Graphite’s ‘lukewarm performance’ in November signals buying opportunity for investors

Alabama Graphite Market Review

Graphite Market Month-in-Review — Graphite & Graphene shares fell 8.61% overall during the month of November even as there was was no shortage of favorable resource updates, but commodity investors have been treading very carefully in the current market environment. The performance of the Chinese economy in November fell below expectations, generating lower demand but the fundamentals of graphite demand have not changed and none of the companies followed by InvestorIntel published any significant news to warrant a shift in market performance, whether up or down. Indeed, the lukewarm performance of the sector is best attributed to falling industrial metal prices at the London Metal Exchange, reflecting weaker economic signals from China for the past month. Meanwhile, more jobs were created in the US, which strengthened the US Dollar, hurting commodities. It should be noted that some of the companies that suffered the most over the past month were Australian; their performance were far more a reflection of an especially sluggish commodities sector on the ASX exchange than any specific graphite market issues. Indeed, in the medium term the current lower oil prices could actually help to boost consumer spending, generating long-term positive effects for metals and minerals such as graphite, which is not only one of the drivers of future technology, it is needed for many current industrial applications. The higher the purity, the higher the value; and very few producers are able to deliver flake graphite at purity levels of 90% or more. Chinese mineral graphite has, until recently, been of sufficient purity to meet basic industrial applications but insufficient in addressing the demand for advanced materials to make the lighter and more powerful Li-ion batteries used increasingly in electric vehicles and beyond.

Graphite One Resources Inc. (‘Graphite One’, TSXV: GPH |OTCQX: GPHOF) gained +21.74% in Toronto trading and +20% at the OTC; it is one of the emerging North American graphite plays that enjoyed a strong November, concluding the month with an announcement that it has published the results of the first ten holes of the recently completed twenty-hole diamond drill program at its Graphite Creek Project located near Nome, Alaska. Of the highlights published in Graphite One’s November 10 release, the highlights to consider are that “all 10 holes intercept significant widths of high grade, near surface graphite mineralization” and that the “geology and assays confirm excellent vertical and lateral continuity of the mineralization.” Graphite One is on schedule to deliver a revised NI 43-101 compliant mineral resource during the first quarter of 2015 ahead of the preliminary economic assessment (PEA), which President and CEO Anthony Huston says will “demonstrate to end buyers and shareholders the economic viability of this project.”

Northern Graphite Corporation (‘Northern’, TSXV: NGC | OTCBB: NGPHF) was one of the few market movers for November, gaining +7.89% in Toronto and +4.65% at the OTC. Northern has managed to produce a spherical graphite product, which is used to make the anodes for lithium-ion batteries. The company is pleased with the quality its graphite and has released its knowledge and expertise to the industry in general because it sees batteries as one of the main market drivers. Northern itself retains the advantage in the battery market thanks to its newly opened battery testing and research facility, proprietary purification and coating technologies.

Mason Graphite (‘Mason’, TSXV: LLG | OTCQX: MGPHF) gained +32.08% in Toronto and +30% on the OTC. Mason is still feeling the effects of its signed Memorandum of Cooperation with the Council of the Innu of Pessamit signed last September, which generated optimism about the prospects for the Lake Gueret mine moving to the next the next steps including the completion of all pre-feasibility studies, feasibility and environmental permits.

Energizer Resources (‘Energizer’, TSXV: EGZ | OTCQX: ENZR), saw some gains and losses during the month, ending last Friday’s trading session at the same price as the beginning of the month Toronto and losing slightly. Nevertheless, Energizer had an interesting November as its joint venture partner, Malagasy Minerals (ASX: MGY) formally opened its Maniry Graphite Project in Madagascar, where Energizer discovered a large region containing excellent graphite deposits. The early data suggests the graphite ore is of very high grade and that it has not been excessively contaminated by other minerals, which will other rocks which will facilitate its refinement into pure flake graphite.

Alabama Graphite (TSXV: ALP | OTCQX: ABGPF) was also very active in November, ending the month down despite having announced the start of exploration at five new targets over the next few months based on identified ‘anomalies’ that hold significant promise for large flake graphite. Alabama Graphite has been very active during the past weeks advancing programs at its 42,000 acres of property in central Alabama, located along a historic graphite belt. So far, Alabama Graphite has engaged in trenching some 10,000 out of a total 18,000 feet and its Coosa and Bama properties have shown two important characteristics that make them ideal: the flakes are course and large and most of the graphite is at surface level, promising to yield even better grades than the already high grade surface material.

Great Lakes Graphite (TSXV: GLK), which enjoyed good result last week, lost -7.69% for the month despite the fact that investors learned about the Company’s new infrared (IR) graphite concentration test method, allowing it to ensure higher quality standards in view of a resource estimate to be issued in the next few months. Great Lakes announced an update on flotation concentration tests based on a composite sample from the Lochaber property. Great Lakes has gone to great lengths in ensuring as accurate a methodology as possible to ensure the highest possible quality. The results were very encouraging given a 57.64% concentration rate for Large, Jumbo and Super Jumbo flakes.

Kibaran Resources (‘Kibaran’, ASX: KNL) published favorable results from its Mahenge Graphite Project. Kibaran has been working on the feasibility study for the ‘Epanko deposit’, which has an inferred resource of 14.9 million tonnes grading 10.5% total carbon graphite and 1.56 million tonnes of contained graphite – and this based only 20% of the project area. Kibaran is banking on developing a large flake deposit featuring material of the highest quality. Kibaran also announced the signing of a Memorandum of Understanding for an offtake agreement with the German industrial conglomerate Thyssen-Krupp for an initial 20,000 tonnes of graphite per year. The fact that Kibaran lost 39.22% of its share value in November, in spite of otherwise favorable results, testifies to the difficulty of the current market, driven by waves of bearish speculation in the resource sector.

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Alabama Graphite and Zenyatta Ventures move north on metallurgical results

Alabama Graphite Market ReviewGraphite Market Review — The Graphite & Graphene market continued along a now predictable bearish path alongside the resource sector overall, even though the share price average for the week ending on November 21 improved somewhat given that the sector dropped by barely a point (-1.13%).

Alabama Graphite Corp. (‘AGC’, TSXV: ALP | OTCQX: ABGPF) continued its successful run from the previous week rising an additional 5.56% in Toronto and 7.06% at the OTCQX. Alabama Graphite presented additional results from metallurgical testing of three new composite samples from the upper 50 feet of the pit walls at its past-producing Bama mine project. The tests showed that “using only simple floatation (without optimization, chemical or thermal treatment)’ the samples featured a high percentage of large and jumbo flakes with graphitic carbon purities ranging from a low of  93.8% to a high of 97.9% – including the smaller flakes. The results suggest that high purity levels can be maintained consistently using relatively inexpensive and very environmentally friendly and chemical-free processing. The higher the purity of the graphite and the low costs of production indicated by the low cost beneficiation process will allow Alabama Graphite to maximize profits from advantageous project economics and a higher average price for its graphite. Alabama Graphite intends to step up exploration in order to ensure that it become “the first low-cost producer and just- in-time supplier of high purity flake graphite in the United States of America.”

Zenyatta Ventures (‘Zenyatta’, TSX: ZEN | OTCQX: ZENYF), which has been one of the fastest growing mineral graphite companies, moved 8.79% in Toronto and 13.39% at the OTCQX respectively. Zenyatta recently ran pilot plant and beneficiation testing of graphite extracted from its Albany graphite project showing a mineral producing a high purity, highly crystalline graphite product featuring less than 0.05% elemental impurities, meaning that Zenyatta has successfully produced a highly crystalline graphitic carbon (Cg) product featuring 99.95% purity. Twenty potential end users have already started to evaluate Zenyatta’s graphite and  Zenyatta will be further testing the materials to achieve even higher purity levels ahead of the preliminary economic assessment (PEA) that is expected to be published toward the end of 2014.

Mason Graphite (‘Mason’, TSXV: LLG | OTCQX: MGPHF), in particular, gained 37.63% in Toronto trading and 31.71% respectively. Mason announced the preliminary results of a study of hub location options for its Lake Gueret project in Quebec. The market rewarded Mason’s opportunity to optimize its feasibility study through unexpected opportunities to reduce capital and operating costs and improve operational efficiency as revealed in a study was conducted during the 2014 third quarter by the engineering consulting firm Hatch. The mining project located near Baie-Comeau should present operational and financial benefits due to revised and lower costs of hydroelectricity, easier access to labor and a more efficient operational framework, which should jointly contribute to reducing both capital costs (CAPEX) and operating costs (OPEX) for the project. It is anticipated that the additional costs of transporting the ore from the mine to Baie-Comeau concentrator would be more than offset by the savings made. A reduction in the emission of greenhouse gases is also anticipated based on the preliminary estimates as defined in the Preliminary Economic Assessment (PEA) published in April 2013.

Meanwhile, the Australian Syrah Resources (ASX: SYR) rose 7.65% announcing that it has succeeded in producing uncoated battery grade spherical graphite, using flake graphite from its own Balama Graphite and Vanadium Project in Mozambique. Even though batteries account for just under a quarter of global flake graphite output, the rapidly growing interest and demand in lithium ion (Li-ion) batteries make it the most important application for this emerging mineral. Among industrial raw materials, graphite is one of those substances which, although only required in small amounts, are expensive due to high demand.

Graphite is expected to experience strong demand growth in the coming years. Just like rare earths, China has been the market leader in the market for mineral graphite; its purity level has not been very high because it has been overwhelmingly used for steel production. However, China’s production will drop because of new and stricter environmental and labor policies – as noted also by its recent commitment to reduce greenhouse gases emissions by at least 20% over the next decades at the G20 meeting. New technological applications from Li-ion batteries in the short term and graphene – in the near future – require over 99% purity and just a handful of producers will be able to deliver such a product.

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Graphite Market Review is a special weekly feature on InvestorIntel sponsored by Alabama Graphite Corp. (TSXV: ALP | OTCQX: ABGPF).




Good ZEN and high DVR performance not enough to drive graphite sector in October

Alabama Graphite Market Review

Graphite Market ReviewZenyatta Ventures (‘Zenyatta’, TSXV: ZEN | OTCQX: ZENYF) was one of the few graphite companies to experience some ‘ZEN’ in October, gaining 16.58% in Toronto and 15.18% at the OTCQX. Zenyatta can boast a graphite deposit that is entirely different than the vast majority of its competitors, which have flake graphite. Its geological formation, through igneous hydrothermal processes, accounts for a superior purity and crystallinity. The Albany project, located in northern Ontario, is the largest & only, “high purity’ hydrothermal graphite deposit being developed in the world. The important and simple fact that investors should consider is that the Albany deposit has been proven to present a very high carbon graphitic content, which means the graphite is pure enough to compete with synthetic varieties. Zenyatta’s target customers are precisely the ones, who, until recently, had no alternative to synthetic graphite. There are incentives to switch from oil based synthetic graphite to naturally occurring graphite of Zenyatta’s caliber. The processing has delivered a nice high-grade, pure product with minimal cost and minimal detrimental environmental effects. The synthetic graphite market accounts for a potential USD$ 13 billion-dollar market.

Zenyatta’s strong performance contrasts sharply with that of the other graphite companies tracked by InvestorIntel. Market performance was decidedly down, registering an average drop of 9.08% versus InvestorIntel graphite members that were barely down 2.43%. Tracy requested I mention this as she insists an online media presence makes a difference, and allow us to welcome Northern Graphite Corp. whose OTCBB: NGPHF — one of the few graphite companies to move upward +2.69% last week.

Speaking of new members, allow me to welcome Deveron Resources Ltd. (TSXV: DVR) who became an InvestorIntel member in the last 2 weeks. DVR gained an impressive 54.55%, staring the month at CAD$ 0.11 and ending at CAD$ 0.17, after announcing that they had officially entered the graphite and zinc market with a targeted acquisition with a high grade deposit.

The Graphite space features in most respects companies that are operating in politically stable locations with access to acceptable to excellent infrastructure. Most of the graphite companies covered by InvestorIntel, moreover, have shown wise management, while just about every deposit seems able to quench the need for a stable and high quality graphite supply, capable of being used in technology ranging from Li-Ion battery anodes to graphene.

The biggest winners for the month ending on October 31, 2014 were, apart from Zenyatta and Deveron, Strategic Energy Resources Ltd. (ASX: SER) which gained 6.45%, Lomiko Metals (TSX: LMR | OTCQX: LMRMF) which gained 19% in OTCQX trading and Discovery Africa (ASX: DAF) gained 9.52%.

This said, there were several companies that saw equally impressive negative numbers (see below chart). Whereas the graphite sector’s market performance in the previous months and weeks might best be characterized as ‘mixed’, October was decidedly less optimistic. Yet many of the companies announced positive developments. For instance, Alabama Graphite announced that it has completed ground geophysical surveys at its prior producing Bama Mine Graphite Project, starting exploration in additional zones at the Coosa Project in Alabama. The two projects encompass over 43,000 acres and are located in an area with significant historical production of crystalline flake graphite. The Company has the largest NI 43-101 indicated flake graphite resource in the United States based on drilling 0.18 square miles (0.3% of the total acreage). The Alabama deposits are unique in that a significant portion of the graphite-bearing material is oxidized and has been broken down into an extremely soft rock, which suggests that operation al costs from mining to grinding should be lower than average.

In addition to the good news Christopher Ecclestone initiated coverage on Alabama Graphite and then selected it as one-of-five most likely to prosper. Undoubtedly the exercise of warrants is responsible for the downward pressure on the stock in October, however — TSXV: ALP was up +5.26% and OTCQB: ABGPF was up +4.17% last week.

On October 21st, Triton Minerals Limited (ASX: TON), which also suffered from downward pressure — presented its maiden JORC compliant resource estimate for the Nicanda Hill graphite deposit at the Balama North project in Mozambique. The total Mineral Resource estimate comprises 1,457 million tons at an average grade of 10.7% Total Graphitic Carbon “TGC” and 0.27% vanadium classified as either Inferred Mineral Resources or Indicated Mineral Resources. 328 Mt were classified at 11.0% TGC and 0.26% vanadium and 1,129 Mt were classified at 10.6% TGC and 0.27% vanadium. Triton claims it now has the single largest known graphite deposit in the world as well as one of the largest vanadium deposits. Click here to access the interview on how Triton’s Nicanda Hill is the largest graphite and vanadium deposit in the world.

Elcora Resources Corp. (TSXV: ERA) reported that metallurgical tests are being conducted by SGS Canada Inc. to determine the preferred processing circuit for the graphite from the Company’s Sakura mine site in Sri Lanka. Elcora aims to produce premium graphite and graphene through a vertically integrated business strategy and announced a name change to focus on the Graphene revolution…and added Jack Lifton to the Advisory Board last week….

Mason Graphite, which had some positive share price movement earlier in October, reported the second batch of assay results from the 2013-2014 drilling program at its Lac Guéret project in northeastern Quebec. Mason said that the results confirmed the continuity of the mineralization within the GC zone while the graphite grades continue to be very high, confirming the high value potential of the Lac Guéret property.

Australian based Valence Industries Ltd., which saw its shares drop 8.89%, announced it has discovered a new and unique flake graphite deposit zone with intercepts exceeding 60% graphitic carbon. The discovery improves the economics of Valence’s Uley operation thanks to the presence of high quality arterial flake graphite, which is located close to the surface presenting grades exceeding 60%+ graphitic carbon (gC). Lomiko Metals, which as noted above had a mixed performance, gaining in OTC trading and losing in Toronto, announced that it has received the drilling permit for the its La Loutre Crystalline Flake Graphite Property. Lomiko has targeted La Loutre, expecting to find high-grade, near-surface graphite mineralization suitable for conversion to battery-grade graphite. Mason Graphite, meanwhile, opened a pilot plant test for the Lac Guéret graphite project at COREM’s research facility in Quebec City to test a bulk sample of approximately 60 tonnes of graphite mineralization obtained from the Lac Guéret property, featuring an average sample grade of 29.1% Cg. Focus Graphite Inc. (TSXV: FMS | OTCQX: FCSMF) announced that significant widths of graphitic mineralization ranging from 95 to 110 meters in thickness were intersected in a new zone at its wholly owned Lac Tétépisca Project southwest of the Manicouagan reservoir in Québec, comparing favourably with the mineral derived at the Lac Knife graphite deposit.

Conclusion

Overall, therefore, the graphite sector was very active in October as the graphite miners explored new areas, confirming or adding new sources of high grade materials suitable for the high end applications that have made graphite such a coveted material in the high technology sector. The market performance of many graphite companies, most of which are based in North America – with few exceptions in Madagascar, Mozambique or Australia, appears to fly in the face of the fact that the resumption of graphite mining in North America serves as a way for North America to rebuild internal supply lines for critical materials such as graphite.

Note from the Publisher: Graphite interest continued to outperform other sectors last month, with 7 of our Top 15 most read articles in October being composed about graphite.

  1. Liquid Metal Batteries – An Impending Deluge? – Christopher Ecclestone
  2. Hostilities between China and Japan heat up in the American Courtroom over Patents – Jack Lifton
  3. Hykawy’s Focus on Focus: Through a Mining Lens – Jon Hykawy
  4. Uranium Stocks Remain Near 52-Week Lows Despite Bounce in Spot Price – Peter Epstein
  5. Graphite stocks down 3rd week in a row, fundamentals be damned – Peter Epstein
  6. The Rare Earth Market Evolves – Jon Hykawy
  7. Confidence of Lynas’s financiers to signal a more profitable change for the rare earths sector? – Alessandro Bruno
  8. Triton Minerals Beats All Expectations with Maiden JORC Resource – Peter Epstein
  9. The Tesla Beauty Contest – Alessandro Bruno
  10. Graphite Market Review: China’s exports of graphite to decline markedly – Peter Epstein
  11. Chinese authority launches new special campaign to fight illegal rare earths – Hongpo Shen
  12. Graphite Market Review: Mixed performance despite a lot of good news – Peter Epstein
  13. Seismic Shift in the Niobium Space – Christopher Ecclestone
  14. Strong graphite market news flow sets the pace for a market turnaround – Peter Epstein
  15. Potash is the new safe haven sector to hedge against market volatility – Alessandro Bruno

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Graphite Market Review is a special weekly feature on InvestorIntel sponsored by Alabama Graphite Corp. (TSXV: ALP | OTCQX: ABGPF) and is written by US Analyst, Peter Epstein. – See more at: http://investorintel.wpengine.com/graphite-graphene-intel/graphite-market-review-positive-week-stocks/#sthash.OF58rc2U.dpuf




Mason Graphite has Tesla’s Li-ion battery Gigafactory in its sights

Rogers-JimJim Rogers, a well known New York business writer, has endorsed Mason Graphite (TSXV: LLG | OTCQX: MGPHF) as one of the logical sources for the graphite that Tesla Motors will need to develop its lithium-ion (Li-Ion) battery ‘gigafactory’. While they are called Li-ion, emphasizing the lithium content, these batteries contain around 5% lithium by weight and up to 15 to 20 times more graphite. The cars use aluminum to save weight. The Tesla and the whole breed of competitor cars it will stimulate means that the world needs to start producing much more of the so-called technology metals and especially graphite. Surely, the Tesla can eliminate the need for motorists to fuel up at the gas station but for this to happen on any significant scale we need batteries….Many batteries.

The Gigafactory will need between USD$ 4 and 5 billion dollars, occupying an area of 930,000 square meters, employ 6,500 employees and a produce enough batteries to equip 500,000 cars per year. Graphite production in North America, the only place where Tesla expects to be sourcing it, will have to increase accordingly. The discovery of high grade mineral graphite sources such as identified by Mason, for instance, will enable battery technology to thrive thanks to higher purity levels and its offshoots into graphene. The path to production is still arduous, but Mason has made very good progress in resource quality and community relations.

Mason Graphite Inc. announced the discovery of new and high-grade intersections of graphite at its Lac Gueret property. The new intersections are part of the latest assay results from its 2013-2014 exploration campaign. In that period, Mason tested 97 drill holes along a 15 km of surface extension, which delivered a mineralized interval of 98m at 29.8% purity. Mason also explored a mineralized zone extending northeast of the deposit, beyond the currently established limits of the resource. Mason says the new data confirms the presence of near surface mineralization with excellent widths and continuity beyond the limit of the current resource.  Benoît Gascon, President and CEO of Mason Graphite said that “the analytical results of the northeast extension are encouraging, said. The exploration target is located at the boundary of the defined mineral resource and is adjacent to the planned pit in the Preliminary Economic Assessment completed in April 2013.” Mason Graphite has the potential to develop one of the most highly concentrated graphite deposits in the world.

Mason plans to invest some CAD$ 90 million to operate the eventual mine north of Baie-Comeau. To this effect, Mason has been actively looking after its social responsibilities in the area, ensuring that there will be a smooth regulatory transition from exploration to production. Indeed, Mason signed a memorandum of cooperation with the Council of the Innu of Pessamit and work at its graphite in Lake Gueret could begin as early as next year right on the Nitassinan, which is the Innu community of Pessamit’s traditional territory. Mason Graphite expects to create 80 jobs, half of which will be reserved for locals, a plan that has certainly contributed to the establishment of favorable community relations.

Mason will now advance the project steadily toward production; the next steps will be the completion of all pre-feasibility studies, feasibility and environmental permits. There is admittedly still a long way to go before the first graphite is shipped to customers; however, the signing of the cooperation protocol paves the way for friendly negotiations between the company and the band council. Both mason and the Innu are optimistic about what is being dubbed as a “historic agreement.” the negotiations will include all matters from financial compensation to jobs and contracts. The Pessamit community has so far been very impressed by mason, which might well be the first miner, developing a project on north shore, to consult the indigenous population. in the past, the Pessamit were the last to be consulted, having a negative impact on the community. Relationships with local communities are delicate, they can fall apart it they are improperly managed. Thinking ahead, establishing trust and an overall strategy of reaching out to the community well beyond the scope of the mining activity itself has become critical in the mining sector.

Companies like mason, which have clearly considered these aspects preemptively, integrating them into the overall project, will reap the rewards while reducing investment risk.




Mason Graphite expands resource and stock moves +25% in July

Mason Graphite Inc. (“Mason”, TSX.V: LLG | OTCQX: MGPHF) has the potential to deliver very high purity graphite – up to 99.9% graphitic carbon content – in response to new industrial applications, using traditional processes, which require relatively modest investment. On July 29, Mason expanded its resource, announcing the discovery of high-grade intersections graphite in the northeastern extension of Lake Gueret beyond the original target zone. The drilling identified a mineralized interval of 98 m at 29.8% Graphitic Carbon (Gc) as part of its 2013-2014 exploration campaign, comprising 97 holes totaling over 15,000 meters aiming to extend the project area while identifying mineral continuity within the established limits. Mason said that the results have confirmed the presence of mineralization near the surface with excellent widths and beyond the limit of the current resource. The estimated resources represent over 150 years of production. The Lac Gueret Project is world class: it is rich in crystalline graphite, which draws international market demand.

Mason_Graphite_Sample-1024x768

Mason Graphite expects the mine to operate for at least 22 years, starting with an annual production of 50,000 tons of graphite concentrate. Production costs have been estimated at about USD$ 390 per ton of finished product, which now sells for USD$ 1,525/ton on average. In this context, Mason expects to achieve a rather prompt return on investment or merely after two and a half years of operation. Mason expects to use a method of concentrating and separating that avoids a blast furnace, which means it will be more energy efficient, requiring less gas. The project also benefits from good infrastructure and good roads: everything suggests the project is fully viable. Mason graphite plans to export the ore to U.S. markets and overseas territories. Mason has also covered important community aspects to ensure the Project’s ultimate success. In July, Mason signed a of a memorandum of cooperation with the Innu Council of Pessamit given that its future mine is located (300 km north of Baie-Comeau) in Nitassinan, a traditional territory belonging to the First Nation of Pessamit. It is expected that at full operation, Mason’s project will provide 80 direct jobs to be shared Aboriginal and non-natives in the region. Eventually, the company will have an annual capacity of 50,000 tons of graphite concentrate that proponents call “exceptional quality.” The mine construction could begin in 2015. On July 16, analysts from National Bank started to follow Mason Graphite and analyst Rupert Merer and not surprisingly: Mason’s deposit has some of the highest grade of ore in the world at 27.4%.

Mason’s resource promises to be 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. Meanwhile, given its high grades potential, Mason will be ready to address those applications as they become commercially relevant. While Mason is certainly targeting the emerging high technology market, as battery technology advancements trickle down from the lab to retail, Mason is different from other emerging graphite companies, in that it has plans to generate short term revenue as well by addressing the more ‘traditional’ graphite market as well – or first – such as the steel industry, which needs refractory materials for furnaces and carbon enhancers in steel alloys or lubricants.

Mason believes these sources will help it grow in the near future while high-tech batteries and other applications will become more commercially relevant in a few years’ time, representing a future and additional source of revenue. Meanwhile, Mason is also squarely projected to the future as demonstrated its collaboration with Group NanoXplore Inc (‘Nanoxplore’), which has given the Company an edge into the emerging graphene market. NanoXplore has developed a proprietary low cost electrochemical method to convert natural flake graphite into graphene, which uses less energy than the more widely used vapor deposition and liquid exfoliation methods. NanoXplore’s main advantage, given its lower cost, is scalability, which gives it the potential to make graphene into a more widely available material, bringing it from the lab to the market. Graphite has long gone beyond pencils; it is essential in many industrial applications in batteries for electric cars. There is growing demand for lithium ion batteries and it could increase at a rate estimated at between 15% and 20% per year according to some analysts.




Overbought private placement deal boosts investor confidence in Mason Graphite

MasonpropertypicThere has been much speculation surrounding the trading halt for Mason Graphite Inc. (“Mason”, TSX.V: LLG | OTCQX: MGPHF). It is not unusual for a company to halt trading for a few hours, maybe a day, so the two day halt provoked much speculation as to the reason. Normally, halts last a few hours. Nevertheless, the speculation tended toward a favorable kind of news, given Mason’s recent achievements and their formal entry into the high technology world of graphene through their alliance with NanoXplore.

Today, Mason revealed that the trading halt was in fact related a material transaction; more specifically, Mason has formed an agreement with a syndicate of underwriters led by Macquarie Capital Markets Canada Ltd., which have agreed to purchase on a bought deal basis 12,307,705 units (the ” Units “) at a price of $ 0.65 per unit for gross proceeds of $ 10,000,000 dollars. The deal also includes the participation of Quebec Resources, a subsidiary of ‘Investissement Québec’, for a total of 4,615,385 units or CAD$ 3 million. Resources Quebec have a right of first opportunity for participation in any future financings for Mason Graphite, which is also discussing additional funding with other major institutions in the order of CAD$ 4 million. The net proceeds will add to the working capital to help Mason develop its Lac Gueret project. Effectively, the underwriting testifies to the confidence that the Government of Quebec (which considers mining an essential, if not primary, economic activity for the Province) has placed in Mason Graphite. This should also help generate an equal level of confidence among institutional or private investors, given that this strong financial support has clearly demonstrated the quality and viability of the Lac Gueret project, which should complete all feasibility studies in 2014 in order to begin operations in 2015.

Mason-drillcore

Mason estimates its annual production capacity to 50,000 tons of graphite purified to 96%. The cost of production is “very low” because of the level of graphite concentration. 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. This 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, with 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.

Growth in developing countries is fueling demand in traditional sectors such as the steel and automotive industry and Mason can offer the right product for these sectors. Moreover, Mason is also ready to address the ‘new markets’ fueled by demand and development of new technology in the production of electric cars, Li -ion batteries and fuel cells. The new generation of small nuclear reactors (pebble – bed) also require graphite. Quebec’, as clearly demonstrated by its investment in Mason, plans to play an important role in challenging China’s role in flake graphite production. China continues to pull the strings of the industry and accounts for 70% of world production. However, to ensure its own development, the Chinese government has recently deployed protectionist measures in regulating the export of graphite. A tax of 20% was added to a value added tax of 17%. Result: large consumers such as the United States and Europe are trying to source elsewhere, which should certainly promote Quebecoise graphite companies such as Mason.




From steel to graphene, Mason is one of the ‘best rounded’ companies in the graphite sector

photo, courtesy: Mason Graphite

Mason Graphite Inc. (“Mason”, TSX.V: LLG | OTCQX: MGPHF) is proving to be one of the most attractive companies in the entire graphite sector. Mason delivered a strong Preliminary Economic Assessment (PEA) in April 2013. Its highlights included a 22-year mine life with an over 96% rate of graphite recovery and the potential to deliver grades well in excess of 96%. Moreover, in September 2013, Mason showed that it can achieve extremely high purity levels – up to 99.9% graphitic carbon content – in response to new industrial applications, using traditional processes, requiring modest investment.

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. Meanwhile, given its high grades potential, Mason will be ready to address those applications as they become commercially relevant. 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.

Apart from the quality of the Mason project itself, Benoit Gascon’s more than 20 years experience in the graphite space is also reassuring. Mr. Gascon served as CEO of Stratmin Graphite, one of the few graphite producers in North America, having a deposit in the same highly prolific Lac-des-Iles zone. Gascon has decades of experience in the graphite industry and he understand what it takes to address the very specific customer needs for this commodity as well as how to confront competition from China. Mason Graphite is very close to Timcal’s Lac-des-Iles deposit – which has just a few years of ore supply remaining. Given, Gascon’s connection to Timcal and Mason’s geographic proximity, the possibility of some kind of ‘union’ between these two cannot be ruled out in the medium term.

While Mason is certainly targeting the emerging high technology market, as battery technology advancements trickle down from the lab to retail, Mason is different from other emerging graphite companies, in that it has plans to generate short term revenue as well by addressing the more ‘traditional’ graphite market as well – or first – such as the steel industry, which needs refractory materials for furnaces and carbon enhancers in steel alloys or lubricants. Mason believes these sources will help it grow in the near future while high-tech batteries and other applications will become more commercially relevant in a few years’ time, representing a future and additional source of revenue. Meanwhile, Mason is also squarely projected to the future and none demonstrates this better than its recent investment in Group NanoXplore Inc (‘Nanoxplore’). Mason closed the first tranche of its investment in NanoXplore on January 13th 2014, under an agreement whereby Mason Graphite can acquire up to 40% of NanoXplore’s issued and outstanding shares for $700,000 in two tranches. The second tranche should be completed by or before July 31, 2014.

The deal will give Mason Graphite an edge into the emerging graphene market as a supplier of graphite and a distributor of graphene. This is because, NanoXplore has developed a proprietary low cost electrochemical method to convert natural flake graphite into graphene, which uses less energy than the more widely used vapor deposition and liquid exfoliation methods. NanoXplore’s main advantage, given its lower cost, is scalability, which gives it the potential to make graphene into a more widely available material, bringing it from the lab to the market.

The exploration and development of graphene is underway in many countries at full speed. China has taken the lead in the race for potential graphene applications with Ningbo Morsh Technology, which built the world’s largest to-date graphene production plant last January. As noted by InvestorIntel’s Dr. Luc Duchesne, in 2013, there has been a sharp increase in patent applications for various graphene applications since 2007. This trend has accelerated even further in 2013 and, unfortunately for the ‘West’, China is currently the world leader in such patents. Ningbo Morsh is able to make 15-inch single-layer graphene films. The company has already signed a deal with ‘Guangdong Zhengyang’ to make ten million ‘Thin Film Composites’ (TCF) used for the production of super-thin, touch- sensitive screens for mobile devices. The investments are expected to amount to the equivalent of around 16 million dollars.

The Chinese have made graphene research one of their technological priorities and they are quickly moving from the pure research and development phase towards implementation in various application-ready products. One of the most eagerly awaited developments will be the production of graphene coatings for Li-ion battery cathodes, which translate to a much longer battery life (by slowing down the discharge rate) and to improved cycle stability. China is also planning a graphene industrial park to advance the research and development of this material and the prompt development of new practical applications.

In this context, Mason’s deal with NanoXplore is far more valuable than its financial cost. It is one of the first – and few – examples of direct collaboration between a high grade graphite supplier such as Mason and a graphene production company. NanoXplore and Mason, therefore, will be competing alongside the graphene R&D facilities being set up around the world in the race to achieve the best method to deliver scalable graphene. All the while, Mason has ‘hedged’ its future by addressing all graphite applications, making it one of the best-rounded companies in the sector.