Alabama Graphite, Elcora Resources and Focus Graphite defy sluggish metals market
Graphite Market Review — The Graphite & Graphene market remained sluggish for the graphite sector in general and on average, the graphite sector share price dropped 2.66% in the week ending on December 5, 2014. Focus Graphite, Alabama Graphite, Elcora Resources were the exceptions.
Get our daily investorintel update
Elcora Resources Corp. (TSXV: ERA) gained +11.54% for the period. Elcora owns the Sakura mine in Sri Lanka, which holds some 3.35 million tonnes of high grade graphite, suitable for the supply of grades cable of addressing Li-ion battery and graphene production needs. The main advantage of Elcora’s Sri Lankan graphite is that it comes out of the ground already possessing purity levels of about 93%, presenting an orderly crystal like structure. This makes it easier to process, achieving very high purity levels. Elcora’s goal was always to get into the graphene business and it has devoted years of research to develop the right process in order to purify the graphite without compromising the unique and crucial structure of the crystals.
Alabama Graphite (TSXV: ALP | OTCQX: ABGPF) gained +5.88% in Toronto and +5.16% at the OTC. Alabama has been exploring five new targets as part of its plan to test ‘anomalies’ that hold significant promise for large flake graphite. At Coosa, AGC evaluated new exploration targets identified during flight and ground survey activity. AGC’s Coosa and Bama properties have demonstrated ideal characteristics including the coarseness and size of the flakes, which make them ideal, and close to surface mineralization and most of the graphite is at surface level. AGC is now completing the trenching and drilling programs at Coosa and Bama while the GS Lab in Lakefield, ON, evaluates samples from both projects. AGG has also gained an understanding of the properties of the natural flake graphite from Coosa and Bama in order to adopt the best suited metallurgical processes to determine ideal market applications. Dr. Nitin Chopra from the University of Alabama’s Metallurgical and Materials Engineering Department will be working with AGC to this effect.
Focus Graphite (TSXV: FMS | OTCQX | FCSMF | FSE: FKC) was up +9.34% on the OTC, and flat for the TSXV for the week ending December 5th. Focus is developing one of the most important graphite projects in North America at Lac Knife, Quebec. Last week, Focus filed its environmental and social impact assessments (ESIA) with the Quebec government for the Lac Knife Project.: “the ESIA is the main document used to communicate and discuss details of the project to all concerned regulators and community stakeholders regarding the project’s impact, risk mitigation, and potential benefits.” The filing of ESIA paves the way for the start of the regulatory work needed to secure all the relevant permits that Focus will need to bring Lac Knife to production. Lac Knife’s operating cost per ton of concentrate will be in the lowest quartile at $441/ton, making it one of the most economical graphite projects and it is one of the very few companies that have successfully produced and tested, “battery ready” graphite. Focus has already filed a feasibility study, which gives it an advantage in timing over other emerging graphite projects. Focus is also considering alternative project financing solution may include stocks and low interest loans, strengthening economic fundamentals for the Project (400,000 ton total) of graphite concentrate with a Chinese-based industrial consortium located in the port city of Dalian, Lianing Province, China; one of the China’s most important centers for trade and industry, and home to many of high-tech companies.
Graphite has been trailing the inconsistent trail of industrial metal prices on the London Metal Exchange. While copper and aluminum are under pressure, the price of nickel is strong; nickel is an important element in the manufacturing of Li-ion batteries, which, the rising demand of which is one of the main drivers of graphite mining. Indeed, among industrial raw materials, a number of materials which, although required in small amounts, will remain expensive due to high demand. One such raw material is graphite, which is expected to experience strong demand growth in the coming years. Similar to rare earths, China is the market leader in the market for graphite, which is there but mainly used in steel production. Very few will be able to provide the 90% + purity flake graphite needed to address emerging industrial requirements. Graphite, while suffering the same price disease that has affected most resource stocks, promising or not, is easier to mine than other minerals. Because of its electrical and thermodynamic qualities, electromagnetic survey equipment picks it up easily and thus it makes for a far less costly exploration process than other minerals. Moreover, much of flake graphite deposits are located near the surface, which also reduces risks while allowing for open-pit mining, a much cheaper alternative than other methods.
Graphite Market Review is a special weekly feature on InvestorIntel sponsored by Alabama Graphite Corp. (TSXV: ALP | OTCQX: ABGPF).