- Non-binding MoU will enable both parties to develop new graphite mines outside of Ceylon Graphite portfolio
- Also to construct and operate a state-of-the-art graphite processing facility in Sri Lanka
Canada-based Ceylon Graphite Corp., which is involved in the exploration and production of graphite in historic resource jurisdictions in Sri Lanka, this week announced the execution of a memorandum of understanding (MoU) dated June 30, 2021, with two subsidiaries of Lanka ORIX Leasing Company Group (LOLC).
Pursuant to the MoU, Ceylon Graphite, through its subsidiary Plumbago Refining Corp B.V. (Plumbago) and LOLC, through its subsidiaries LOLC GEO Technologies Ltd (LOLCGT) and LOLC Advanced Technologies Ltd (LOLCAT), will work together to develop new graphite mines outside of the existing Ceylon Graphite portfolio and to construct and operate a state-of-the-art graphite processing facility in Sri Lanka.
LOLC is the largest corporate conglomerate in Sri Lanka. It recorded the highest profitability in Sri Lankan corporate history in FY 20/21, with Rs.57 billion (US $ 285 million) profit before tax.
LOLC’s portfolio includes leisure, plantations, agri-inputs, renewable energy, construction, manufacturing and trading and other strategic investments, with microfinance enterprises expanding out to Cambodia, Myanmar, Pakistan, Indonesia, the Philippines, Zambia and Nigeria.
LOLCGT is the mining arm of LOLC and holds several exploration licences from the Sri Lanka government’s Government Survey and Mining Bureau (GSMB).
LOLCAT is the research arm for LOLC Group and a joint owner of Sri Lanka’s first graphene and advanced material company, currently producing graphene from ultra-pure highly crystalline Sri Lankan graphite and making significant advances in a variety of breakthrough applications involving graphene.
The MoU provides for Ceylon Graphite and LOLC to develop and operate a minimum of three mines on grids located near the government-owned Kahatagha mine, an area known to be rich in high-grade vein graphite, as high grade as 98 percent Cg.
Under the MoU, Ceylon intends to purchase a 10 percent interest in LOLCGT, with an option to buy up to 40 percent of the company.
The development of the new mines will be funded on a pro rata basis, will be operated by Ceylon and Ceylon will agree to offtake all mine production for further processing.
Further, Ceylon and LOLC will construct an in-country value-add facility to upgrade the mine product further to 99.99 percent purity, ready for spheronisation. This mine production will be in addition to Ceylon’s existing and planned mining operations at K1, M1, H1, P1 as well as six other potential sites under development.
Under the terms of the MoU, LOLC intends to purchase up to an aggregate of 15 percent of Ceylon Graphite shares either as a lead order on a future financing or under separate terms with timing and terms to be detailed in a definitive agreement.
Both parties will also agree to cross-appointments of designates to their respective corporate boards.
“We are excited to embark on this joint venture together with LOLC Group, the most profitable company in Sri Lanka, led by Ishara Nanayakkara, one of the most respected business leaders in Asia, whose extraordinary vision aligns with Ceylon’s goals in graphite and graphene applications,” stated Ceylon Graphite CEO Don Baxter.
“We’re delighted LOLC is eager to support the joint venture’s technical strategy to produce a minimum of 50,000 to 100,000 tonnes per year of unparalleled quality spheronised graphite for the rapidly growing anode applications market as well as to collaborate with us and share successes in the graphene production technology.”
“LOLC is pleased to partner with a well-established graphite production company like Ceylon,” said LOLCAT CEO Danesh Abeyrathne.
“Together we can work to capture a greater share of the world’s battery anode and graphene applications markets, than we can working separately. This will benefit both our companies as well as the people of Sri Lanka in a significant way.”
The MoU is non-binding and signals the intent of both parties to negotiate in good faith a definitive agreement to reflect the intent and content of the MoU. There is no assurance that such an agreement will be reached.