Nextsource Materials Inc (NSRCF)

[Polemarchos_Megas]

Some good analyst coverage:

http://www.wallstreetsectorselector.com/2014/03/wave-future-investment-ground-byron-king/

TMR: What companies could fill the demand for graphite, and what type of graphite does each project have?

BK: Focus Graphite Inc. (FMS:TSX.V) has a very high-grade deposit in Lac Knife, Québec, on the border with Labrador, near Fermont. This graphite play was discovered several decades ago by miners looking for iron or gold. Focus has done a lot of drilling and defining the graphite ore body.

Focus is still developing its mine and processing capabilities, but management has built the company into more of a technology play on graphite. The company invested heavily in developing applications for graphite that involve other forms of carbon, such as graphene and nanotubes. Focus wants to create a branded, high-spec, high-tech product it can sell to downstream users looking for the high-end stuff.

If you want a down-to-earth company—so to speak—that’s more of a traditional graphite miner, take a look at Energizer Resources Inc. (EGZ:TSX.V; ENZR:OTCQX). Its deposit is on the island of Madagascar. The deposit is so extensive that you can see it from space on satellite photographs. It originated deep underground and was heated to high temperatures 400 million (400M) years ago. Now it’s all large-flake graphite—and I mean beautiful mineralogy!—exposed at the surface.

When I visited, we drove for miles across the scrub of southern Madagascar. The tires kicked up graphite dust. You could do geologic mapping by looking at the termite mounds. The gray mounds were graphite, the brown ones weren’t. It’s very mineable. In terms of strip ratio, there’s virtually no waste.

Energizer has put together plans for a mining and processing facility, logistics, transport and shipping. The company recently hired two well-known mine builders. The company has had successful bench-scale testing and is building a pilot plant to demonstrate the processing capabilities of the material. The next step is to get together with mid- and downstream users, to understand their needs. Madagascar is far away if you look at the map from North America, but it’s also that much closer to major markets in India and East Asia. Plus, Madagascar has a stable government and is relatively mining friendly. Rio Tinto Plc (RIO:NYSE) and Sherritt International Corp. (S:TSX) have operations there.

TMR: Energizer’s new CEO and board are talking to potential offtake partners for its Molo graphite project. Is an offtake deal the next expected catalyst?

BK: The next announcement will probably be about the pilot project, probably around the end of November. A deal with offtake users is the next logical step in the company’s development.

Considering the size of the deposit, the quality of the material, the lead time involved in making the arrangements and commitments on something this big, there isn’t a lot of time for any grass to grow beneath anybody’s feet.

Focus and Energizer are two of the most advanced, most attractive graphite mining plays in terms of their ability to deliver product to an end user that can then add more value to it.