We are delighted to provide a comprehensive research update on EcoGraf Limited (ASX: EGR). EcoGraf presents a compelling opportunity as an emerging, vertically integrated graphite supplier focused on ex-China markets. The company has made significant progress across its development pipeline and is increasingly well positioned within the global battery supply chain, actively developing strategic partnerships with multiple downstream partners.
We have an unrisked, after-tax base case valuation for EcoGraf of A$752 million, or A$1.59/share, and $0.55 using appropriate risk factors. This uses a conceptual funding scenario, is based on DCF valuations of the Epanko mine, shaping facility and a single EcoGraf HF free® plant, and assumes 84% ownership of the mine, and 100% of the downstream facilities. We see substantial upside to our valuation as the company progresses key milestones, particularly the completion of project financing and the transition to development. Additional upside is supported by the potential expansion of all business units, which would enhance scale, margins, and EcoGraf’s strategic positioning within the global battery materials supply chain.
At the core of the investment case is the 84%-owned, fully permitted Epanko Graphite Project in Tanzania. Epanko stands out as one of the largest and most advanced undeveloped graphite projects globally, characterised by high grades, low strip ratio, favourable flake size distribution, scalability, and potential for a multi-decade mine life. Importantly, the project is underpinned by binding offtake agreements covering ~40,000 tpa of the planned initial 73,000 tpa of high-quality graphite concentrate production across four size fractions, providing strong commercial validation.
The recently completed BFS highlights robust project economics, with a pre-tax NPV10 of US$516 million and upfront capital costs, including resettlement, of US$199.3 million. In addition, the company is evaluating a staged expansion pathway to ~390,000 tpa, offering substantial long-term growth potential. Critically, the company is close to meeting a key milestone, through the well-advanced project debt negotiations with the German KfW-IPEX-Bank and Tanzanian Government for the US$105 million facility for Epanko. Combined with the existing offtake agreements and strategic partnerships, this significantly de-risks the Project.
EcoGraf’s strategy extends beyond mining, with a clear focus on downstream value addition. Planning for a shaping facility in Ifakara, located approximately 70 km from Epanko, is well advanced. This facility is expected to process 20,000 tpa of fines into ~12,000 tpa of high-value spherical graphite (SpG), enhancing overall project economics while unlocking further value from additional material that could be used in domestic industries.
A key differentiator for EcoGraf is the proprietary and patented EcoGraf HF free® purification technology, positioning the company to be one of the few non-Chinese providers of graphite purification solutions. The process has been successfully demonstrated at pilot scale and offers a cost-competitive and environmentally superior alternative to conventional hydrofluoric acid (HF) and thermal purification methods. The company is looking to develop these facilities proximate to battery manufacturers in Europe, Asia (ex-China) and North America, potentially under capital efficient partnership or licencing structures.
The suitability of the EcoGraf HF free® process to upgrade waste graphite (including SpG production waste and the recycling of anode material from end of life lithium-ion batteries) has also been demonstrated, with the potential for this to be a high margin parallel business unit. EcoGraf has entered into a partnership with South Korean battery cathode recycler SungEel HiTech Co to develop modular recycling units.