Can IG6’s Low-Cost German Facility Withstand Market Price Fluctuations?

Strategic Expansion into Europe

International Graphite Limited (ASX – IG6) has announced compelling financial projections for its planned expandable graphite facility (EGF) in Germany, marking a significant step in its ambition to become a major player in the global graphite processing market. The EGF, structured as a 50/50 joint venture with Arctic Graphite AS, is designed to produce 4,200 tonnes annually of micronised expandable graphite, leveraging proven chemical intercalation technology and secured intellectual property rights.

With a capital expenditure estimate of just A$11.2 million, the project promises a rapid payback period of less than two years once full production is achieved. This low capital intensity, combined with an expected annual net operating cashflow of A$7.6 million, underscores the facility's potential as a high-margin, low-risk operation.

Robust Financial Outlook and Market Positioning

The techno-economic evaluation (TEE) projects a pre-tax net present value (NPV) of A$57.9 million and an internal rate of return (IRR) of 66% over a 25-year horizon, figures that reflect strong profitability and operational efficiency. These metrics are particularly notable given the facility's moderate scale and the strategic advantage of its location within the Bitterfeld-Wolfen Chemie-Park industrial estate in Germany, providing access to established infrastructure and European markets.

International Graphite's Managing Director Andrew Worland highlighted the importance of this foothold in Europe, positioning the EGF as a precursor to expanding mine supply from the company’s Springdale Graphite Project in Western Australia. The joint venture partner, Arctic Graphite AS, brings valuable expertise and connections, including ties to Norway’s Skaland Graphite Project, Europe’s only operating graphite mine, enhancing feedstock security and operational synergies.

Synergies with Australian Operations and Growth Potential

Alongside the EGF, International Graphite is advancing the Collie Micronising Facility in Western Australia, currently under construction. Together, these facilities are expected to produce up to 12,000 tonnes of graphite products annually by 2027, generating combined net operating cashflows in the range of A$10 million to A$20 million. This integrated approach strengthens the company’s position across the graphite value chain, from processing to specialty materials.

The EGF’s design allows for expansion through additional processing lines and purification stages, potentially enabling the production of ultra-high purity (99%+) expandable graphite products that command premium market prices. The company is actively conducting testwork on diverse feedstocks sourced from East Africa, Madagascar, Norway, and its own Springdale project, aiming to optimize product quality and market acceptance.

Market Sensitivities and Forward Outlook

While the financial projections are promising, the company acknowledges that the EGF’s profitability is sensitive to fluctuations in expandable graphite product pricing. The TEE includes sensitivity analyses showing that sales price variations have the most significant impact on net present value and internal rate of return, underscoring the importance of market dynamics and customer acceptance in the early years of operation.

International Graphite plans to secure construction financing in the first half of 2026, targeting production commencement by mid-2027. The company’s strategy to build low-capital, high-return processing facilities ahead of expanding mine supply aims to mitigate execution risks and shareholder dilution, positioning IG6 for sustainable growth in the evolving graphite market.