Graphite producers at NYC summit agree that demand for natural graphite is expected to increase
Black Friday is the perfect day to discuss graphite and grapheme companies, as I complete my Part II coverage (Part I) of the Graphite & Graphene Summit in NYC earlier this week…so if your enjoying your holiday and trying to get a handle on who’s who — then allow me to share my notes with you….
Greg Bowes, CEO of Northern Graphite Corp. (TSXV: NGC | OTCQX: NGPHF) provided an update on Northern’s flagship Bissett Creek Graphite Project, east of North Bay, Ontario, and addressed the economics of flake graphite development projects (and some of the challenges new graphite mines face). Northern Graphite is one of the most advanced-stage graphite exploration companies in the sense that it has completed its Bankable Feasibility Study, along with receiving the requisite environmental permitting and demonstrating positive economics — at what many feel is a bottom in the market. “The graphite supply side problem is anticipated to be more severe when economies recover, as no new mines were built during the last economic cycle and the existing graphite production base in the rest of the world is aging,” Bowes stated. “Graphite prices are likely to exceed previous peaks in future.”
Lincoln Minerals Limited’s (ASX: LML) Managing Director, Dr. A. John Parker, provided an overview of south Australia’s Eyre Peninsula — a world-class, high-grade graphite province and host to 25% of the world’s top graphite resources, including the emerging Australian graphite producer’s Kookaburra Gully high-grade flake graphite project. Kookaburra Gully has a JORC-compliant Mineral Resource (ranking 8th in the world, based on graphite grade percentage at 15% total graphitic carbon), and with its four other less-advanced graphite projects in the region, Lincoln Minerals has secured a dominant position in Australia’s premier graphite province. Dr. Parker was quite clear; although his company is advancing all five of Lincoln Minerals’ graphite properties, Kookaburra Gully’s targeted timeline to production is within two years.
Brasil Grafite S.A. (a Brazilian-based Frontera Minerals Inc. company) may not stimulate the interest of potential investors (as the company is private); however President and CEO, Felipe Holzhacker Alves made a fantastic presentation examining the Brazilian graphite industry. Brazil is an emerging economic powerhouse with a premier — and highly underexplored — mining jurisdiction. Brazil is the world’s second largest natural graphite producer and accounts for nearly 10% of global production. Brasil Grafite is focused on advancing the Itabela Graphite Project in the state of Bahia, Brazil. Itabela has been the most prolific graphite belt outside of China for over 70 years (currently producing approximately 80,000 tonnes per year). A Preliminary Economic Assessment was completed in September of this year, demonstrating the potential of a low CAPEX and OPEX operation, yielding a post-tax, unleveraged IRR of +70%.
Here’s a graphite story you don’t read every day — a Chinese graphite mining company, with producing projects outside of China. Newly established Power Stand Development (H.K.) Limited (PSD) owns three graphite mines (and a processing plant) in eastern Madagascar and sells high-quality, large-flake graphite. As PSD’s General Manager, Hailing (Harry) Yang explained, “With over 200 employees and USD$100 million invested in operations, our graphite mines are in the core area of high-quality ore deposits. PSD’s rich graphite reserves can sustain 50 more years of mining. Currently, we own a graphite processing plant that is fully equipped with an annual production capacity of 10,000 tonnes.” PSD’s motto is simple: “We are fresh. We are young. We want to be the number one graphite firm in China.” Investors may wish to keep a close eye on Power Stand Development as the company is planning an IPO.
Dr. Elena Polyakova, CEO and President of Graphene Laboratories, Inc. gave a presentation that provided an overview of the graphene market and discussed some of the recent developments in the industry. As most InvestorIntel readers are aware, Graphene Laboratories has a “strategic alliance” with Lomiko Metals Inc. (TSXV: LMR). Graphene Laboratories actually sells graphene directly from its website (the ‘Graphene Supermarket’) and is the world’s largest supplier of R&D graphene products. Dr. Polyakova noted that the evolution of graphene towards commercialization would consist of three phases: from graphene-enhanced products, to replacements of current technology, to finally graphene-enabled products.
Get our daily investorintel update
Three of the world’s major graphite processors/manufacturers (meaning these companies are not miners or producers, but rather purchase and process graphite to end-user specifications) gave excellent presentations on both the natural and synthetic graphite markets.
First up was German-based SGL Group. In business since 1878, SGL is one of the world’s largest manufacturers of carbon-based products (sales were over USD$2.3 billion for 2012). Tom Burkett, Vice President for SGL Americas, explained that SGL “does not wish to become a graphite miner, but rather maintain the flexibility it enjoys as a consumer.” Burkett noted that in SGL’s opinion, it is economically feasible for 3 to 5 more graphite mines to open (although I think that is a exceedingly conservative figure).
One of the brightest minds in the graphite-processing world, Stephen Riddle, President and CEO of Asbury Graphite Mills, Inc. (a fourth-generation family business, established in Asbury, New Jersey, 118 years ago), gave a stellar presentation on the natural flake graphite market. Excluding the refractory market, there are four key natural flake graphite markets: expandable flake, purified flake, spherical flake, and pulverized (milled) flake.
Chicago-based Superior Graphite was the ‘rookie’ of the group, having only been processing graphite since 1917, but provided one of the most in-depth presentations of the conference. Gerry Hand and Andy Rill presented for Superior Graphite and in many respects echoed Gary Economo’s (CEO of Focus Graphite) remarks; underscoring the fact the graphite demand is shifting and focused towards higher performance (technology-grade) graphite. The mineralogy of a graphite deposit is vastly more critical than how big it is. The consensus of all three producers was positive and that demand for natural graphite is expected to increase.
An accomplished entrepreneur and corporate finance professional, Tracy Weslosky is the CEO for InvestorIntel Corp. and the VP of Business Development for Bellotti Capital Partners ... <Read more about Tracy Weslosky>