It may surprise you to know that despite the demand for graphite, as of 2014, there were only two countries in North America which produced it: Canada and Mexico. The United States is wholly dependent on importing graphite to satisfy its needs for this allotropic form of carbon used, among other things, in refractories, as a solid lubricant, in pencils and as a moderator in nuclear reactors. More recently, graphite has grabbed the global spotlight over its use in lithium-ion batteries. The green revolution is upon us and Tesla’s construction of a gigafactory to produce the batteries necessary for the production of its line of electric cars and “Powerwalls” will require as much flake graphite as is currently produced globally. This impending radical increase in demand emphasizes the importance of being able to source graphite locally rather than depending on global producers such as China and Brazil. As a result, domestic junior miners in the graphite space are scrambling to be part of Tesla’s supply chain.

In the midst of this clamouring crowd, there is a company which is setting itself apart from the pack with some extraordinary results from its current testwork that provide strong confirmatory evidence of the unique properties of its Graphite Creek graphite. Stockhouse reporters sat down with Anthony Huston, President, CEO and Director of Graphite One Resources (TSX: V.GPH, Forum) to get an in-depth look at the company and its prospects in a global graphite market expected to hit US$17.56 billion in 2020.

Anthony, would you describe what differentiates Graphite One Resources’ flagship Graphite Creek project, located on the Seward Peninsula of Alaska, from other North American graphite deposits?

Even taking away the large size and excellent grade of this deposit, this graphite’s unique physical characteristics truly distinguish the deposit from any other we have compared it to. Producing graphite really is about producing battery grade graphite, and with our initial test samples, our yields of premium-grade spheroidized graphite (SPG) are close to double that which we have seen for other deposits around the world. We hope this will translate into lower production costs. In the drive to be a provider of premium grade graphite in the imminent battery revolution, we believe that this graphite’s unique physical properties, the deposit’s large size and its location in the United States are all key differentiators.

image: http://www.stockhouse.com/getmedia/ca1a409a-efcf-4dfe-9d13-2bb7b33a429d/lithium-ion-battery?width=150&height=99

Lithium ion battery technology is the most advanced to date, it has increased energy density, the amount of energy obtained from a single cell by weight, about 5% every year and decreased in price by 8% annually. With the emerging hybrid and electric vehicle revolution and the rapidly growing energy storage sector, Li-ion cells are expected to register a CAGR of 33.1% right up to 2020 when global sales are expected to hit US$36.5 billion; truly a space with explosive potential for both manufacturers and materials suppliers such as graphite producers. So what makes spherical graphite so important in the construction of lithium batteries and why is having a local supply so necessary?

Graphite is unlike a lot of the metals and minerals that the mining community provides. In the construction of lithium ion batteries, manufacturers are looking for specific qualities from their graphite sources and more than just purity. They have a long list of specifications to be met which include size ranges and shapes, an added coating and limits on other required physical and electrical properties.

Having a local source has been a mandate for a few of the announced manufacturers as these companies prefer a guaranteed, low cost supply from a stable jurisdiction. Politically, we believe it would also bode well for a U.S battery manufacturer to get supply from a United States source.

2015 was a hard year for mining in general and yet Graphite One Resources continued to move ahead. What were some of the major milestones in fiscal 2015?

2015 was a successful year for Graphite One as we announced more successful results from our 2014 Drill Program, closed on additional funding and began work with TRU Group on product development to produce carbon-coated spherical graphite. It’s important for the market not to underestimate the value of our graphite having a natural spheroidal shape (STAX) and the fact in testing that our unmilled material processed into premium SPG with high yields.

Graphite One Resources just made a major announcement regarding the commencement of product development test work to produce carbon-coated graphite from STAX graphite sourced from Graphite Creek. Can you give us some details about this initiative and explain the importance of it?

Last year we began our Graphite Creek Product Development Program with TRU Group to produce carbon-coated graphite from STAX graphite. We completed Phases 1-4 that have shown a SPG yield of 74.6% from our first-run trials. We are very pleased with this given that typical yields are 30% to 40%.

The results we have found with TRU Group suggest that SPG from Graphite Creek STAX Graphite could potentially be much less energy-intensive to produce than conventional flake graphite. The all in costs to deliver end product will be a key factor is securing a supply agreement with a battery manufacturer.

How do you see 2016 in regards to the graphite sector?

2016 will be transformative year in the graphite sector as we continue to see growing future growth in demand as more companies shift from traditional energy sources to lithium ion batteries. The growing demand for North American sourced graphite continues to build and globally we are seeing positive numbers globally as China’s steel production is up 20.7% in March. Refractories used in the steel and other industries have been a major user of flake graphite.

What milestones can investors expect over the next 12 months?

We have a number of announcements to make over the next 12 months. We have entered Phase 5 with TRU Group on our Graphite Creek Product Development Program. We will be announcing the results on the performance data related to purification, milling, spheroidizing and coating. The findings of Phase 5 will be a baseline to our PEA which we expect to have complete shortly afterwards.

Why is now a good time for investors to consider Graphite One Resources as an option to add to their portfolio?

There is no denying that there is a growing demand for graphite with major companies like Tesla, Dyson and others making products that are run on Lithium Ion Batteries. As manufacturing centers/ gigafactories get up and running, these companies are going to need significant amounts of graphite. With announcements already made that these companies are looking for a North American supply, I believe Graphite One is well positioned to benefit from the growing graphite demand.