Focus Graphite are a Canadian diversified company that hopes to become the world’s lowest cost graphene source. The company’s interests cover the whole spectrum of valuable materials from gold, to graphite and rare earth metals; but most significantly for their graphene ambitions is the acquisition in August 2010 of the Lac Knife graphite project. Purchased for $239,000 from the gold producer Iamgold, the Lac Knife crystalline flake graphite deposit is the corner stone of the company’s ambitions.
The Lac Knife graphite deposit is located 35 km south of Fermont, Quebec, and contains a historic non NI43-101 compliant resource (compliance expected by year end 2011) of 8.1 million tonnes grading 16.7% graphite, making it the highest grade graphite resource in the world. Well developed infrastructure, with cheap Quebec electric grid power and transportation links make the mine not only an attractive proposition but also a feasible business. Lac Knife is also close to the towns of Fermont, Wabush and Labrador City that serve as a base for three iron ore mines in the area.
Interestingly enough the mine was once on the wish list of another of the companies tipped for success by Investingraphene. In 2001, Graftech, in partnership with Ballard Power Systems, looked to develop a new fuel cell application and considered the mine at Lac Knife with the intention of exploiting its extremely high grades of graphite. Financial pressures on Ballard and the Chinese dominance of the graphite market and prices caused the venture to be sidelined. Focus Metals happened to be in the right place at the right time, and acquired Lac Knife from IAMGOLD (TSE:IMG) in 2010, who sold it as it was a non-strategic asset.
Focus has updated historic feasibility studies completed in 1990 and 2000 for a conceptualized mine plan with an annualized production rate of 20,000 tonnes of graphite flake grading 95% to 97%. At the time of researching the study it was anticipated that the very high grade of graphite deposited in the mine would result in a cash cost of around $350 per tonne, as opposed to the much higher recorded typical cash costs of $800 to $1,500 per tonne paid by competitors; reported sales of $2,000 to $2,500 per tonne are also reflections of the superior grading of the mineral. The Lac Knife mine feasibility study also reports an additional potential 3,000 tonnes per year of high purity graphite grading 99.9% which can be processed at a cash cost of $1,300 per tonne. This high purity graphite sells for $20,000 to $40,000 per tonne, and is produced to specific customer requirements that are mostly required for battery manufacture.
Capital costs are estimated at around $55 million to produce 20,000 tonnes per year of graphite, and an additional $10 million to produce an extra 3,000 tonnes per year of high purity graphite. Mine life is estimated at more than 40 years. Annualized revenue potential is estimated at $40 million for sale of 20,000 tonnes of 95% to 97% graphite, and an additional $60 million for 3,000 tonnes of 99.9% purity graphite, for an annualized total of $100 million. Clearly the profitability of the rests on the industry developing a requirement for higher grade materials. The potential of the lithium ion battery market and the emerging field of the graphene industry are therefore key considerations in the company’s future success. The company slogan “Think graphite today, think graphene tomorrow,” reflects this new world reality.
Lac Knife is currently at the pre-development stage but Focus plans to fast track development and commence annualized production of 20,000 tonnes of 95% graphite in 2013, and commission a secondary enrichment and refining facility capable of producing an additional 3,000 tonnes per year of 99.9% graphite in 2014.
The company intends to continue implementation of its build, grow and promote strategy for the coming year. A strategy that includes:
• A more robust initiative to raise Focus Metals’ profile in the global investment community by positioning Lac Knife as the lowest-cost graphite producer in the world.
• Publication of our Lac Knife NI 43-101 estimated resource calculation and scoping study and conclusion of our project financing.
• Working towards aligning ourselves with key global partners
• Unlocking the value of our other properties and our Grafoid Inc. joint venture, and;
• Working to increase shareholder value
Focus Graphite shares have increased in value since the beginning of 2011 by some 45% while the TSX composite index has lost 7.3%.