Great Lakes Graphite Inc (GLK.H)

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Tesla ‘gigafactory’ will require 8 new graphite mines

http://business.financialpost.com/2014/09/16/tesla-gigafactory-

will-require-8-new-graphite-mines/Special to Financial Post September 16, 2014 9:13 AM ET

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Sr. VP John Carter runs a series of tests to identify the most efficient way to process the Lochaber ore while also achieving the highest recoveries.
HandoutSr. VP John Carter runs a series of tests to identify the most efficient way to process the Lochaber ore while also achieving the highest recoveries.
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Great Lakes Graphite is fast tracked to production

Electric car producer Tesla Motors (TSLA-NASDAQ) is planning to build a $6-billion lithium-ion battery ‘Gigafactory’ in 2017, doubling the 2013 global output of lithium ion batteries and creating a massive shortage of graphite – unless new mines come on line.

Great Lakes Graphite (TSX.V:GLK) is a strong candidate to fill some of that North American demand. GLK’s 100%-owned Lochaber project in Quebec is a large flake graphite project with a near-surface resource located close to infrastructure and end user markets.

“We spent the last seven years assessing opportunities in the graphite space,” stated GLK CEO Paul Gorman in an exclusive interview with Financial Post, “We wanted a high grade graphite project that had already been drilled and that had historic reserves which needed to be upgraded to modern geological standards. The Lochaber graphite property in Quebec checked all the right boxes.”

Gorman stresses that he intends to be one of the first producers of flake graphite in North America. Great Lakes will achieve this by opening a quarry style graphite operation in a smaller footprint, that offers an easier permitting process and much lower initial capital requirements.

“We are focused on the development of Lochaber” stated Gorman, “but at the same time we are building relationships with North American end users to supply graphite from our Lochaber project. We are not just a junior explorer, we are an industrial minerals company. Graphite demand in North America is surging and there is a race on to see who will fill it. It is our intention to be one of those companies.”

The former owner of the Lochaber project spent $2 million drilling it and doing particle distribution work, so Great Lakes Graphite inherited a lot of very useful data.

“We knew the size of the historic reserve,” confirms Gorman, “Our focus is to bring it to 43-101 standards and update the resource calculation based on new modelling and developmental work.”

On August 27, 2014 – Great Lakes Graphite announced that it has initiated a program to fast track the Lochaber Graphite Property towards production. The first phase of this program includes field-work, laboratory work, a new 43-101-compliant resource estimate and the securing of offtake agreements that will be the key to obtaining production financing. Gorman expects the production decision to be made by Q4, 2015.

Handout
HandoutSamples collected recently appear consistent with the high quality, large flake natural graphite for which the area is known and also indicate the potential for lump graphite.
“The beauty of industrial minerals is that we can scale the output based on customer requirements,” stated Gorman, “We’re going to have all of the orders from the customers in place before we go to the bank and say: ‘this is how much we need’. The construction cost for this graphite mine is going to be very modest – around $35 million dollars – give or take.”

GLK’s Senior VP John Carter, in his former role as President of MinPro, built mills in 26 different countries around the world. Carter’s unique knowledge and experience is another way the Company is mitigating risk. By leveraging a wealth of prior experience, GLK is exploiting every advantage to insure their operations will produce graphite products to the exacting requirements specified by customers.

“On the marketing side, we are doing a top-down approach,” stated Gorman, “Getting graphite samples into the hands of end users and having them analyse it and reverse-engineer what they need from us.”

In 2007 Gorman and Carter spent several months talking and visiting with potential customers along the Eastern Seaboard, to Cleveland, Philadelphia, Pittsburgh – meeting with procurement managers from different carbon companies. It was an eye opening trip. They discovered that the carbon end users are actively looking for new suppliers, since at that time there was only one graphite producer in North America and the pricing and supply from the Chinese trading houses to this day remains unreliable.

“We now have about 640 customers in our marketing database,” stated Gorman, “Refractory companies, battery companies, solar panel companies and new technology companies.”

GLK’s field-crew partners recently concluded the initial phase of fieldwork at Lochaber, which involved verifying the location of each of the 100+ drill holes drilled by the previous operators and collecting a mini bulk sample. The field team also secured the drill core from the 7,000 metre program that was conducted in 2012.

“Particle size distribution and flake analysis is a big focus for us,” stated Gorman, “How much jumbo flake, large flake and smaller stuff do we have? With this data, we can align ourselves with the right customers.”

Handout
HandoutAt Great Lakes Graphite “from mine to market” means bringing an understanding of customer requirements to all aspects of building the business.
Lochaber is GLK’s flagship project and is intended to be the first into production for the Company. But Gorman plans to develop four or five more quarry-style projects, which can be duplicated and scaled from the Lochaber model.

“North American factories that are buying graphite are sourcing it mostly from China,” explains Gorman, “but across the industry, inventory levels are falling. The Chinese have consolidated a many of their small graphite operations, largely because they are doing a national audit, trying to determine how much graphite they have left. There is already an export tariff on domestic graphite leaving China. That tariff could go up, or they could choke off graphite exports all together.”

With its lower cost profile relative to synthetic graphite, Tesla’s Gigafactory is going to require new streams of natural flake graphite.

With the advancement of battery storage, mobile battery systems and alternative energy infrastructure, it is estimated that 20 new graphite mines will be required to keep up with demand by the year 2020.

Great Lakes is working with its partners to develop proprietary technology to micronize, shape and purify flake graphite to 99% for emerging technological applications. GLK plans to put Lochaber into production by Q2 2017. Currently, GLK intends to purify up to 40% of Lochaber’s gross yield. The specialized products created through the purification process command prices of up to $7200/tonne.

GLK is currently trading at $0.10 with a market cap of $6-million.

This story was provided by Market One Media for commercial purposes. Postmedia had no involvement in the creation of this content.


http://www.greatlakesgraphite.com/