Great Lakes Graphite Inc. is an industrial minerals company. — Graphic courtesy Great Lakes Graphite Great Lakes Graphite Inc. (TSXV: GLK; OTCPINK: G
Great Lakes Graphite Inc. is an industrial minerals company. — Graphic courtesy Great Lakes Graphite
Great Lakes Graphite Inc. (TSXV: GLK; OTCPINK: GLKIF; FWB: 8GL) is an industrial minerals company in the process of developing high-quality flake graphite properties to create a mine to market revenue stream.
GLK looks for graphite projects that meet their four criteria: 1) at or near surface deposits; 2) superior particle distribution; 3) easy to upgrade and purify; and 4) widely accepted product for smaller North American manufacturers. GLK’s flagship property is located in Lochaber Township in southwestern Québec, close to a growing industrial belt. Graphite is a critical mineral required in new technologies, battery applications and alternative energy infrastructure.
“We have just completed the acquisition of the Lochaber Graphite Property,” stated Great Lakes CEO Paul Gorman in an exclusive interview, “This gives us 100% control of the project and allows us to advance an expedited business plan. Flake distribution analysis and purity testing are completed so that we can now proceed to confirm the viability of a small footprint, low-Capex graphite mine."
There are currently no graphite mines producing in North America, so Great Lakes Graphite has the potential to become one of the first producers to supply a growing regional customer base.
A program of diamond drilling (eight drill holes) to support an on-going Mineral Resource Estimate by SRK Consulting has been completed. Earlier mineral processing studies of graphite samples from Lochaber produced a graphite concentrate with over 57% large flakes (+70 mesh) and over 45% jumbo flake (+50 mesh). This represents an exceptional size distribution and suggests a premium future price based on the size of the flake.
Investor interest in graphite is driven by Tesla Motors’ (TSLA-NASDAQ) plan to build a $6-billion lithium-ion battery ‘Gigafactory’ in 2017. But Gorman is not chasing that rabbit. He has spent the last 7 years building relationships with smaller manufacturers in the Great Lakes Region that are currently getting their graphite shipped from China.
“China is currently producing over 80% of global supply,” stated Gorman, “But the Chinese have done a massive consolidation of small graphite operations. We believe they are trying to determine how much graphite they have left. There is already an export tariff on domestic graphite leaving China. That tariff could go up, or they simply decide to keep all their graphite. Either way, the status quo is changing. And the manufacturers I talk to are motivated to sign a deal with a North American company that can guarantee product for 20 years.”
GLK’s focus is to supply the carbon companies in the Great Lakes region with concentrate and upgraded graphite. The company has a database of about 200 companies that are less than 600 km (400 miles) from the Lochaber deposit.
“Graphite is not like gold or copper,” stated Gorman, “You can’t just sell it into a spot market. You need customers. And you have to understand their requirements before you can do business with them.”
A hypothetical Great Lakes mine would be a quarry style operation with a scalable, modular mill. Gorman advocates a modest CAPEX model with a small environmental footprint and a diverse localised customer base.
“Our typical end user will require 50 to 100 tonnes of graphite a year,” stated Gorman, “These small- and medium-sized customers add up to a substantial revenue stream. The breadth of the customer base provides downside protection. With dozens of customers, if one of those customers goes out of business, it will have a small effect on our bottom line.”
After the resource calculation and a bankable feasibility study, GLK can prove the size and grade of its flake graphite. Gorman anticipates bank financing or an off-take agreement.“
A $30 million, 500 tonne-per-day mill with an investment payback of about 30 months is not a difficult concept to sell,” stated Gorman, “Our differentiator is the location of our deposit, the quality of our material and our relationships with manufacturers in the vicinity.”
If the Lochaber scenario is successful, Gorman plans to duplicate the model in other parts of the world so that GLK can expand production without cannibalising its own customer base. Recent listing on the Frankfurt Exchange reflects German investors’ growing interest in graphite, and also a way to capitalise on GLK’s banking relationships in Europe.
“The Tesla Gigafactory will suck up the graphite from 5 or 6 new mines,” stated Gorman, “Meanwhile, graphite demand in North America is surging and there is a race on to see who will fill it. It is our intention to be one of those companies.”
“We are focused on deposits that are high grade, albeit small tonnage, but with a quality of product that we can sell for premium prices,” summarized Gorman, “I’ve put seven years of my life into this project, and I am convinced that it is a solid business that will enrich early pre-production investors.”
