RE:Albany Mine Dr. Francis Dube and Greg Fenton's Zentek Ltd. (ZEN) rose three cents to $2.04 on 66,000 shares. The company had its first success a decade ago, running its stock to $5 by heavily promoting its Albany graphite project in Northern Ontario. That spiel flamed out a few years later but Zentek caught its second wind two years ago, getting as high as $7.50 last summer by promoting plans to produce specialty graphene products. Now, Dr. Dube, Zentek's executive chairman, and Mr. Fenton, its CEO, are spinning long-forgotten Albany off as a new company, to be called Albany Graphite Corp.
Albany Graphite will issue nearly 60 million shares to Zentek in exchange for the Albany project and all related claims, contracts and drill core. The company also plans a going-public placement, offering an unspecified number of shares at $1 -- a hefty sum that would appear to value the Albany project at $60-million, assuming investors are willing to pay the price for new Albany shares in its coming-out placement.
Mr. Fenton has been appointed chairman of Albany Graphite and Brian Bosse, Zentek's chief operations officer, has been anointed the new company's CEO. As well, Peter Wood, another Zentek veteran, has been appointed Albany's vice-president of development. "It is time to resume work on the unique Albany graphite deposit," cheers Mr. Fenton, noting the soaring demand for graphite and strong political support for the electric vehicle industry.
"With its significant size and high-performance characteristics, similar to synthetic graphite, the Albany deposit could potentially play a string role in the battery supply chain in North America," Mr. Fenton enthuses, adding that his team -- both teams, presumably -- are "excited to see the work on Albany resume" to maximize the benefit of this asset for shareholders.
Investors will recall that Zentek's stock was flatlined at about 40 cents through the late 2010s, until its graphene promotion gained traction. At that time, the company's full market value was about $24-million, with just a sliver of that accorded to the Albany project. Mind you, a decade ago Albany was the prime reason that Zentek had a $275-million market capitalization, although most of that accorded value was the result of predictions of billion-dollar valuations spouted by Internet wags -- opinions carefully coddled if not fully endorsed by the company's former management.
When Zentek delivered an Albany resource estimate and then a dream sheet, both were nightmarish compared with the market's inflated expectations, and so the company's market valuation crashed. Last fall, Dr. Dube conceded that his company "did extensive work to determine potential uses for the graphite" at Albany but was not doing anything further at the time, as Albany graphite was not needed in its new plans. And so, Zentek hired a strategic adviser to see what deals might be available to offload Albany.
The resource estimate, now nine years old, credited Albany with 25 million tonnes indicated at 3.89 per cent graphite and 20.1 million tonnes inferred at 2.2 per cent. The uninspiring grades of graphite -- unique or not -- was just the first blow. A year later, the company rolled out its preliminary economic assessment and the proposed $411-million mine supported an internal rate of return of just 24 per cent. And so, Albany has sat, unloved but not forgotten.