The Tech Revolution Has Driven Up Graphite, Lithium and TM Stocks

Graphite. Lithium. Technology Metals. What do these metals andminerals have in common? They are playing bigger and morecritical roles in widely used big kid toys like smartphones, tabletsand electric vehicles. Investors can’t stay on top of every hotcommodity but Luisa Moreno, mining analyst with Euro PacificCanada, offers some companies developing graphite, lithium andREE resources for the toys and technology of the future in thisinterview with The Mining Report.

Luisa Moreno: Two advantages of vein or lumpgraphite deposits would be the natural high-grade purity of the graphite in the ground, aswell as the relatively low cost of production,most of which comes from Sri Lanka. Anotherimportant point is that it is usually sold at apremium price relative to natural flakegraphite.

• The Mining Report: What are the key advantages of vein or lump graphite deposits over flake deposits?

LM: I think an advantage is that they havemore applications. The graphite market ismuch larger. Vein depoflake sits are quiterare and make up less than 1% of themarket.

• TMR: Are there any advantages flake deposits have over vein deposits?

LM: Flake graphite deposits can be high grade but you won’t find depositsgrading 90–99% in the ground. Flake deposits tend to run 2–3% graphite.Some deposits in Quebec have 16–20% grade. It seems that there’s acorrelation between grade and the recovery of larger natural flake. Forinstance, Northern Graphite Corporation ($NGC:CA) (NGPHF) has a depositgrading about 2% graphite yet it has been able to recover more large flakerelative to others with higher-grade deposits.

• TMR: Flake graphite deposits can be high grade too, can’t they?

LM: To start, investors should look at thesegraphite companies just as they would look atany other mining company. They need tounderstand the feasibility of the project—thecapital requirements, operating costs, etc. Forindustrial and critical materials it is alsoimportant to understand size of the market,the project time to market, the type of productit will produce and how much it could be soldfor.

• TMR: Which one should an investor prefer?

We talked about flake versus lump graphite deposits, but within the flake type productsthere are the finer flake, the medium and the larger flake, and it is important tounderstanding how much of each a mine can produce, as they are sold at different prices.The shape of the flakes and other characteristics also influence the price and applications.In the case of lump graphite, the market is estimated to be ~5,000 tons (5 Kt) per year, butit’s relatively rare. If there is a company with a lump or vein graphite deposit that requireslow capital and operating costs, has secured an offtake agreement and the project hasstrong economics, which could potentially be a good investment.

• TMR: Where’s that 5 Kt coming from now?

LM: It’s coming mainly from Sri Lanka. AMG Advanced Metallurgical Group N.V. (AMVMF)is a major producer. It’s a German firm that owns a subsidiary called Graphit Kropfmühl,which owns a lump graphite mine in Sri Lanka. The asset produces about 3 Kt of the 5 Ktestimated world production. The rest comes from a private company owned by the SriLankan government. Elcora Resources Corp. ($ERA:CA) has also secured a lump graphitedeposit in Sri Lanka, and expects to bring the project into production in a short period oftime. It seems that the company is attracting great interest from end-users looking foradditional supply of lump graphite.

Dubai, UAE Office #1702, One Business

BayFirst Al Khail Street

Tel: +971 (0) 4447 0990Fax: +971 (0) 4453 8811info@electio-invest.com