Company Overview

Company Overview

Corporate

A-Cap Energy Limited (A-Cap) is an ASX-listed (ASX: ACB) minerals exploration and development company. The Company’s strategy is to diversify its minerals portfolio focusing on the acquisition of nickel-cobalt laterite projects. The Wilconi Project represents the Company’s first nickel-cobalt laterite project and, after completion of project and development funding, the Company aims to supply cathode materials to the battery industry.

A-Cap is dual listed on the following publicly traded stock exchanges:

  1. Frankfurt Stock Exchange from May 2019; and
  2. Botswana Stock Exchange from September 2006.

Diversified Minerals Strategy

The Board’s diversified minerals strategy is focused on the significant growth expectation in the supply of battery materials to the OEM automotive and battery industries. The Wilconi Project represents the Company’s first nickel-cobalt laterite project interest. The Company is committed to becoming a relevant supplier to the OEM automotive and battery industries.

The Company aims to establish key strategic and commercial relationships to take advantage of new materials processing and refinery technologies, particularly in production of cobalt and nickel sulphates products used directly in battery manufacture.

The nickel and cobalt battery materials industry is responding to an anticipated demand increase driven predominantly by the new electric vehicle (EV) battery industry. The materials demand has sparked a wave of lithium ion battery mega-factories to be built.

Benchmark Mineral Intelligence, Managing Director Simon Moores reported in his testimony to the US Senate on US Energy and Natural Resources Committee on 5 February 2019 the company is now tracking 70 lithium ion mega-factories under construction across four continents, 46 of which are based in China and only 5 planned for the USA; and

Northvolt CEO Peter Carlsson commented in EurActive interview on 5 April 2019 – “we expect that the European market will have a yearly need of 500 to 600 gigawatt-hours. If we consider the advancement of various plants, I expect there to be at least 10 gigantic plants in Europe by 2030”.https://www.euractiv.com/section/batteries/interview/europe-will-have-at-least-ten-gigantic-battery-factories/

Almost exclusively, these mega-factories are being built to make lithium ion battery cells using two chemistries: nickel-cobalt-manganese (NCM) and nickel-cobalt-aluminum (NCA). RBC Capital Markets, Equity Research initiation Cobalt25 – January 2019 commented:

“We forecast nickel-based chemistries used in EV’s rising to 80% by 2025, up from 60% in 20I8”.

Bernstein research, February 2018 illustrated the types of Lithium-Ion Batteries and their cathode materials mix up to 2030.

Benchmark Mineral Intelligence reported in February 2019 cathode and anode materials demand at 2023 and 2028 in chart 2 below.

Chart 2 highlights the theoretical cathode and anode materials demand from mega-factories in the pipeline at 2023 and 2028. It assumes a 100% utlisation rate where every plant is constructed and operated at planned full capacity. Under this scenario lithium demand will increase by over 8 times, nickel by a massive 19 times and cobalt by 4 times.

Planned mega-factories investment are aligned to the automotive OEM forecasts of EV models design, development and global growth in annual unit sales up to 2030. The following research house studies published the following new EV forecasts:

Research House New vehicle annual EV sales by 2030 On road EV stocks by 2030
1. International Energy Agency (IEA) released in May 2019 23 million 130 million
2. BloombergNEF outlook released in May 2019 25 million 140 million
3. RBC Electric Vehicle Forecast to 2050 released May 2018 25 million 107 million

In terms of cathode materials supply, RBC research note on Cobalt27 in February 2019 estimated the following supply deficits for both nickel and cobalt:

  • A cobalt supply deficit up to 28kt by 2025. Cobalt chemical supply was estimated at 17.3kt of the total supply deficit.
  • A nickel supply deficit up to 190kt by 2025.

New projects will need to come on stream to meet the supply deficits anticipated for both nickel and cobalt battery materials supply. New Nickel project investments can be expected with a long-term LME price/Ib over US$6/Ib.  In respect to cobalt supply, approximately 40 to 45kt of cobalt mine capacity additions are expected to come from two projects, both in the Congo – Glencore’s Katanga Mining Joint Venture and Metalkol Roan Tailings Reclamation. The DRC represents 70% of global mine supply of cobalt. Given the increasing supply exposure in the DRC, the proposed development of new nickel and cobalt projects in Australia and Canada are a direct response to the anticipated shortfall in mine capacity supply.

The nickel and cobalt commodity spot prices can be expected to be volatile as they will be linked to the speed and rate of adoption of all batteries EV and battery chemistries. China still dominates the world in battery making capacity, currently making up over fifty percent of global lithium-ion battery production.

A-Cap’s key strategic and commercial relationships will be pivotal to the Company’s implementation of its diversified minerals strategy. The Company intends to introduce the Wilconi Project to strategic product supply partners identified in Europe, China and the United States.

The Company’s Letlhakane uranium project located in Botswana remains an important project asset within the diversified mineral strategy. While the nuclear industry is confident in the long-term fundamentals of uranium and nuclear power, there is less certainty in the short term with industry expectation that the market will gradually move towards balance from calendar year 2023.