Month in Review: Graphite Saved by Graphene and Quebec
Commodities stocks, in general, did not fare very well in February; many reported earnings that reflected the global reduction in demand for resources in 2012 while the US market had a mixed bag ranging from favorable housing market results to the US Congress’ failure to reach an agreement over spending cuts. Nevertheless, there were some encouraging sectors as well; graphite is certainly among these. As a whole, the graphite sector experienced the same malaise as other commodities, but it also reserved some room for remarkable individual performances. Two companies in the ProEdgeWire graphite sponsor index stood out throughout the month: Galaxy Graphite Corp (TSXV: GXY) and Zenyatta Ventures (TSXV: ZEN), which rose respectively 183.3% and 109.68%. Galaxy’s rise reflects the discovery of high grade, large flake graphite at its Buckingham property in Quebec. The stock has almost tripled in value, rising from about CAD$ 0.03 to CAD$ 0.08/share.
Zenyatta’s share price increase is more significant, even if it is not as dramatic in percentage terms. The market has shown Zenyatta that it appreciates the fact that its vein/Sri-Lankan type graphite has reached 99.96% purity; this puts it in direct competition with synthetic graphite, which is far more expensive and environmentally challenging to produce. At this level of purity, Zenyatta’s graphite is ideal for all of the battery, pebble-bed nuclear reactor, high end refractory materials and graphene applications that the market has been waiting for. Zenyatta’s rise in February coincided with a series of announcements from Europe concerning billion Euro investments in graphene research for the private sector. In essence, last February, the graphene space moved away from the field of pure research toward one of actual development and production.
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The graphite market was anxiously waiting this moment, in a sense validating the period of expectation and speculation in the graphite mining industry witnessed since the famous Vancouver conference in December 2011. If anything, at all, in February 2013, graphite mining has proven its importance to future technology and its validity as an investment. So in many ways, it can be said of graphite that it has matured as a commodity and that it should start to attract more interest. Meanwhile, Quebec, has also assured its place in the graphite space as having perhaps the most significant concentration of flake or crystalline graphite deposits in the world for the time being; even of other jurisdictions might show promise, few can compete with the Canadian province’s infrastructure and mining friendly regulatory environment.
The EU’s flagship graphene research program involves two giant research projects over the course of ten years, aiming to put Europe in the lead in graphene technology. That may be the case, but Quebec (and central Ontario – where Zenyatta has its property) has the mineral source for this graphene. The EU project envisions developing graphene as economically useful in the fields of information and telecommunications technology, materials science, energy and life sciences. The EU has encouraged individual member governments and the private sector to offer additional funding to promote this research.
There is an overall optimism about graphene and its potential to advance technology in the same way that silicon did in the 1960’s and 1970’s. There is still basic research to do, especially in finding a way to make graphene transistors and more complex circuits. At a more macro level, graphene is at the center of an international scientific battle, the winner of which will reap significant economic rewards. The EU is challenging, and being challenged, the United States and even more so by South Korea, Japan and China. The latter countries have been investing heavily in the development of graphene, Korea 1.5 billion alone, with most of those funds coming from the industrial giant Samsung, which projects a huge graphene market for flexible touch screens and flat panel monitors.