Kingsland emerges as key piece in huge battery graphite and renewable power jigsaw

Normally a $2.56 million placement by a graphite junior would barely rate a mention.

Graphite is in the dumps and like lithium, producers of the stuff are waiting for electric vehicle uptake (53kg per EV) to eventually swamp supply capabilities by around the turn of the decade for happy days to return to pricing.

At the same time, the western world has to get serious about building an ex-China supply chain of battery material because when it comes to push and shove on the supply side of things, China will look after its own auto and stationary battery industries first.

But like an improvement in current prices, that is also proving to be a slow process, although the US government did provide existing Mozambique graphite producer Syrah (ASX:SYR) with a $US150m loan during the week.

It seems the west needs to get seriously hurt first before committing to decisive action by supporting the build out of a non-Chinese supply chain beyond what currently exits.

So again, all that is down the track, meaning there was no real reason to get interested in a $2.56m placement by a graphite junior, in this case the one announced on Thursday by the Northern Territory graphite junior with a world-class deposit under its belt, Kingsland (ASX:KNG).

But the placement was not the normal let’s keep the doors open kind of stuff. It was strategic in the true meaning of the word and highlighted the first intersection in this mining market between the new energy revolution and a junior looking to build a project.

The placement at 23c a share, or a 27% premium to the previous close of 18c a share, was to Quinbrook Infrastructure Partners, a renewable energy specialist which has invested some $US5 billion of equity in 43GW of green energy infrastructure in the UK, the US and Australia.

Investors in Quinbrook include Mike-Cannon Brookes’ Grok Ventures which is behind the proposal to build a huge solar farm in the NT to supply the domestic market as well as Singapore and Indonesia via an intercontinental power cable – the SunCable proposal.

It has previously been reported Quinbrook is heavily involved in SunCable and has an option over part of Grok’s 100% equity position.

Agglomerating domestic demand is obviously an important part of the business case. It is where Kingsland and its placement fits in.

Quinbrook will emerge with a 15.3% stake in Kingsland, which traded 3c or 16.6% higher at 21c on news of the placement for a market cap of all of $15.2 million on the expanded issued capital base.

In a show of further support for Kingsland and its own aspirations, the intention is for Quinbrook to buy graphite concentrate produced by Kingsland’s undeveloped Leliyn graphite project in the Pine Creek area of the NT, with Quinbrook to provide renewable power, either from an extension of the grid or from a standalone power project (SunCable).

Simultaneously, Quinbrook is investigating the feasibility of locating a downstream processing facility to produce precursor battery graphite at the Middle Arm precinct in Darwin.

Brian Restall, Quinbrook managing Director for Australia, said the investment in Kingsland supports the development of a globally significant graphite resource that is intended to be used in establishing new and diverse clean energy supply chains, specifically in batteries.

“The location of Kingsland’s resource complements our plans for delivering mega-scale renewables to the Territory via SunCable and our plans for the Middle Arm precinct,’’ he said.

Kingsland’s Leliyn deposit, discovered not long after the company listed in June 2022 and lying some 250km by road south-west of Darwin, is a globally significant graphite resource, in a Tier 1 location to boot compared with most of the other big undeveloped projects out there.

At last count, the resource stood at 194.6Mt at a grade of 7.5% for 14.2Mt of contained graphite. The resource is based on a small section of the host schist meaning the project is by no means resource constrained.

Apart from fending off Chinese supplies, new natural graphite projects need to fend of synthetic graphite from China which is a much more energy-intensive business and not ideal when the west is trying to decarbonise.

The potential for an eventual development of Leliyn and a downstream processing plant in Darwin based off the sun’s irradiation powers fits nicely with the decarbonisation intent. Lots to do though before it becomes a reality, more so for SunCable than Leliyn.

That’s because one thing seems certain – Leliyn has the sort of scale that will be needed to meet forecast demand growth for natural graphite, said by one forecaster to be a much as 12% CAGR through to 2040.

Silver:

When the books are closed off for the year there is a fair chance that ASX-listed silver stocks will be among the best performed, if not the best.

Two things are play. First there is the 41% increase in the silver price since the state of the year to $US33.83/oz in sympathy with the gold price, and a growing appreciation of silver’s high-growth industrial applications, particularly in solar panels.

Citi recently stoked interest by revising its 12-month price target for silver to $US40/oz from $US38/oz previously.

The second thing going on is the wall of impressive exploration results reported of late by some of the ASX-listed silver stocks, notably those by Andean (ASL), Sun Silver (SS1) and Mithril Silver and Gold (MTH).

In the last three months these stocks are up by 98%, 111% and 275% respectively as investors respond to the rising silver prices and the companies reporting thick and high-grade mineralisation exploration results on a regular basis, all of which point to big resource estimate increases down the track.