Albany Thoughts and Discussion
I want to start by apologizing on how long this post it. We have had 5 news releases on Albany starting in July 2024 till yesterday. The big picture of these 5 news releases is being completely missed in my opinion by the market. I will endeavour to capture this below.
First, I want to give full credit to Peter Wood, P. Eng, P. Geo who is in charge of the Albany project. Peter is incredibly dedicated to Albany, being with the project since 2012, like many of us here! He is one of the most professional and hard working individuals I have ever met and he is a great team player. Trust me when I say we are lucky to have him!! He is the reason the true value of Albany is being unlocked right before our eyes. I do also want to give a shout out to Monique Manaigre who has been very helpful in connecting Zentek with everyone both at the federal and provincial governments to help move Albany forward. Albany is in solid hands with these 2 individuals.
July 17, 2024: First News Release
For the first time ever, Albany graphite hits 99.999 aka 5N purity. This was accomplished by taking our 99% pure graphite after our 2 step hydrometallurgical process and exposing it to 2700 degrees for 5 minutes. This 100g sample then hit 5N purity.
As early as this first news release, the company stated their intention to evaluate this sample for the nuclear market.
January 8, 2025: Second News Release
Using a pilot scale fluidized bed reactor (FBR) with a continuous process, a 950g sample was purified to 5N. The critical part for me here is they did this straight from the 85% concentrate! No hydrometallurgical process at all!! So basically we can now take Albany ore, crush it, grind it, drop it in water where the waste falls to the bottom and the 85% graphite floats, scoop that graphite, put it in the biggest pizza oven you have ever seen and you now have 5N graphite! Our purification process solved at pilot scale for the first time since Albany was discovered! We all owe Peter a big thank you for this one!!
There was a casual comment at the end of one paragraph that the boron concentration was 1.8 parts per million (ppm). There is only 1 reason to test for boron...Nuclear market!
September 2, 2025: Third News Release
Albany receives $500k from the Ontario government's Critical Minerals Innovation Fund
NRCan to provide another $200k worth of services to Albany as In Kind support
With this funding, Albany will now process the 110 tons of material collected in 2019 into 5-6 tons of graphite. This now positions Albany to have all the samples needed by market participants to assess Albany 5N graphite for their usage.
September 22, 2025: Fourth News Release
Albany, working with American Energy Technologies Company (AETC), a leading carbon product manufacturing company repeated the purification using a PBR and hit 5N purity again. This sample was tested for boron equivalency and hit 2.6ppm where the nuclear industry threshold is 3ppm or less. In other words, the 2 toughest criteria of the nuclear industry, purity and boron equivalency...check and check!
The Company listed nuclear testing first and battery work next. This subtle change in order may be seen as a change in priority. When you compare prices of nuclear industry and battery industry, who can blame them!!
The Company then hightlights that Prime Minister Carney has made small modular nuclear reactor at Darlington one of Canada's first 5 projects to be fast tracked! With the power demand of the AI industry, there will most likely be a significant increase in nuclear reactor build outs.
October 6th 2025: Fifth News Release
"...findings suggest that ultra-high purity Albany graphite could be well suited for use in the nuclear energy industry."
For me, this may have been one of the most important news releases in the Company history. From the details in the news release, Albany meets or exceeds every technical requirement for graphite used in the nuclear industry!!!
They are doing one more test where they are actually make a brick of graphite combining Albany with synthetic graphite and coal tar pitch. However, I would be completely shocked if this was not successful.
Now, if and this is now a much much smaller if we can sell Albany graphite to the nuclear industry, our sale price for graphite goes from $7500 USD per ton as per the 2015 PEA to somewhere between $30-45k USD. Our cost in the PEA was $2,046 which I am sure has gone up but we eliminated a 2 step hydrometallurgical process to replace it with a simple 1 step FBR process. We have had inflation of course but even if the cost doubled to $4,000, we are still looking at a margin of $26,000 to $41,000 per ton instead of $5,500.
Now, the nuclear market is quite opaque to research so please keep this in mind here. I found 1 source that stated in 2024, the nuclear market for graphite was 60,000 tons and growing at a CAGR of 5%. From what I read, I think the growth will be substantially higher than 5%.
Now, what percentage of that market should we get?
Our graphite would the most environmentally friendly of the graphites meeting the nuclear market requirement as that industry is dominated by synthetic graphite players.
Our cost structure will also be significantly lower than synthetic graphite players.
Our PEA contemplated producing 30,000 tons per year. Because of our green and cost advantages, I can see us making a significant move into that market. This becomes even more possible when you consider that Chinese companies are the main players in the synthetic graphite market. Would Europe prefer to buy from us? America? South Korea, Japan, Australia...
Ok this post is getting longer than I even intended but bear with me a little longer...
Our 2015 PEA had an NPV of $438M after tax using a 10% discount rate. That was based on selling $165M worth of graphite with an after tax profit of $110M. The bull case here is we sell our entire 30,000 tons per year to the nuclear industry. At the low end, that is $900M worth of graphite per year. That is 5X higher revenue at a signifianctly higher profit margin. What is our NPV now? $2B $3B? What percentage of the NPV should we be trading at? Even 10% maybe, 20% more likely as I think it would be more reasonable considering how derisked this is, the current geopolitical climate, the Fed having the power to fast track projects, the Province already supporting us...Albany on its own for me now is worth multiples of where we are trading right now.
Our share price may be floundering here while the PP closes but please do not think big money is not making the same connections I am, that they are not calculating what this deposit could generate. When that big money decides this is real enough for them, good luck chassing this thing!!
G. |
