Sunday 9th August 2020

Resource Clips

No Flash In The Pan

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Does Moores think there’s a risk of a repeat of the 1993 bust? “There is the possibility that China’s going to increase production because they’ve got the capacity. But I think they’ll increase it for their own domestic needs, and I don’t think they will want to export graphite raw material. It’s not an issue of raw materials any more. They want to move to making the higher-value products. So I don’t see that as any real risk.”

The only technological factor creating uncertainty in the graphite sector, Moores argues, is the uptake rate of electric vehicles. “You’ve got strong battery growth anyway, but the huge demand leaps are going to come from electric vehicles. That’s going to be a limiting factor, if it’s slower than expected.”

Fifteen companies exhibited at the Graphite Express-Conference—an outline of each can be found here—12 of which delivered presentations. OnPage Media Principal Robert Bick comments, “We’ve expanded on the success we saw last February in Vancouver. There was a great turnout at the conference’s Toronto debut. Brokers and investors were given an invaluable opportunity to become acquainted with a number of up-and-coming graphite juniors, as well as hearing from two of the sector’s foremost authorities.”

Even without those next-generation uses for graphite, there is growth in this industry and a need for additional supply —Chris Berry

As the graphite boom enters its next phase, Berry emphasizes that the key to understanding a graphite company’s potential is “knowing the footprint.” He explains, “My personal opinion is that a balanced footprint is the way to go. [A project] shouldn’t be too slanted toward a given end use, say batteries. A balanced footprint is the best bet because it insulates a company from demand shocks. What you need to remember is with a graphite deposit it is not one size fits all. Mesh size and carbon content can vary. It’s great to be able to say we have a certain percentage that is perfect for the battery industry, based on flake and carbon content. But if that’s only 20% of a given deposit, you need to be thinking about what’s going to happen with the other 80%. How is the company ultimately going to be able to sell that? That affects the potential economics of the deposit.”

Asked about the prospects for graphite juniors, Moores replies, “Very strong. There’s a handful of companies that you saw today that are quite advanced, probably more advanced than people realize. You look at Northern Graphite TSXV:NGC, Focus Metals TSXV:FMS, Energizer Resources TSX:EGZ; companies like that are very serious about a single project. Those companies have got a very good chance of succeeding.”

He concludes, “Graphite’s security is in its diversity. It’s used in so many end markets that when one drops, the other market is steady. So the miners continually grow. If you look at graphite production over the last 100 years, it goes in steps and is continually growing. Sure you have blips—three- to five-year blips—the production drops down. But then it rebounds higher. The reason is that it’s essential to old and new technologies. All the existing technologies which use steelmaking—it’s central to it. All the new high-tech stuff—central to it. No other mineral can say that. Therefore, graphite has a very bright future.”

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