(Asx: EV1) | Evolution Energy Minerals

Jan 9, 2022

Sentiment: Bullish

Type of Trade: Speculative

Industry: EV - Electric Vehicles - Graphite

Sector: Materials

Evolution Energy Minerals is a graphite explorer in Africa focus on the development of its flagship project in Tanzania, which shall produce and supply the EV market with flake graphite, which is one battery anode main compounds, in extreme high demand in the incoming years.

Evolution’s principal asset is the Chilalo Project located in south-east Tanzania and the company firmly focused on bringing the Chilalo Project into production.

The Company’s strategy is to increase the current 18 year mine life of the Chilalo Project through a targeted drilling program on the deposits located within the Chilalo Project and an assessment of further opportunities to enhance the outcomes of the DFS, whilst pursuing the project finance necessary for development with a view to ultimately becoming a vertically integrated manufacturer of sustainably produced, high-value graphite products.

The company also aims to re-pay the Lender Debt in discharge the Lender Security, pay the Marvel Cash Consideration for the acquisition of Chilalo Project, hence advance the Chilalo Project towards a construction decision and provide working capital for the company.

What is Graphite? (if you don’t know yet what graphite is, ready it through)

Graphite is a crystalline form of the element carbon. It occurs naturally in this form and is the most stable form of carbon under standard conditions. It is a good conductor of heat and electricity. Its high conductivity makes it useful in electronic products such as electrodes, batteries and solar panels. It is a soft, light mineral which is flexible but not elastic, and it has a high melting point of 3,650°C. It has high thermal resistance, lubricity, and inertness as well as thermal and electrical conductivity, thermal insulative and expandability properties.

Types of graphite

Graphite occurs naturally in metamorphic rocks. There are three types of natural graphite – amorphous, flake and vein (also known as lump). Each form of graphite is found in differing types of ore deposits and each type has different end uses.

Amorphous graphite is the most abundant graphite, but also the lowest quality with carbon purity lower than flake graphite. “Amorphous” refers to the graphite’s small crystal size (microcrystalline). It is a low-priced graphite product that cannot be upgraded through flotation or purification and is limited in its usage, focusing mainly on refractories, friction, and
lubricants for thread compounds.

Flake graphite, or crystalline graphite, has a distinctly flaky or platy morphology, formed when pure carbon atoms stick together to form flat sheets. Compared to amorphous graphite, it is less common and of higher purity.

Vein graphite is a true vein mineral with high carbon purity in-situ.

Chilalo Project (Tanzania)

The Chilalo Project is an advanced, development-ready project that the company believes will become a premier source of world-class flake graphite products. Over $21,000,000 has already been spent on the Chilalo Project and a definitive feasibility study was completed in January 2020 which demonstrated the economic viability of the Chilalo Project with attractive returns. The initial public offering of a project at a construction ready stage such as the Chilalo Project represents a compelling investment opportunity.

✅ The Chilalo Project is a high-grade, coarse flake graphite project with excellent product quality.

✅ The Chilalo Project is fully permitted and on completion of the Offer, the key focus of the Company will be to progress the Chilalo Project towards a construction decision.

✅ A definitive feasibility study on the Chilalo Project was completed by Marvel Gold (then named Graphex Mining Limited) in January 2020.

✅ The Company owns and controls 100% of the Chilalo Project.

🚩 The Chilalo Project is located in Tanzania and is subject to the risks associated with operating in foreign countries.

It is located in south-eastern Tanzania, East Africa, 100 km north of the border with Mozambique, approximately 180 km west of the coastal port city of Mtwara on the Indian Ocean and 400 km south of Tanzania’s largest city, Dar es Salaam. The property is situated in the Ruangwa District of the Lindi Region. (we rather avoid investing into stocks which the projects are based in Africa, due unstable economy and political influence.)

🚩 The Company was only recently incorporated (15 March 2021) and has no operating history and limited historical financial performance. Shareholders should understand that mineral exploration and development are high-risk undertakings. No assurance can be given that the Company will achieve commercial viability through the successful exploration and/or development of the Chilalo Project.

🚩 The mining tenements underpinning the Chilalo Project are subject to the Tanzanian mining regulations. There are risks attached to exploration and mining operations in a developing country like Tanzania which are not necessarily present in a developed country like Australia.

The question is, would you have your capital invested into a company which relays on Tanzanian mining regulation?

What are the risks?

These risks may include economic, social or political instability or change, hyperinflation, currency non-convertibility or instability and changes of (or interpretations of) law affecting foreign ownership, government participation, taxation, working conditions, rates of exchange, exchange control, exploration licensing, export duties, repatriation of income or return of capital, environmental protection, labour relations as well as government control over natural resources or government regulations that require the employment of local staff or contractors or require other benefits to be provided to local residents.

🚩 Tenure, access and grant of applications: Mining and exploration tenements (including the mining interests) are subject to periodic renewal. There is no guarantee that current or future tenements and/or applications for tenements will be approved.

🚩 Lacks on Diversification with only one project.

Projected outcome

Technical Analysis

The company’s IPO has successfully raised that $22,0000,000 initially aimed at 20c per new share with immediate share price soaring more than 3x the IPO released stock price rising as high as 70c in some stage in the first trading day, followed by a fall of 42% in December, together the whole sector. Since the sector started the recover, SP has risen 30% in January, but so most of the other EV stocks.

We do not have enough data to be able to modeling this stock as per BGS 20 or BG Trading Strategy KPI’s. The only indicator that to use at this stage is to follow the Heiken Ashi candles and buying upon the green candle bullish intersecting (level 2) the EMA9 and selling when the opposite formation occurs if you are not lock in profits; upon a bearish intersection level 2 (red candle dead crossing the EMA9).

Should I invest in EV1?

Since the number of Redflags highlighted in our fundamental analysis are far too many, we believe there are far better companies in more advanced stages to invest than EV1. Furthermore, according to our analysis the main facts that make this investment much more risky than all the other graphite companies that we have been trading and investing with our VIP MEMBERS are, but not limited to: the lack of diversification, the location of the project, the necessity to renew Tenure in a country such as Tanzania and lastly if all goes according to the plan, we would be estimating that a hypothetical production commencement would not occurs earlier than 2025 which is way too far, while several other players should have already started to commercialise the same mineral, hence potentially being balancing the market by then, or even making the graphite price lower than it is today in a more pessimistic scenario.





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