Focus Graphite (TSX-V: FMS) Advances its Lac Knife Project in Quebec; Files its Environmental Impact Assessment, and; Moves to Close Discussions for Mine and Plant Financing
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By
on 12/17/2014
Don Baxter, the President and COO of Focus Graphite (TSX: FMS; OTCQX: FCSMF; FSE: FKC), is enthusiastic about what the Lac Knife project can offer to the manufacturing market and to investors. The Company’s unique, low-cost graphite mining and graphite purification project boasts an unusually high level of purity throughout its mix of flake sizes, making it ideal for the battery markets.
Baxter said, “A lot has happened since we last spoke. There have been several significant news items that have come out. One of them is the value added, battery ready graphite. We produced and tested our purified, spherical graphite in batteries and that testing produced remarkable results. It produced very good results, far better than we expected. That was one milestone. Soon after that we announced the results of our feasibility study. That came out in June and we published it in August. That was another milestone. With our resource, we just announced our cooperation agreement with the First Nations community at Fermont, Quebec. That is a significant milestone on the path to production. The feasibility study is an all-encompassing study that now allows us to refer to our ore body as a reserve. We are showing extremely good economics with a 30% return on investment based on a price of our product mix without the value added. And then, on December 2nd, we submitted our Environmental and Social Impact Assessment report that includes an optimized mine site layout. The design will be refined during the upcoming detailed engineering phase of the project. So, it is only going to get better from here on in.”
Baxter’s positive outlook on their project has to do with the economics that are available. He said, “Our margin on the value added could be $6,000 per ton. Our average is $1,300 to $1,400 per ton. Our value added battery grade graphite will provide a significant margin to the project.” The way that the company will achieve the margin is through the type of flake. Said Baxter, “The flake at Lac Knife is different from anything I’ve ever seen and beneficially different from any other graphite deposit in the world. We can produce 98% purity even from our fine flakes. Lac Knife is unique in the world in this respect; our fines are 98% carbon making it easy to produce technology-grade, high purity graphite. It also allows us to purify the fines from 98% to 99.5% for lithium ion battery projects. That is significant on the battery side of things. The metrics we are showing in the irreversible capacity loss is only 1%. That translates into 99% efficiency. Other companies compare at 94% percent. Companies that want to drop the cost of the batteries can look to Lac Knife for higher performing lower cost graphite. Currently, other producers – China for example - are using graphite that leaves a high CO2 footprint and acid effluents. The positive economics with the offtake and the First Nations agreement puts us as the leader in the space. We are just waiting for the markets to realize that. We have some unique attributes that the market needs to see. We are seeing the graphite price stabilize and start to move forward for the larger flake materials. We are seeing that from the green energy area as well.”
Focus Graphite’s management team is top-heavy with graphite mining expertise and purification and processing experience. Said Baxter, “I’m a mining engineer. We have one of, if not, the only team in the graphite space that has actual graphite experience. Dr. Joseph Doninger and George Hawley have brought a lot of technical experience. Between the two of them and my experience as well, we have rapidly brought Focus up on the technical products. And we are excited by the fact that we provide Lac Knife graphite that enables the production of graphene products in partnership with Grafoid Inc. Focus itself is focused on graphite mining and processing. Our VP of Development is a former Xstrata production geologist and is well plugged into the Quebec mining scene. He has been instrumental for the development issues with the Uashat mak Mani-Utenam First Nations.”
Financially, the company is moving forward as well. Said Baxter, “There are several Quebec based funds that have been mandated to invest in mining funds. We are looking to have some investment into the cornerstone of the project from the funds. Several of these options are Quebec based. Right now our thoughts are to derisk and advance the project. We have just filed our environmental assessment for permitting. And, we are just about to put up the RFP for detailed engineering. That will help us put a shovel in the ground in the spring of 2015 and also, with that in hand, we are working on the project financing. It is looking quite promising even in this horrible investing environment. We have unique opportunities in this market. We have an offtake agreement already signed with a company in China. We purposely didn’t announce the name. It does show that we can sell the material and that helps us to look at supply chain financing. It is similar to a forward sale that is non-dilutive. It doesn’t encumber the entire project, only the offtake agreement. It is cash potential with a royalty type stream as we work on other offtake agreements.”
Overall, Baxter is optimistic about the future for graphite. He said, “There are some other exciting manufacturing companies that require, low-cost, environmentally sustainably produced graphite and we would hopefully like to work with them. I believe the age of the electrification of the automotive sector is upon us, so whether it is a Tesla or a Honda, or China’s BAIC Motor Company, they all use graphite. I think the future is very bright for graphite. We are the most advanced because we have the offtake in hand, we have tested the graphite, we have advanced the First Nations agreement which is a lengthy process, we have submitted our environmental and social impact studies required for permitting, and we are the only company with actual graphite experience. Arguably, we see ourselves as the leader in the graphite space. We continue to derisk and advance the project and continue to work with end users for offtake agreements in China, Europe and the US. We are one of the few companies that can show battery-grade materials. We can have the conversations with their engineers and that gives us the technical advantage.”
Disclosure:
The
Alper family owns shares of Focus Graphite stock.
For more information:
http://www.focusgraphite.com/
Don
Baxter, President and COO
Email: dbaxter@focusgraphite.com
Tel: 705-789-9706
Adrienne
Mauriks, Investor Relations
Email: amauriks@focusgraphite.com
Tel: 1-604-559-2008
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