for GPHOF prospects, noting that the company is better positioned now compared to any time in its history, operationally and financially, to expedite its mission of becoming the most important graphite player in this country’s history. Remember, the DoD took a long, hard look before giving up the $37.5 million. Since they awarded GPHOF, it’s fair to conclude they liked what they saw. Thus, it may be wise for investors to follow their lead, noting that the GPHOF tangibles pave a path of least resistance higher. More likely than not, appreciably so.
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