Canaccord Morning COffee Back on the front burner? Shares of junior graphite companies have been building momentum of late, with the likes of
Zenyatta Resources, Northern Graphite, Mason Graphite, Focus Graphite and Graphite One all moving strongly higher over the
past couple months. The basket of those five stocks is up an average of over 70% since early December. Both company specific
news and increased investor sentiment towards the graphite sector are driving the stock prices higher. One Bay Street brokerage
highlighted late last year that the global supply of graphite is densely concentrated in China with 80% of the world
supply. Adding to that, Chinese policy recently shifted and the government enacted several initiatives that have sharply curtailed
graphite supply to the rest of the world including export duties of 20%, a value-added-tax of 17% and the creation of a state-run
monopoly and export licensing system. Also of note, the U.K., the U.S. and the EU have all declared graphite to be a critical
raw material. The brokerage highlights that global demand for graphite is broadly spread across many industries. with some of
graphite’s largest applications possessing the most bullish growth profiles with no substitutes available. According to the Bay
Street firm, batteries, which currently represent ~25% of graphite demand, have "tremendous growth projections." As an
example, Li-ion batteries used in hybrid and electric vehicles require ~12 times more graphite than lithium.