Evion Poised to Become Major Global Graphite Player

• Evion Group's vision is to become a significant player in the global graphite supply chain, with a project in Madagascar that is in the pre-construction phase.
• The graphite market is considered critical due to its importance in various industries, including lithium-ion batteries, hydrogen fuel cells, and nuclear energy.
• Evion Group aims to address the potential supply deficit in graphite by building a vertically integrated company and exploring battery anode material production.
• The Madagascan project, Maneri, offers significant upside potential with extensive graphite reserves and a focus on environmental and social responsibility.

Evion Group (ASX:EVG) Managing Director Tom Ravey outlined the company's strategy to become a vertically integrated graphite producer during his presentation at Africa Down Under. Ravey highlighted Evion's advanced Maniry graphite project in Madagascar, which is in the final permitting stages, as well as the company's downstream processing joint ventures in India and Europe. He explained how Evion aims to capitalize on forecast graphite supply deficits as demand surges from the electric vehicle and energy storage markets.

Advanced Madagascar Project to Drive Near-Term Growth

The "jewel in the crown" for Evion is the wholly-owned Maniry graphite project located in southern Madagascar. Ravey stated that the project is now in the "final licensing and permitting stage before we break ground, which should be next year."

A feasibility study completed in November 2021 outlined strong economic returns, with an after-tax NPV of $205 million. Initial mine life is 18 years based on proven and probable reserves of 16 million tonnes grading 7% total graphitic carbon (TGC). However, Ravey emphasized the exploration potential to significantly expand resources, noting "We have a 40-50 year mine straight away and the exploration target is governed by largely by outcropping graphite mineralization at surface, which has been calculated around the 260 to 380 million tonnes. So this is potentially a 100 plus year mine."

The study envisages average annual production of 60,000 tonnes of 95-97% purity graphite concentrate. Metallurgical testwork has confirmed Maniry can produce concentrate suitable for various battery and expandable graphite applications.

Having recently submitted its environmental and social impact assessment and now working on finalizing off-take agreements, Ravey said Avion is on track to make a final investment decision in 2023. He highlighted the competitive tax and royalty regime in Madagascar.

Downstream Processing to Add Value

To capture additional margin in the supply chain, Evion is collaborating on two downstream processing joint ventures.

In India, construction of a 20,000 tpa expandable graphite facility is nearing completion under a JV with Graphite International. Production is slated for late 2022.

The company also recently signed an agreement with American company Urbix to assess building a purification and spheronisation plant in Europe to produce battery-grade anode material. Ravey said this will allow Avion to be "exposed to an uplifting price and greater profits."

Strong Graphite Market Fundamentals

Ravey outlined the bullish case for natural graphite demand, noting benchmark forecasts for a six to seven-fold increase in annual production by 2035. Graphite is irreplaceable for lithium-ion batteries and other clean energy technologies. However, he warned "those mines currently don't exist and I'll be very, very surprised if they get up and running because they'll need to produce a very specific graphite with very specific properties."

With China controlling over two-thirds of global graphite output, Ravey said Evion can help alleviate supply chain concerns over reliance on Chinese supply. He highlighted how Evion's projects tick all the boxes in terms of scale, quality and logistics to service global customers.

Significant Upside Potential

Despite its advanced status and downstream ventures, Ravey noted Evion remains undervalued with a market capitalization of only around A$10 million. He sees strong potential to improve the economics outlined in the feasibility study, including from lower capex and opex components.

The company also has exploration upside at the nearby Antsapera project, which Ravey described as holding "exceptional grades that hold strategic value."

Experienced Leadership to Execute Strategy

In conclusion, Ravey emphasized the experience of Evion's board and management team. This includes his own 35 years in the resources industry and strong expertise in project development.

He reiterated that Evion is "poised to become a material player in the global graphite supply chain" through leveraging its high-quality assets and integrating downstream to capture additional margin. With graphite demand set to surge, Ravey sees Evion delivering substantial returns for early investors as it transitions to producer status.

Reasons to Invest in the Evion Group

• Strong economics at flagship Maniry project with after-tax NPV of $205 million based on feasibility study. A low market cap of only around A$10 million suggests potential for high returns if project is developed successfully.
• Additional upside through downstream processing JVs in India and Europe. These allow Evion to move down the value chain into higher-margin battery anode material production.
• Forecast graphite supply deficit as EV adoption accelerates. Benchmark sees the need for 6-7X increase in graphite production by 2035. Evion's assets can help fill this gap.
• Exploration upside at Maniry and Antsapera offers the potential to significantly expand resources and production profile over time. Could support a multi-decade mine life.
• Experienced board and management with expertise in project development and the graphite industry. Increases likelihood of successful execution.
• Located in the stable mining jurisdiction of Madagascar with competitive fiscal terms.
• Strong demand outlook from major economies investing heavily in EVs and energy storage where graphite is a critical input.

In summary, Evion is positioning itself to benefit from surging graphite demand through a near-term production asset at Maniry and downstream processing to integrate further along the value chain. The company has robust economics and exploration upside that are not reflected in the current share price. For investors bullish on the EV and battery materials thematics, Evion provides leveraged exposure to the graphite growth story with the potential for significant shareholder returns.