Flinders Resources (TSX: FDR) Producing and Marketing Graphite Flake at Woxna Mine in Sweden as Company Searches for Other Opportunities
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By Allen Alper Jr.
on 3/18/2015
Visiting PDAC 2015, Blair Way, the President and CEO of Flinders Resources (TSX: FDR), took time to speak with Metals News about the operation of their business and their unique graphite business model at the Woxma Mine in Sweden. He said, “Flinders in the last 18 months has transitioned from being an explorer and a brownfield restart to a running operation. We are now up and running.”
In fact, Mr. Way no longer considers it a project, he considers the Woxma to be a business. He said, “We have been running for the last eight months, refining the process, building relationships with customers. We are starting to feed fresh ore, so that now in 2015 we are fully engaged to go into production which is up to 10,000 tons per year into the European market. That is where we are at.”
The company is offering a variety of products to manufacturers. Said Way, “We have all flakes of graphite. There is a mixture of large, medium and fine. The large and medium certainly do command more of a premium. The fines do have a place in the market, it is just not as lucrative, but we do produce a mixed bag. We are probably about a 30-30-30 split. We make 30% large flake, 30% medium flake and 30% fine flake.”
Their business model has had to adjust to the product that they are making. Way said, “The thing that is different for an industrial metal as opposed to a base metal is that we have to produce to meet our sales rather than the other way around. Our customers in the refractory business are all consuming relatively small amounts – maybe two thousand, to four thousand tons per customer per year. We will have anywhere from ten to twenty customers over the coming years as we start to supply and build their trust and build their relationship. Our plant can produce up to 13,000 tons per annum. Our permit is capped out right now at 11,000 tons, but our sales are what drive it. We can ramp the plant up and produce as much as we need to in order to meet those sales, but the real numbers are 11,000 tons per annum. That is what we are allowed to produce per year. We won’t have to run 24/7 in order to meet that target, but it will be defined by our customers. Our customers aren’t going to give our company 100% of their consumption. We will get maybe five to ten percent in the first year when we prove ourselves as a reliable supplier. We are a new addition to the supply chain and we grow the business that way. I would like to think that we can get up to 5,000 tons in 2015 but I’ll know that at the end of 2015 and whether I have achieved that.”
The sales process for graphite is a bit different than for other metals. Mr. Way said, “There is really no spot. In graphite, the customers buy through traders. They buy it in the range of 3,000 tons per year and they stock it in bulk and either they stockpile it or the trader stockpiles it for them. We can offer them kind of a novel solution to their stockpiling issue. We can ship them a truckload a week or a month, whatever their needs are. They can call us and we can get it to them. Getting it from China means a two month delivery so we are changing their supply chain as well as offering them a new supply chain. We produce in Europe and sell in Europe. It is a low value commodity. It doesn’t make sense to ship it. Our plan is to find a North American producer to sell in North America. We will set up production near the market. There are a number of former producers in North America that we are looking at. For now, we just continue to look at ones that fit our definition of our producer. We are looking for one that is a former producer or is permitted and ready to start. We aren’t interested in one that needs $100 million dollars. That just won’t happen.”
Like every company in the mining sector, Flinders is facing challenges. Mr. Way said, “Our biggest challenge is to grow our sales. We are doing that by working with graphite end users. We are working closely with our European customers. Those customers are now calling us. There are other customers that we need to contact to let them know we are there and they have an alternative to China. We are looking for North American and Eurasian properties. The future of graphite has two stories to it. There is all the pie in the sky, batteries and graphene and all that. That won’t affect my bottom line. We want to be the go-to people in the future, but right now it is the steel sector. We are starting out in the quiet time. When things do become more busy, we are in a position to reap some of the benefits of that. The supply and demand is relatively healthy. There is no one following our heels that closely. They are one to three years behind us. We are the one that the companies will come to. There will be changes in battery technology, people who want to live off the grid and electric cars.
We are actually a business. We have viable business and we are selling to customers. We will continue to grow and then we will grow elsewhere. We are the only public graphite company who can provide that.”
http://www.flindersresources.com/
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Relations
Seema Sindwani (Toronto)
Phone: 1.647.478.3017
Email: ssindwani@flindersresources.com
Head Office
Flinders Resources Ltd.
Mariana Bermudez - Corporate Secretary
1305 - 1090 West Georgia Street
Vancouver, BC Canada V6E 3V7
Phone: +1 604 685 9316
Email: mbermudez@chasemgt.com
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