Good morning, everyone. My name is James Moses, and I would like to welcome you to this morning's Renascor Resources webinar. This morning, we will hear from Managing Director David Christensen, who will provide an update on the company's flagship Battery Anode Material project, and we will also hear from the company's Manager of Resources Strategy and Development, Andrew Lewan, on the company's exploration assets, also in South Australia. At the end of the presentations, we will have a question and answer session, so if you have any questions, please pop them into the chat, and we will deal with those after the presentations. If there are any that we are unable to deal with due to time constraints, we will take those offline. Just before we start, can I ask you all to make sure you are on mute?
With that being done, I would now like to hand over to Managing Director David Christensen to deliver his presentation. David, good morning to you.
Yeah, good morning, James. Thanks very much. Thanks to all of you who are listening to this. For those of you who are not familiar with Renascor, we are an Adelaide-based exploration and development company, and we have now gotten into the Critical Minerals space after we have discovered and have now been developing what has grown into not just Australia, but one of the world's largest undeveloped graphite resources. The graphite space, both graphite on the mine side and its use in finished products, the refined graphite anode material through the supply chain, has been under significant downward pressure over the last couple of years. That is primarily because of the price competition coming from China, where China has real supply chain dominance.
In some cases, that dominance translates into near-monopoly control, in particular over purified spherical graphite, the refined form of graphite that is used by manufacturers of lithium-ion battery anodes.
Our strategy in this, what has been a really difficult market, is to build up a competitive position by offering a solution to anode manufacturers who are looking to break that Chinese monopoly. We do that by leveraging off of what has become really a tier 1 graphite deposit that we have here in South Australia, and combining that with a secondary processing where we can use a technology that does not use hydrofluoric acid and has significant economic benefits. We believe that gives us a real opportunity to become the lowest-cost producer of purified spherical graphite outside of China. That is the competitive position we want. How do we get there? Well, we are development-ready. We have all of our major regulatory approvals in place, both for the mine and the downstream.
We have completed definitive feasibility studies, again, for the upstream and downstream, and even have moved into early site works.
On the financial side, we have a strong cash position, a big balance sheet, over AUD 90 million at the end of the last quarter. We have also gotten very good support from the government. In critical minerals projects, this is becoming increasingly important. That includes a AUD 185 million conditional loan from the Australian Government under the Critical Minerals Facility. It also includes grant funding, a AUD 5 million co-funded grant that we used to build a large-scale demonstration facility for our purification tech that is now operating here in South Australia, here in Adelaide. That is the key to unlocking our non-binding MOUs with some of the leading anode companies, including POSCO and Mitsubishi Chemical, as well as the Japanese trading company Hanwa. What I would like to do now is maybe step through a bit of the market and then get into the project itself.
Usual disclaimer, which I believe we have made available in our ASX filings. Okay, so the market. What is happening in the market? I think we have all seen some of these very forward, optimistic cost curves, and this one is on the anode market. Why do we focus on anode? Anode is the key market for use of graphite. If we look at the anode market, the anode market looks really positive. If we look at the last five years, really impressive compound annual growth rates. If we project the future, we are looking at, again, continued good times for anode demand. What is driving that? The increased efficiency in electric vehicles and the big growth in energy storage.
The big question is, why are not we seeing a benefit in the West? Why are not we seeing a benefit at Renascor? Why have not we seen commodity prices reflect this?
I think the answer throughout the supply chain, and in particular, if we look at graphite and anode, is because of this Chinese dominance and what they are doing with pricing is, really, they are buying the market share with low-priced material. If we look at the anode market over the last five years outside of China, really, there are four main companies that are supplying to Western markets outside of China, and they are growing. Their production capacity is actually increasing significantly, but their overall market share is falling. The reason it is falling is China has captured a larger portion of the market by producing a large amount of generally synthetic material out of China at low prices, and they are taking up market share.
Can this kind of thing continue? There are a lot of policy measures in place that suggest maybe it is not the case.
The EU and, in particular, the U.S. have a number of policy measures, which I think we have talked about in the past, that could change it, could change it very quickly. The other side of the coin is what China can do, and we have already seen export control laws that have been selectively introduced, selectively utilized to control markets. I think maybe one of the best comparisons to this dominance in the supply chain is rare earths, where if you see in graphite, the dominance from the Chinese is even greater than it has been in rare earths. In rare earths, we have seen this change, and we have seen it change very quickly, in particular last year with some of the measures out of the U.S. in making markets.
Really what we are seeing in graphite and throughout the battery minerals is the potential to do the same thing, with real potential risk on the graphite side, simply because of the dominance of the Chinese and the critical importance of getting graphite material in order to grow the EV sector, in order to grow the stationary storage sector, and increasingly from a defense perspective, in order to have that material for defense purposes. While all this is going on commercially, the large producers are not standing still. Again, they are expanding capacity. Again, the universe of companies that are providing material to Western cell makers is relatively small. We have four companies that provide the great bulk of material going to the West. These companies are still increasing their capacity, notwithstanding stiff competition from the Chinese.
If we look at those companies, one of the important things to underline is their reliance on natural graphite anodes. Again, for those of you who follow the sector, we know that the Chinese have really built up an advantage in being able to produce synthetic at low prices and really expanding their capacity and then providing low-priced material. If we look outside of China, the situation is a bit different, where historically, the ex-China anode makers have produced a large amount of natural graphite, and nearly half of that material coming out of China right now on the anode side is natural graphite. What these companies are trying to do is they are trying to provide ex-China supply chains of anode material going into the cell market.
To do that, they are looking for sources of natural graphite, and the key material they need is purified spherical graphite, for which they are, again, nearly 100% dependent on the Chinese. This is the market that we want to fill at Renascor, and this is where we see a real competitive advantage, where we can combine our mining downstream operation and deliver into those current markets in Northeast Asia. Then as we move forward and that anode capacity expands into Europe, it expands into the U.S., we have the ability to expand with them and grow and become one of, if not the largest producers of purified spherical graphite to the ex-China market. How do we do that? Well, again, our plan, for those of you who might not be so familiar, we want to vertically integrate. What does that mean?
What it means is we combine a traditional mining operation, and we do one step of refining, in our case, shaping and purifying, and then providing purified spherical graphite, or PSG, to the lithium-ion battery anode sector. Our target customer is an anode manufacturer, and really the opportunity in this sector is traditionally in Australia, we have been very good at mining, and we produce that material, we give it to downstream processors, usually in Northeast Asia, and then they refine that and they provide it to the rest of the world. The opportunity in critical minerals, the opportunity in particular in graphite, is to go one step further, and because of the Chinese dominance, that really creates an opportunity to be an alternative.
Now, to do that, you need to be economically competitive, you need to be secure, and that is the opportunity we have in Australia, combine a good mine with a downstream operation. We do that at Renascor by leveraging off of one of the premier graphite assets, not just in Australia, but the world. Siviour is a large resource, second-largest proven reserve of graphite globally, largest reported reserve outside of Africa. But being large is not enough. You have to be economically competitive, and this is where Siviour really hits home in that it has one of the lowest projected operating costs, one of the lowest projected capital intensity of any graphite development globally. We are development-ready. We have completed all of our major regulatory approvals. We have native title agreements in place. We have completed feasibility studies. We have acquired freehold.
Siviour is a development-ready project ready to start.
Most of our work now, though, is looking at going one step further and doing the value add, and this is very important from a competitive position. Again, in a very difficult graphite market, it is important to underline what is your competitive position? What solution are you offering for your potential customers? Here, our potential customers are anode customers. Anode customers are bankable customers, the kind that can underwrite a large-scale project. It gives more value to our shareholders by producing a higher value-added product. That makes the whole project more valuable, more valuable to our investors. But maybe what really underlies why we are doing this is our competitive position. We can be valuable from a mining perspective. By going one step further downstream, it increases our competitive position. We become more competitive by producing purified spherical graphite. How are we going to get there?
Well, we built this large-scale demonstration facility. Again, this is where a large amount of our effort is currently undergoing. This was a big effort. This is perhaps the largest facility of its kind built outside of China. This was built with the support of the Australian Government. We got a AUD 5 million grant that was supported by some of our non-binding offtake partners, the South Korean group POSCO, the Japanese trading company Hanwa. What we are looking to do here is we are looking to validate our process, validate the cost, and then produce product and deliver it to customers. Where are we now? We have completed construction of the facility. It is operating. We are producing battery-grade graphite. We recently announced the completion of trials on third-party material. We have met the key purification hurdle. We have produced 99.97% purified spherical graphite.
Later this quarter, we are going to be working through the same process with Siviour graphite. The idea here is then to give those samples, continue to provide samples to customers, and the new multi-ton production trials to finalize the operating parameters. By operating parameters, really what we mean is the competitive advantage. Again, one of the things that has gotten the interest of our potential offtake partners initially is the resource itself, a resource that has amongst the lowest cost profiles globally. Downstream, we have the similar advantage by using this method. We are keeping the product here in Australia, but we are upgrading it with simply a more efficient way to do it. We are not using hydrofluoric acid. We are recycling our reagents. We are using water treatment that reduces reagent consumptions.
But by not using hydrofluoric acid, simply from a cost perspective, this gives a major advantage. Not too long ago, we put out a cost study that showed by using this method, not using hydrofluoric acid, going HF-free, we have a major cost advantage in the purification side. If we translate that to the total cost of producing purified spherical graphite, it gives us a real opportunity to be amongst the lowest-cost producers. One of the independent forecasters, Benchmark, forecast us as the lowest cost amongst ex-China projects. That is important to have that competitive position. We move forward with production. That will give us the opportunity to really unlock some of the value here.
Potentially, we are looking at a billion and a half value from our study, where with expansion, even to go further from that moving forward, initially we are looking at producing about 50,000 tons of that purified spherical graphite into a market that is projected to grow by about 4.9 million tons over the next five years. So, ample growth prospects within this with some potential for great returns. The key here for us at this stage is how do we advance offtake and finance? How do we get through customer qualification? How do we get through commercial terms that are going to allow us to progress to the final investment decision? We already have non-binding agreements with some of the major players ex-China. That includes POSCO, Mitsubishi Chemical, Hanwa. What we are seeing is continued commercial demand, continued supply securities are really reinforcing that non-China supply chain.
At the same time, we are seeing challenging price, low prices, and that is making it very difficult for new supply. What we need at Renascor is long-term pricing that allows us to support binding offtake that gets into project financing. I think we have a few detailed questions which we will get into the Q and A session. The key for us in doing a lot of this is the work that we are currently doing at the demonstration facility. This is driving some of the increased interest, some of the customer visits that are looking for it, and really what it is doing is it is underlying that cash position that we have. What do we want to do next? We want to continue the work at the demonstration facility, produce battery-grade PSG. This is for customer qualification.
Again, I think we have a few questions to get to in the Q and A. I want to leave time for that. We also have some pretty exciting exploration opportunities as we are getting ready for some of the drilling. James, I will stop, and I will turn it over right now, and we will get into some of the detail in the Q and A.
Okay. Thanks, David, for your update there. Always lots happening with the BAM project, and it's exciting to see the continued progression there. Also exciting is the company's about to start unlocking some value with its exploration assets, all located in South Australia. I'll pass you over to Andrew Lewan, who is in charge of the exploration activities, and Andrew will run through the company's plans to get into the exploration ground. Andrew, good morning.
Good morning, James, and thank you, David. It's really good to be here. Renascor exploration. What are we doing in South Australia? What really excites us about non-graphite exploration initiatives in the state? I'm responsible for developing and executing exploration programs where we're particularly focused on copper and uranium resources. One of the main reasons why we think South Australia is the right place to do that is because we're surrounded by amazing uranium and copper resources. We really think that's a great place to start our exploration efforts. If we focus in on the Marree area, where we have our Flat Hill and Mulgaria prospects, they're really in the middle of where some of these amazing existing resources are.
With this presentation, I'll go through what we plan to do and what we have been doing at Flat Hill and Mulgaria, and some of the next steps we have to get drilling underway. Just a cautionary statement and disclaimer. Really just to reiterate what I just mentioned, South Australia, we know has abundant copper and uranium resources, 66% of copper in all of Australia and 89% of all of uranium in Australia. We think that really reinforces why we want to be in our state. We know our backyard best, so why not take advantage of some of the opportunities we have in our backyard and really get some drill rigs running in the near future? Just to focus a little bit on the region in particular that we want to do our exploration, particularly for copper in the Flat Hill prospect.
What you're looking at on the screen is a surface geology map, and really what stands out to me, and hopefully to you as viewers as well, is the red region, which has a whole range of green dots all over them. Those green dots represent found copper occurrences. As you can see, Flat Hill is right up the top of that red region, so we think we're in the area which has had most success in the state in finding copper resources. That really honed our interest in our Flat Hill area. The other thing that's really of interest to us about this red region, which what it is actually demonstrating is at-surface exposure of Neoproterozoic geological rocks.
Because it is close to surface or at surface, this real target geological lithology, it means we can also target exploration areas which are expected to be close or which are expected to deliver exploration results close to surface. One of the benefits of that is we can put more drill holes in the ground and cover larger areas with a limited exploration budget that we might have, as opposed to, say, doing one or two drill holes targeting really deep holes. We think the discovery risk in what we are trying to do at Flat Hill is relatively reduced and gives us some confidence in having exploration success. What have we been doing at Flat Hill over the last 12 months or so?
One of the main efforts we have been spending a lot of time on is reviewing and interrogating and compiling, digitizing a huge expanse of historical exploration data. This is actually a real key advantage to Renascor's exploration program in the Flat Hill area. One thing that really stands out, not only do we have a lot of data, it is the quality of data that the previous explorers, particularly in the 1960s and 1970s, produced. These are real high-caliber technical geologists who have generated significant amounts of surface geology field mapping. There were over 200 drill holes put in the ground over a period of roughly five years by some significant exploration parties at the time. We also have a huge expanse of surface geochemistry data.
Now, if we combine all of that historical knowledge and add our own modern, really high-resolution, quite advanced exploration datasets to the historical data, we think we really have the final piece of the puzzle to really refine and hone our exploration targets for future drilling. What key numbers are we seeing, particularly around the Flat Hill area, from some of this historical exploration, which really excites us? Most exciting in my mind, and it was the first piece of historical data that made me go, "Hang on, we really should be looking at this area more closely," was 134 m at 0.57% copper at Boorloo. What this really stands out to me as is something that demonstrates potential scalability of a future economic resource.
It is nice to get small, high-grade intercepts, but when you have got something of real significant scale at a reasonable grade, there is some real potential for a mine, and that is, at the end of the day, what we all really want to be seeing eventuate. We have also got some interesting results slightly further south of Boorloo at Breaden Hill, where we had 1.57% copper over 18 m from surface, which points out that not only do we have potential scalability on our side, we have also got significant mineralization near surface, which can help lower our mining costs. What do we want to do with these historical results and follow them up with new exploration? As I mentioned previously, we really want to refine our exploration targeting with new high-quality exploration data.
What we did at Renascor earlier this year was complete a high-resolution VTEM electromagnetics geophysics survey. The key thing that I want to point out on this slide is the red areas just to the east of the Boorloo and Breaden Hill prospects that you can see on the map. What this demonstrates are areas of localized very high conductivity, which in our geological interpretation might represent significant sulfide drill targets that we can directly target with our upcoming drill program. One advantage of this EM data, over to the west, you can see both the black shale and Marree resource, is the ability for this technology to better define the geological interpretation. We think this information is also helping us really refine and work with some of the historical geological mapping to understand what geological lithologies we're targeting.
Further south to what we think is quite an interesting new exploration target for us, are two additional EM targets at West Willouran and Mayflower. Now, whilst there has been some historical activity in this area, there's been nothing to the extent as what we have seen near the Breaden Hill and Boorloo region. What we're going to do here is, whilst these targets look very interesting and have similar conductivity features as what we see at Boorloo and Breaden Hill, we propose to first test the targets at Boorloo and Breaden Hill, and if those high conductivity features do represent significant sulfide bodies, then these two targets at West Willouran and Mayflower really do move quite quickly up our drill prioritization list, as they also may represent sulfide targets for us to drill test.
Just a quick run-through of what we've been through and what's up next at Flat Hill. As discussed, we've done an extensive historical data review and combined a lot of that information with new exploration data. Really, what the key from there was to make sure that we could then get on the ground. Fortunately, just in recent months, we've secured a native title mining agreement, which has been executed with the Arabana, and we thank them for their support in helping us execute this NTMA. Essentially, all we really need to do now to get out in the field and conducting drilling is to do our final land access and environmental approvals, lodgments, and yeah, we're really excited to get on the ground and to execute our stage one drilling programs at Boorloo and Breaden Hill.
Whilst Flat Hill's a really exciting exploration project for us, Mulgaria is another one which is equally as exciting, but it's actually built on a really quite simple exploration model, and one that we're really quite pleased that we've had the opportunity to secure rights to drill this target. What's interesting about Mulgaria is it's in quite close proximity to essentially one of the largest, if not the largest, uranium deposits, being Olympic Dam. But it's also close to major sediment-hosted deposits such as Beverley and Four Mile. What really drew our attention to this target is recently acquired uranium radiometric data, and that is what you can see on the map on the screen. We can see two red dots on the page.
One is a huge province which is falsely intensified, being the Olympic Dam mine waste tailings, which, through radiometric data collection, has, funnily enough, actually returned quite significant uranium radiometric responses. But then the only other and completely standout, very obvious thumbprint target that you can see in that map, which is about 7,500 sq km in size, is the red dot at Mulgaria. That made complete sense for us to focus in on that area, which is of a radiometric intensity that is about two or three times stronger than any other relief in the area. Since this target is so clear and it actually represents at-surface radiometric values, it is quite straightforward for us to go in and develop a drill plan. We are actually quite prepared and ready to go in terms of getting on the ground and conducting multiple stages of drilling.
What we are really keen to understand here when we get in and drill is to not only understand what is causing the elevated uranium concentration at surface, but more importantly, to understand how deep that uranium anomaly might extend and whether that extends laterally as well. Can we get some real scale on this potential uranium target? Expanding on that, one thing that I really wanted to touch on is how uranium radiometric data has worked in the past elsewhere. Kintyre is a significant uranium resource that was discovered in Western Australia, and interestingly, its targeting was first focused on as a direct result of identifying elevated uranium radiometrics. As you can see on the map, the intensity or the increase above background uranium radiometrics at Kintyre and Mulgaria are actually quite similar, and the exposed footprint is of very similar size.
What was key at Mulgaria, what was key at Kintyre, my apologies, was that they got in there and they started drilling, and then not only did they discover that there was uranium concentration at surface, but they also discovered a much more significant resource below and at depth. Whilst it is definitely far too early for us to make direct comparisons with Kintyre in terms of resource size, we think that gives us really good confidence in terms of the exploration targeting approach that we are looking to apply and the potential for our exploration results to convert into a significant discovery. What is next at Mulgaria then? Fortunately, the land access process has been very similar to Flat Hill. The NTMA that we had executed covering Flat Hill is actually the same NTMA that can apply at Mulgaria.
That has been a really good streamlined sequence of events for us from a land access approvals perspective. We still do have just a couple of minor final field preparation activities, and once we have those in place, we are ready to hit the ground running and to start drilling out the Mulgaria prospect. Elsewhere across the state, we also do continue to build out our portfolio of exploration targets, which we really want to progress to a series of drill-ready targets, primarily at the Olary and Arno Bay areas. At Olary, we have recently secured a new exploration license that is directly adjacent to the operating White Dam gold mine, where in the area there has been some really significant exploration results emerging, including some major players in the area that have committed to major development activities.
We are currently reviewing the available exploration data to prioritize some new exploration targets in this area and have started to prepare for land access negotiations. Whilst at Arno Bay, we are continuing to undertake some material characterization studies on anomalous rare earth samples from the Tumby Bay prospect, which will help support our understanding of whether drilling out a rare earth resource could result in a strong economic case for future mining. We have also actually recently completed some TEMPEST EM data acquisition in this area, and something that is very early stage in terms of interpretation, there may actually be a new base metals exploration target just north of Tumby Bay.
In conclusion, whilst Renascor is definitely focused on the Siviour BAM project development activities, we have a really exciting additional line of projects on the exploration side, which we expect to get up and running and drilling hopefully within the next six to 12 months, depending on land access finalized approvals. We really look forward to laying out the last remaining approvals and clearances and delivering some exciting results for our shareholders. Thanks, James.
Andrew, thank you. A very detailed introduction for people that have not heard too much about our exploration plans to this point, and some exciting times ahead on the exploration front. Okay. With the presentations both completed, we will move to take some questions, and as always, we get a number of detailed questions, so we appreciate everyone's continued engagement on the company's activities. David, we will swing back to you and deal with the questions on the Battery Anode Material project to start with. The first question we have here, I will just read this out to you and you can It is multifaceted here, and you can talk to this, but here we go. Question one, are you seeing a broader shift among ex-China anode producers towards HF-free purification, or does it remain an emerging approach within the industry, and what factors might influence its adoption?
Yeah. Thanks, James. Traditionally, anode makers are purchasers of purified spherical graphite. They do not make it themselves. If you look at the ex-China market, there are four main producers, all of whom either currently produce large amounts of natural anodes or are looking to move into the natural anode market. All of these companies need PSG, and they are dependent, to one degree or another, on China for PSG sourcing. China, as we have discussed, generally, although not exclusively, uses hydrofluoric acid to produce purified spherical graphite. In recent years, the domination of synthetic anodes produced in China has meant that PSG is not facing the same kind of demand in the Chinese domestic market. Outside of China, the situation is very different. It is very different because natural anode has a much higher portion of the market ex-China.
This is largely because that Chinese cost advantage, the kind that we see in the production of synthetic graphite based on capacity, based on scale, doesn't really exist outside of China. If you look at the production of purified spherical graphite, it's been less expensive and more efficient to produce natural anodes outside of China. Today, all of these ex-China anode producers have been able to source HF produced from China without much of a problem. What's happening is problems are emerging, right? It's a problem without a solution yet. The first problem is that the Chinese companies are no longer freely sourcing PSG outside of China. Some of those markets are closed, so new sources are needed. Right now, none are commercially viable outside of China. The first facilities that we've seen have been adopting Chinese tech.
The big example is what BTR is doing in Indonesia, BTR Indonesia. They're using hydrofluoric acid, Chinese tech. POSCO's building a similar facility in Korea. With these kinds of projects, the biggest issue is that much like the synthetic cost advantage doesn't translate very easily outside of China, that HF cost advantage hasn't been able to be replicated outside of China. Really, the emerging story is the price of hydrofluoric acid itself. That's the single largest cost in purifying in an HF-based operation. HF prices are not just up a little, they're up significantly. This is where we've always felt avoiding hydrofluoric acid, using our HF-free technology, has a real advantage. Our pricing studies, the ones we talked about, show that that HF-free flow sheet we've adapted is simply more economically competitive. This is before the recent increase in HF prices.
They've just really hammered that home even more. This has driven some of the recent interest that we've seen as we've gotten into our trials at the demonstration facility. What factors can influence it from one way to another? Really, it comes down to economic competitiveness. As we move through our demonstration facility and get into commercial plans, we think we're really going to hammer home that HF-free cost advantage. It's just a more efficient, a better way to do it in the ex-China market.
Okay. All right. Thank you. Next question, David. What steps has Renascor taken towards binding offtake agreements? Always front of mind for followers of the company. What relationship building and negotiations have taken place and proactive steps taken to get to this important milestone?
Yeah. That's a great question. Look, our strategy on offtake agreements is to enter into commercial deals that get us into production as quickly as possible. We do that by, the way I'd put it is offering a solution that's valuable to our customers. The proactive steps in the pathway. I think the pathway involves a number of steps. Introducing the project, demonstrating credibility, creating interest, find out what the customer wants. Then we go through preliminary due diligence, provide initial samples. That leads to some of the commercial discussions, specifically on offtake. Then we get into more detailed due diligence, site visits, and then secondary or B samples. Then obviously the goal is a commercial agreement. Where are we specifically now?
I guess at this stage, we're very recognized as having a very credible ex-China project, recognized by anode makers as well as cell makers and OEMs now. We've gone through initial due diligence with multiple anode companies, with other battery participants, even governments now. We've completed multiple initial sample rounds. This has led to some really significant non-binding MOUs focused on purified spherical graphite. This opens up more detailed commercial discussions, looking at things like volume, product specifications, price, and it identifies that solution that the customer wants. A couple years ago, when prices were higher, there was a scarcity of new production, so the focus was on getting the upstream started as quickly as possible. Now, the missing piece that we're seeing from the ex-China anode companies is offering ex-China PSG. That's where the focus is.
This has led us to build the demonstration facility to validate our competitive position and to demonstrate to our customers that we have this advantage. That's led to more detailed diligence, to site visits. Ultimately, the solution that we're really proposing is probably best thought of as a partnership with anode companies, where we give them something they can't secure elsewhere, and that is secure and competitive ex-China PSG. What comes next is translating that into binding agreements that allow us to move into the commercial stage. The missing piece now is focused on price. How do we get our customers to accept a pricing structure that isn't reliant on Chinese benchmarking, where Chinese are offering simply unattainably low pricing? We do this by offering the best alternative outside of China, with the validation we're doing at the demo plant being really the key driver to get us there.
Okay. Thanks, David. Next question for you. Renascor's focus is on producing purified spherical graphite. Other graphite developers have plans to go further downstream and produce active anode material. The question is, why does Renascor not go down this pathway and go further downstream and produce anode material?
Yeah, that's another great question. I'd probably start my answer to that one by looking to offtake. We do whatever we can to realize shareholder value through getting into production as quickly as possible. The graphite market's been difficult. It's very competitive, very low pricing, and it's been dominated by supply, throughout the supply chain, by one country giving products at unattainably low prices. So, what we're trying to do is create the most competitive position outside that country. On the mining side, Siviour has the potential to do that. We went through in the deck, our estimated cost is amongst the world's most competitive, and we have the benefit of being in one of the most secure jurisdictions in the world here in Australia. But by going downstream one step and producing purified spherical graphite, we can actually become more competitive.
We can pass on the cost savings from the operation, the mining operation downstream. We keep in-country, we use HF-free purification. So, we have the potential to produce PSG as the lowest-cost producer outside of China. Since China has a near monopoly on PSG, that gives us a very attractive competitive position with our customer base. And it's the kind of position that solves a problem for our customer base who need ex-China production. Now, should we go further downstream and produce active anode material? Anode market's really attractive. Higher value from the finished product, better potential margins. But if you look at the market right now, ex-China, you already have established players in Korea and Japan who have decades-long, longstanding relationship with the very limited number of cell makers who are providing into the West.
These companies not only have the market penetration, they also have capacity that's currently being underutilized. So, from a competitive standpoint, there's a very tall bar to get over in the current market. Now, our future could and should include anode production, but how we see the market now is our strongest offer and our strongest competitive position is by partnering with anode companies, not competing with them. So we combine our PSG, existing anode production. That looks like the solution for the market. That's the timely solution, that's the competitive solution, and that's the one that's going to get us into production fastest.
Okay, David, one final question for yourself. Here we go. Following the production of battery-grade graphite at the demonstration facility, what remains to be demonstrated before Renascor's technology is ready for commercial deployment?
Yeah, the work we've done to date from a technical perspective would generally be sufficient to move to more detailed engineering design and commercial construction. This is because we've been able to produce the material we need both in the lab, now in the demonstration plant, and we've gone through the engineering steps from a feasibility basis. The challenge is, it's a difficult market. It's a low-priced environment, and being able to produce that product isn't enough to get the kinds of partnerships that we need to underwrite commercial production. Instead, we've had to go one step further. So we built the demonstration facility to show we can have this cost advantage at scale, to de-risk the project for our customers. The first major step after building the facility was to produce battery-grade graphite in the demo plant.
We've done that, and that's a major de-risking step, and it's proven we can hit the key customer purification. This has led to increased interest, and that's why we're seeing increased visits to the facility. Later this quarter, we're going to be repeating this with Siviour samples, and then we'll continue to show that we can do this progressively at larger scales to larger multi-ton trials. So, at this stage, from a technical point of view, we're ready to move forward. The work we're doing is continuing to scale operations through the demo plant so we can demonstrate to our potential partners that we're managing the risk. By de-risking the project this way, this gets us to closing commercial agreements so we can move forward into commercial construction.
Okay, David, thank you. Some really good questions there and some detailed answers, so thank you. Andrew, we'll move back to you now, and there's been some questions come through in relation to the exploration side of things. First question, Andrew. You've said that there hasn't been any drilling in the Flat Hill or Mulgaria areas for several decades. Why do you think it's been so long since anyone has revisited them, and does this mean there's limited exploration opportunity here?
Yeah, thanks, James. Good question. Really, two main things have changed recently when compared to previous years, and one of those, commodity price cycles. They go up and down, and we really think we're in an exciting period for both copper and uranium. The other side is land access. Look, to be honest, land access has just become such a difficult and expensive and complex exercise that we think that has been a significant limiting factor for other exploration companies trying to capitalize on some of the exploration opportunities in the area. Fortunately, we've just got our NTMA, and that is really one of the critical barriers to entry for exploration in this particular area that we're targeting.
So, yeah, with that in place, and we've got light at the end of the tunnel, we really think we're really close to getting both exploration targets up and running in close succession.
Okay. Next question here, Andrew. Can you provide us with some details about the size and scale of the exploration programs you are planning to execute across the exploration project areas?
Yeah, sure. Another good question. What we really want to achieve from our exploration programs is to discover new mineral resources, and the only way we can do that is by getting drill holes in the ground. We worked really hard, I think, to build up a portfolio of quite a few targets that are immediately ready for drill targeting and testing once we get land. In terms of size and scale, we actually have two really nicely defined and refined exploration targets, and this means we can be really focused with our drilling meters. We think there's probably somewhere around 3,000-5,000 m that we'll be conducting initially at each prospect, and really what's key around that is further land access approvals. Really what we've tried to focus on here is we're very excited about the potential to scale out these drilling programs.
What we've done with our land access approvals is to make sure that they are already catering for an expansion of exploration activity. If we have significant success at either Mulgaria or Flat Hill, we're essentially ready to go from a land access perspective to expand those programs into either a phase two or phase three or beyond. While relatively small and efficient programs to begin with, we're ready to go to scale out those programs when we get some good results.
Okay. Andrew, thank you. That does wrap up our questions. I'll take the opportunity to thank David and Andrew for their presentations this morning, and also to thank everyone who has attended the webinar. With that, we'll say thank you and good morning, and goodbye from Renascor Resources.