Canadian graphite mining company South Star Metals stock soars 49%

(omid roshan/Unsplash)

Canadian battery-metals project developer South Star Battery Metals Corp (ticker: OTCQB: STSBF TSXV:STS)  saw its stock rise 49% over the past ten days, a move that increased the company’s market cap by C$8.3 million to C$25.37 million.

The Canadian company’s goal is to position itself as a key supplier to a growing market for both traditional and value-added graphite products. Its Santa Cruz Graphite Project is currently in operation in Southern Bahia in Brazil, the first in a series of industrial and battery-metals projects in its pipeline.

Brazil is the second-largest graphite-producing region in the world and has been actively mined for 80 years. Scientifically speaking, South Star’s project has a lot of promising potential, with findings of at-surface mineralization in friable materials and successful large-scale pilot-plant testing, as well as nearly 65% of Cg concentrate is +80 mesh with good recoveries and 95-99% Cg. 

The Santa Cruz Project has 13 approved exploration licenses spanning over 13,000 hectares. The at-surface mineralization has both large and jumbo flake graphite and large upside, with less than 5% of the land package explored.

The project is being run by a team of experienced developers, builders, and operators with over ten years of experience in successful graphite mining in Brazil. They have extensive experience with construction all the way through to production and post-production operations.

South Star is heading towards Phase 1 production, predicted to begin in Q4 2022 once financing is confirmed. On October 25, the company announced the closure of its non-brokered private placement for a total proceeds of C$2,427,700.

“Net proceeds from the Private Placement will be used for advanced materials sample preparation, commercial agreements, project finance and general working capital requirements for the Company,” the company stated in its press release.

In another recent press release, South Star announced the successful results from the project in regards to testing, strengthening of its senior management, and board changes.

“Several battery cells were constructed as part of the ongoing optimization and testing program, and all the cells continue to have an extremely flat discharge pattern without noticeable degradation over the current testing period,” the press release stated. 

Given the current state of the graphite market, it’s no wonder that South Star is experiencing a soaring stock price. The global graphite market is on track to reach $36 million in 2030, a significant increase from its value of $19 million in 2019, according to P&S Intelligence.

The market has been growing at over 20% per year thanks to the soaring demand for Li-on batteries, which use 10kg of graphite for every hybrid EVs, and 70kg for every battery-powered EVs. Propelling the demand for the graphite metal is not only its application EVS, but also consumer electronics, power tools, cell phones, cameras, laptops, and other hand-held devices. 

Based on its independent research, South Star predicts that demand for natural flake graphite will increase from +410% from 2020 to 2030. The company estimates that rapidly increasing sales of electric vehicles and continued development of the energy storage market will drive an +800% increase in installed lithium-ion manufacturing capacity to by 2025.

It also predicts that the demand from lithium-ion batteries could increase demand for both natural and synthetic graphite from ~200kt in 2020, to 1.2Mt in 2030—a CAGR of 18%.

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