Agoracom Blog

Bigger flakes, higher prices — Paul Gill talks about Lomiko’s Quebec graphite projects

Posted by AGORACOM-JC at 9:01 AM on Tuesday, September 25th, 2012

By Kevin Michael Grace

Lomiko Metals Inc (V.LMR) announced September 20 that has completed its summer drill program on its Quatre Milles East Flake Graphite Property in Quebec. Twenty-three holes totaling 1,600 metres were drilled, and the presence of large-flake graphite was identified in multiple holes.

The drilling replicated previous exploration on the property by Graphicor Resources Inc in 1992. Although Lomiko holds the data derived from these historic drill results, the drillcores are not available to compile a NI 43-101 resource estimate.

Quatre Milles East consists of 1,600 hectares located 175 kilometres northwest of Montreal. In May, Lomiko optioned the Quatre Milles West Property, 2,180 hectares adjacent to Quatre Milles East. In addition to these graphite properties, Lomiko owns the Vines Lake gold property in the Liard Mining District of northwest British Columbia and the Salar de Aguas Caliente Lithium Brine Property in Chile.


Lomiko President/CEO Paul Gill spoke to Kevin Michael Grace September 18.

RW: What pleases you most about your drill campaign?

PG: We were able to drill into an area which has previously been drilled and has grades and intercepts similar to a proven mine in the area [Timcal Canada’s Lac-des-Îles Mine]. The intercepts are near surface and amenable to an open pit, and the location is amenable to a mining operation.

RW: When will your drill results be released?

PG: We anticipate results in the middle of October.

RW: What’s your next step after that?

PG: We need to finance Phase 2 and confirm that it’s the correct step to take because it’s contingent upon results. Phase 2 will be another 50 holes. These will bring definition to the target area and probably come up with a resource. Usually, juniors have a discovery phase. We didn’t have to go through that. Next is the resource stage, and I think that’s when the next value jump happens. Well, there is going to be one now when people recognize that we will be confirming some of the historic results on Quatre Milles.

RW: You said in May that you were looking toward developing a resource estimate by December.

PG: We’d like to stay on that course. But we’d have to get funding and do another round of drilling in November for that to happen. If there will be a significant move in the market, we could have warrants exercised or we would put financing together. We would then have approximately a $1 million to $1.5 million.

RW: How much cash do you have now?

PG: About $550,000.

RW: What is your current burn rate?[pullquote] “We feel that we’re among the top six or seven graphite companies that will be able to add value through exploration”—Paul Gill[/pullquote]

PG: There is $307,000 that’s going towards the Quatre Milles Phase 1 and another $100,000 for Vines Lake. Those are all-in expenses. Our only other expenditures are administrative, and that’s about $20,000 a month.

RW: What’s the significance of finding large-flake graphite at Quatre Milles?

PG: Something that’s been confirmed with Northern Graphite (V.NGC) is that the flake size is more desirable if it’s larger simply because you can make different elements with it. Electric-vehicle manufacturers are looking for a spherical-granular structure for the graphite they use in their batteries. The greater the size of the flake, the higher the price.


The next biggest issue is recovery. The type of host rock that’s here, part of the reason we took it is because the metallurgist, Michel Robert, actually staked this land. The type of marble in this area allows for the graphite flakes to pop out easily, and the recovery rate is quite high, so your strip ratio goes down.

RW: Assuming you have the resource, how would you compare the difficulty and expense of bringing a graphite project to production compared to a gold, silver or copper mine?

PG: There is an issue around the expertise in this field. You have to have specific expertise mining this particular product. For gold, silver or copper projects, it’s a very straightforward situation, and there are many geologists and mining engineers familiar with the situation. What’s key to graphite is you need a mining engineer and metallurgist and a geologist and chemist that will be on site and can advice how to make the project the best possible project. And in regards to actually introducing the project to the financiers that’s another challenge because the end users of the product are relying on and have relationships with about a maximum of 20 different companies that market different variations of graphite. We’ve had contact with several different groups among those 20. So we’re encouraged by that, and we’re in the right location with the right product.

RW: About six months ago, there was a tremendous amount of excitement about graphite stocks. Prices increased tremendously, and then was a big falloff. Why did this happen?

PG: I think the falloff followed the price of graphite itself. The price of graphite peaked in the spring of 2012 and so did graphite stocks. Every market has to correct. You’ve seen graphite move up from $500 a tonne to $2,000 per tonne, and it’s settling in now at this level. I think the next big increase will be when the applications and products now being patented get to the development stage.

It’s actually a healthy correction and a fortuitous one for those of us that already received financing because we’re way ahead of the game. There are many projects that were announced but didn’t receive financing and couldn’t proceed. We feel that we’re among the top six or seven graphite companies that will be able to add value through exploration

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