AGORACOM Small-cap Investor Relations Blog

If the timeline holds, Northern Graphite’s (TSXV:NGC) Bissett Creek Project will be one of the first graphite mines to open outside China since the 1990s. Bankable feasibility is scheduled for completion later this month, along with a mine closure plan. Assuming the latter is approved by the Ontario government, a year of construction will bring the project to fruition by the end of next year.

“From a mining and metallurgical point of view, the project has pretty well been de-risked,” CEO Gregory Bowes declares. “This thing had a full feasibility study done on it during the 1980s, so we’re effectively doing the second one, and all the results are consistent. So it’s low risk, technically.”

The new feas will bring firmer numbers, but a 2011 PEA projected a capex of $70 million to $80 million for an open pit producing 19,000 tonnes of graphite a year at a cash cost of $1,000 a tonne and a 40-year mine life. To put those figures in perspective, world graphite production is dropping to about one million tonnes a year while flake-graphite prices range from “at least $1,500/tonne at the lower end and $2,500/tonne for higher-end products, with higher purity and larger flake size,” according to an April 17 Industrial Minerals article by graphite authority Simon Moores.

At first glance, Bissett Creek’s in situ grade appears underwhelming. Using a 0.99% cutoff, the September 2011 resource estimate shows 25.98 million tonnes grading 1.81% carbon for 470,300 tonnes graphite indicated, and 55.04 million tonnes grading 1.57% C for 864,100 tonnes graphite inferred.

Bowes maintains, however, that the grade is more than compensated by “the high percentage of large flakes, the high purity, very low strip ratio, good infrastructure and the fact that our project is very scalable. We can increase production three to four times based on the resource we have now.”

He adds, “I think we’re the only graphite company that’s really completed the full suite of metallurgical testing, bulk sampling, pilot plant, all of that stuff and published the results. And I think they confirm that we have the best flake-size distribution in the industry and the highest carbon content of our graphite concentrate, so we will be producing the highest-price, premium-value product.”

Metallurgical tests released April 23 show average flake-size distribution and purity from eight locations on the deposit, including

• 19.1% of concentrate produced +32-mesh flakes, 98.1% carbon
• 33% of concentrate +50 mesh, 97% C
• 23.3% of concentrate +80 mesh, 95.1% C
• 5.2% of concentrate +100 mesh, 94% C
• 10.5% of concentrate +200 mesh, 92.7% C

Coarse-flake sizes of +80, +50 and +32 mesh and carbon levels of 94% or better qualify for premium prices, the company states.

As feasibility progresses, the company has been working on a value-added component. Northern announced April 2 the successful manufacture of test quantities of spherical graphite, a product crucial to the battery technology that’s expected to power the future for digital devices and, especially, electric vehicles. “All lithium-ion batteries use spherical graphite, but only some graphite concentrate can be made into spherical graphite,” Bowes explains. Northern’s success led to a strategic cooperation agreement with Panacis Inc, a supplier of li-ion batteries to military, telecom, medical and renewable energy sectors.

In February, Northern struck a cooperation agreement with Grafen Chemical Industries for graphene research. By supplying Grafen with +48-mesh and +32-mesh jumbo flake, Northern gets a 50% interest in North American patent rights to any products or processes developed by Grafen. As a graphite derivative, graphene is an R&D wonder that’s rollable, foldable, especially conductive and nearly transparent, despite being 200 times stronger than steel.

Bissett’s southeast Ontario location offers admirable infrastructure. “We are 15 kilometres from the Trans-Canada Highway, between Ottawa and North Bay, so we’re also 15 kilometres from the powerline and the natural gas pipeline,” Bowes reports. “We’re about 50 kilometres from nearby towns, so we don’t have to build a camp. We’re five hours by truck from the Port of Montreal. From there we can ship anywhere in the world. You can drive a transport truck from Toronto to the site in five hours.”

The project remains Northern’s sole interest. “Bissett Creek has enough resources that we can expand production three to four times in the future, if the demand is there. So why fiddle around with something else?”

A geologist, Bowes was Senior VP at Orezone Gold Corp (TSX:ORE), VP Corporate Development and later CFO for its predecessor, Orezone Resources, and President/CEO of San Anton Resource Corp. He’s also a director of Industrial Minerals Inc, the company that spawned Northern in the earliest days of the graphite exploration rush.

Among his colleagues is Northern President Don Baxter, who joined the company after five years as President of Ontario Graphite, which plans to reopen the Kearney Graphite Mine. Baxter worked there as Mine Superintendent and Chief Mine Engineer from 1990 to 1995. His background also includes stints with Inco and Noranda.

Technical Adviser George Hawley is a 40-year specialist in research, product development and market analysis for the industrial minerals sector.

Bowes will present a talk at OnPage Media’s May 2 Graphite Express-Conference in Toronto. “We are the leading graphite public story out there by a wide margin,” he says. “This is a supply-demand price story. The mine is very economic at current prices, and we believe the situation in China is going to get worse. So we think the outlook for prices is very positive.”

At press time, Northern Graphite had 46.4 million shares trading at $2.36 for a market cap of $109.5 million.

Disclaimer: Northern Graphite Corp is a client of OnPage Media, and the principals of OnPage Media may hold shares in Northern Graphite.

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Source: http://business.financialpost.com/2012/05/02/northern-graphite-plans-to-open-ontario-mine-next-year/