Top 10With 15 companies in attendance and key note addresses delivered by Chris Berry, founder of House Mountain Partners and Simon Moores, Graphite Market Specialist at Industrial Minerals, yesterday’s Graphite Express conference it was a good way to get a quick and direct overview of the graphite industry and its constituent companies. The conference was a speed-dating format with each company having 5 minutes to showcase their graphite endeavours. Given the express format of the conference, here are 10 express bites of Today’s graphite industry:
The most animated presentation of the event was by far delivered by David Hodge, President and Director of Zimtu Capital Corp. (TSXV: ZC) who used a bright orange carpenter’s pencil as his notes for the presentation. All the companies he had to talk about were printed on the pencil which was also a freebie at the Zimtu booth. He professed patriotically that the world is saying we need more graphite and is looking to Canada to provide it. The most popular phrase heard repeatedly throughout out the conference was “…the mining friendly province of Quebec…” Many presenters also spoke about the ease of getting graphite permits, some taking as little as four weeks.
Gray Economo, President and CEO of Focus Metals Inc. (TSXV: FMS) announced that they will soon be known as Focus Graphite. He also indicated that a preliminary economic assessment (PEA) for the Lac Knife project is currently being prepared and is expected to be published next month. He also highlighted establishing relations with academia and the private sector on graphene and that investors can expect to hear more about this. As the only junior mining company with an investment in graphene has says that the 16% grade large and medium flak graphite at Lac Knife gives the company a clear strategic advantage in that “the highest grade graphite will lead to the lowest cost of production.”
Chris Bogart, President and CEO of Standard Graphite (TSXV: SGH) commented that exploration is risky and a with a graphite project you must consider size, tonnage, marketability. Having a variety of graphite projects gives Standard Graphite the ability “to reload” with a new project if another is determined to be non-economic. He also added that “EM (electromagnetic) conductors are very important for graphite exploration” and more so than for other resources.
Chris Healey, CEO and President of Galaxy Capital Corp. (TSXV: GXY) announced that Galaxy Capital will be changing their name to Galaxy Graphite in a few weeks, after their upcoming Annual General Meeting. He announced the recent closing of the first tranche of financing and that a second tranche will close next week.
Aubrey Eveleigh, CEO and President of Zenyatta Ventures Ltd. (TSXV: ZEN) highlighted that the graphite mineralization at the Albany Graphite Deposit is a magmatic hydrothermal style similar to the high value the Sri Lankan type graphite deposits. The deposit is very clean with feldspar, quartz and graphite that is expected to be of high purity.
Paul Gill, President and CEO of Lomiko Metals Inc. (TSXV: LMR) provided an update on the Quatre Milles project noting that 26 holes were drilled by Graphicor of which 23 “hit graphite” and provided an update on their 2012 drill program. It’s Lomiko’s goal to complete both Phase I and Phase II drilling with the intent to establish a flake graphite resource by December 2012.
What’s the key to understanding a junior graphite company? Knowing the company’s footprint -- one size does not fit all and mesh size and carbon content can vary. A ‘balanced’ graphite footprint is probably the best as this can help insulate a company from demand fluctuations. Considerations must also be given to grain, grade, strike length and metallurgy.
China factors into the graphite supply and demand equation -- big time. According to Chris Berry there is excess graphite capacity in China but many expect graphite supply to be constrained by export quotas, value added tax (VAT) and mine closures. Simon Moores added that one myth of the graphite industry is that China has imposed an export quota on graphite -- this is not the case and currently only a VAT and an export tax are in place.
Graphite has been given critical mineral status in the US and the EU and according to Simon Moores it should be placed high on the investor’s radar. Today graphite is used primarily in refractories and crucibles. Future demand growth for graphite will be for use in lithium-ion batteries. This market is growing at 20% per year.
Key graphite markets are India, China, South Korea, Japan and Europe. Graphite companies that are first to production will enjoy the highest valuations and will enjoy additional opportunities like off take agreements and joint venture opportunities.
That said, the general vibe of the event was that the graphite Bull Run is not over and there’s lots of opportunity in the graphite space.
Disclaimer: Focus Metals Inc., Lomiko Metals Inc., Standard Graphite Corp., Galaxy Capital Corp. and Zenyatta Ventures Ltd. are sponsors of GraphiteBlog.
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