Byron Analyst Research Report - Jan. 12, 2012
Northern Graphite Corporation
(NGC – TSXV,
.89)
Pilot Study Confirms Metallurgical Work
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Third Time's a Charm: In the past, the Bissett Creek project has had pilot plant work done on the deposit twice, once in the early 1990s and again in the late 2000s. It has, once again, confirmed the quality graphite that the deposit holds. Flake size distribution was consistent with half of the graphite concentrate being jumbo mesh (+48 mesh). Surprisingly, the carbon content was higher than in the past with an average carbon content of 97% using a simple flotation circuit. This is in line with our expectations and is similar to the metallurgical results released on September 23, 2011. The nature of the graphite at the Bissett Creek deposit is favourable as graphite with larger mesh sizes and higher carbon content demand higher pricing. We reiterate our SPECULATIVE BUY rating and $1.90 target price based on a DCF model and a 14% discount rate.
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Definitive Feasibility Study Is Next Catalyst: With the confirmation of the positive metallurgical work, we believe the feasibility is up next over the next few months. We are now more confident with our expectations of the upcoming feasibility study with these positive metallurgical results.