RE: Scalability While NGC plans to start at 20,000 tonnes per year the engineering blueprints are based on a 40,000 tonne per year production facility. Doubling the annual output is already built-in and will be achieved at a substantially lower cost than the initial 20,000 tonne facility when demand calls for expansion.
To state that Bissett Creek isn't scalable is the exact opposite of the truth. It is mainly a flat-lying deposit with the graphite at surface. It is much less expensive to scale laterally than having to go deeper. This is a huge advantage Bissett has over most other deposits in terms of scalability. Jack Lifton wrote the following on NGC and addressed the scalability question (it is also addressed in analyst reports):
JL: There is only a handful. Northern Graphite Corporation (NGC:TSX; NGPHF:OTCQX) is, in my opinion, the leading public graphite company. Northern Graphite has the "three Ps" of investing in junior resource companies: people, property and price.
Seven members of Northern Graphite's board and management team have significant senior management experience with mining and exploration companies and are widely known and respected in the mining and investment communities. CEO Gregory Bowes was senior vice president of Orezone Gold Corp. (ORE.TSX) and Ron Little, a director, is Orezone's CEO and founder. Orezone drilled off a 5 million ounce gold deposit in Burkina Faso, Africa, completed a bankable feasibility study and permitting, and started construction before its Essakane project was taken over by IAMgold Corp (IMG.TSX) in a $350M transaction. Iain Scarr, another Northern Graphite director, was commercial director of Rio Tinto's (RIO:NYSE; RIO:ASX) industrial minerals division for many years and is now vice president of corporate development at Toronto-based Lithium One Inc. (LI:TSX.V). Jay Chmelauskas, a director, is CEO and a director of Vancouver-based Western Lithium USA Corp. (WLC:TSX; WLCDF:OTCQX). Don Baxter, president, was mine superintendent at the Kearney Graphite mine in Ontario when it operated in the 1990s and was CEO of Ontario Graphite, which is presently attempting to reactivate the mine, before being lured away by Northern Graphite. George Hawley, technical advisor, started in the graphite business more than 40 years ago and is a leading minerals industry expert.
Northern Graphite's Bissett Creek graphite project has a number of significant advantages over other graphite deposits. It is located about two hours east of Ottawa, the nation's capital, and 10 miles from the TransCanada highway and associated natural gas pipeline, power lines and small communities where workers can live. It is five hours by truck from the port of Montreal and less than one day by truck from the major steel and automotive centers in the northeast United States.
Bissett Creek itself is a very large, low-grade deposit that is located right at the surface, which means it will be mined by simple open pit methods and will have a very low waste-to-ore ratio. It is also very flat lying and therefore production can be expanded by moving laterally rather than going deeper, which is much more expensive. North Graphite's original NI 43-101 report contemplated an operation producing 20,000 tons of graphite per year for over 40 years. Since that time, the resource has more than doubled and it is still open to the north and down dip. This indicates the deposit could support production of 70-80,000 tons per year and still have a mine life of more than 20 years. We do not know of any other graphite deposit in the world that has this degree of scalability and believe that at this production level it would be the largest graphite mine in the world. This feature should make it very attractive to potential strategic partners that want to secure a stable source of long-term supply to meet growing demand.
Another feature that makes Bissett Creek quite unique is that almost 100% of production will be large-flake (+80 mesh), high-purity graphite. Recent metallurgical test results have shown that 50% of production will be even larger, +48 mesh jumbo flake, which will result in premium pricing. We believe Bissett Creek will produce concentrates that have the highest average value per ton in the industry. While Bissett Creek will not be the lowest cost operation due to its relatively low grade, its near-surface nature and low strip ratio will help to balance this disadvantage out, meaning that costs will be in the middle of the pack. Bissett Creek should generate the highest margin per-ton of concentrate in the industry.
Something else not often mentioned is that the current N43-101 only includes drilling results from roughly 10% of the property! The deposit is still open. To say it's not scalable based on what has been drilled to date, and then not to consider the future increase of the resource number by future drilling, adds insult to injury.
NGC's share price went too high too fast. At $3.30 it was ahead of itself as the pendulum swung too far to the upside.
At $1.50 the share price pendulum has overcorrected and swung too low.
The likely proper resting place for the share price over the near term is somewhere in the middle of $1.50 and $3.30.
The bankable feasibilty study (BFS) is days/weeks away ( no later than the end of June) and there will be several independent analyst reports (updates to the already existing reports and new firms that initiate coverage) published as a result of the BFS being announced.
IMO, this low share price is a time to accumulate prior to the analyst reports that result from the publishing of the BFS. The time to buy is when there is blood in the streets but it takes cajones.