Mason Graphite’s Distinguishing Advantage: Business Plan
Mason Graphite Inc. (“Mason”, TSX.V: LLG) has reported the assay results for 104 remaining drill holes from its 163 drill-hole resource expansion zone program (July to November 2012) at its Lac Gueret project in Quebec, one of the most abundant crystalline/flake graphite regions in the world. The 104 holes are split between two general drill zones. The GC zone is the main exploration target and the new holes were intended to look for potential mineralization extending beyond the known boundaries.
The second zone, GR, represents a new potential target located some 1,000 meters away from GC. Mason said that the results have shown significant and measured resource of 300,000 tons at 24.4% carbon and 7.3 million tons at 20.2% carbon Indicated. The high graphitic carbon (Cgr) content (or purity) gives it a cost-benefit advantage as higher material grades can be achieved with less effort. The highlights from the new results in the GC zone include intersections ranging from an average 17.1% to 26.1% (Cgr), with peaks of 37.3% and 33.9%, confirming the value of the resource.
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The new GR zone yielded average intersections ranging from 15.9% to 20.2% Cgr with peaks of 26.1% and 27.5% Cgr. In the real world these numbers suggest that quality mineralization extends far beyond the current mineral resource boundaries especially insofar as the original GC zone is concerned. The favorable results from the GR Zone, meanwhile, invite further exploration in view of its demonstrated potential. Significantly, in the short term, the GC results will make for a more exciting resource estimate in the near future. The estimate will be based on Mason’s July 2012 resource calculation and the new GC zone drill results.
Grade is a crucial factor of success; it gives the miner the ability to attract more and higher customers while also offering lower production costs; the higher the ore’s grade the less amount of graphite needs to be processed to achieve the desired specification product. Naturally, the ability to lower production costs allows a company to be more flexible in the face of international economic cycles. Large flake graphite, which is cheaper to process than the amorphous variety, has seen sharply rising demand, accounting for a fivefold price increase from USD$ 500/ton to USD$ 2,500/ton since 2005 with the steepest price increases occurring over the past two years.
Mason’s resource promises to be especially rich in large and medium flake graphite, the most desirable variety of graphite for applications in clean energy, lighter and more powerful batteries, super capacitors for wind turbines and pebble-bed nuclear reactors. Mason, however, is also interested in generating revenue in the short term by supplying the more basic graphite market, including steel industry furnace refractory materials, carbon enhancers in steel alloys, lubricants and even pencils.
The attention to the traditional and present market is the mark of a valid business plan, divulging the management’s experience in the sector and its understanding that the traditional business is what will contribute to reducing the ‘time to money’ ratio between production start, timing, identification and location of customers. The graphite market revolves around the ‘application’, which implies a significant understanding of the end user and their specific need. Mason Graphite, as well as other emerging graphite plays with interesting resources, has an advantage over their Chinese competition (70% of natural graphite comes from China) is a better understanding of their customers in the areas where new graphite technologies are emerging – even beyond the graphene space.
Quebec has been involved in graphite mining and production for decades with a propensity for large flake graphite. Given the presence of an active graphite mine, the province is rich in professional expertise; Quebec is also logistically ideally located to serve the North American and international markets with excellent infrastructure and government support. Mason’s project is close to established transportation infrastructure and management has maintained good relations with the local First Nations Native Pessamit community. Mason’s other advantage is having a CEO, Benoit Gascon, having more than 20 years experience in the graphite market. Indeed, the company he managed, Stratmin Graphite – now Timcal Canada is one of the few graphite producers in North America (its deposit in also in the Lac-des-Iles zone) to have survived the 1990’s, when much of the world’s production of graphite, like so many other industrial developments, shifted to China.