Focus Graphite Inc V.FMS.WT

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Tesla talk electrifies stocks

Huge plans for EV expansion would require several new graphite mines
by Greg Klein
Giga what?
It’s a “Gigafactory” and its dramatic announcement has frontrunners to graphite production basking in the news—a potential 37% increase in natural graphite demand by 2020, requiring six to nine new graphite mines. Those estimates come from the authoritative journal Industrial Minerals in the wake of Tesla Motors’ plans for a $5-billion plant to manufacture lithium-ion batteries for electric vehicles. While several caveats have to be considered, graphite companies have once again come to market prominence.
The Gigafactory’s not yet a fact. Start-up is slated for 2017 but Tesla needs a location, not to mention partners. Tesla’s putting up only two-fifths of the $5-billion price tag. Writing in Morning Notes, Chris Berry states that Panasonic and Sanyo are “rumoured to be contributing as well.” IM writers Simon Moores and Andy Miller caution that “the plant is in the planning stage and capacities depend strongly on market demand.”

Even without growth elsewhere, Tesla Motors
would dramatically increase demand for energy minerals.
Berry, who has previously called Tesla a “bellwether or benchmark for green technology and by extension energy metals,” emphasizes that the Gigafactory’s success depends “less on a secure supply of raw materials and more on the long-term price of a gallon of gas.” He also says EVs face competition from other technologies. And, although “a long shot,” current battery technology could become obsolete.
Nor has Tesla specified that its batteries will use natural graphite. Synthetic graphite might be an option but, as Berry points out, the natural stuff would help the company meet its goal of cutting manufacturing costs by half.
Moores and Miller note alternatives to graphite, such as the non-graphitic carbon anodes now in the R&D stage. But, the writers state, graphite anodes remain “the current material of choice for Li-ion battery producers.”
Should all go according to plan and assumptions, IM Data offers some intriguing estimates. Capacity operation at the Gigafactory would call for 93,000 tonnes of large flake graphite. Those grades, +80 mesh and larger, “made up just over 20% of total flake graphite output of 375,000 tonnes in 2013,” IM stated. By 2020, even with no growth in other areas, the Gigafactory could require six new mines.
That’s just the conservative estimate. “In a bullish case this could rise as high as 140,000 tonnes,” IM states, calling for nine new mines. A number of projects rank among the contenders.
Canada’s next new graphite operation would likely be Ontario Graphite’s Kearney mine, 250 kilometres north of Toronto. Having missed its 2013 target date, the privately owned company now says Kearney will re-open early this year. The large, low-grade resource would produce an annual “20,000 tonnes of natural, large flake, high carbon graphite concentrate,” the company states.
Next in line might be Flinders Resources TSXV:FDR, which plans to skip feasibility and even pre-feas to begin commercial production at Sweden’s Woxna mine by July. The company calls itself the only publicly traded company that’s completely funded for production. Its primary market would be European refractories and crucible manufacturers.
The only graphite company with full feasibility complete, not to mention an expansion case PEA and major permitting, Northern Graphite TSXV:NGC hopes to begin construction on the Bissett Creek mine in southeastern Ontario by Q4 this year, with commercial production following in Q4 2015. Negotiations are underway with potential strategic partners to take up part of the $101.6-million initial capex. One of the company’s claims to fame has even greater significance following the Tesla news. Northern is “the only junior that has successfully produced and tested spherical graphite for Li-ion batteries,” the company says.
This year has Focus Graphite TSXV:FMS focusing on feasibility and financing. In December the company signed what it terms the graphite industry’s first offtake deal, a 10-year contract with a Chinese conglomerate that will buy 20,000 to 40,000 tonnes a year. The 2013 preliminary economic assessment for the Lac Knife project in northeastern Quebec forecast total annual production at 44,000 tonnes. The PEA projected an initial capex of $126 million, which Focus hopes to raise through a combination of debt and equity.
Mason Graphite’s (TSXV:LLG) timeline has feasibility scheduled for completion in Q3 and construction beginning in Q1 2015. Last April’s PEA gave the company’s Lac Gueret project in northeastern Quebec direct costs, including contingency, totalling $107.92 million.
A company hoping to begin production in 2015, Energizer Resources TSX:EGZ has a February 2013 PEA projecting a $162.04-million capex for its Molo deposit in Madagascar. The current plan is to start small with 50,000 tonnes per year but build to a 150,000-tpa capacity as the market requires.
Not as advanced, but a prominent company nonetheless, Zenyatta Ventures TSXV:ZEN plans to finish a PEA in Q2 following last December’s maiden resource for its Albany project. The “very rare hydrothermal deposit” rejuvenated early-stage graphite activity by sparking an area play around the north-central Ontario property.
One junior that’s already selling product is Big North Graphite TSXV:NRT. The company has so far sold 760 tons produced by test-mining its 11-hectare, 50/50 Nuevo San Pedro joint venture in Mexico and by purchasing output from other small, nearby operations. The less-expensive amorphous product doesn’t serve the battery market but the company’s also pursuing flake graphite at its other properties in Mexico and Canada.
IM writers Moores and Miller compare Tesla’s plans to Henry Ford’s introduction of the assembly line to car manufacture, saying the Gigafactory “could prove just as pivotal in the emergence of the EV market, unlocking a lucrative new layer of demand for natural graphite producers.”
In his Morning Notes article, Berry points out that graphite is the largest component of the numerous materials used to make Li-ion batteries, but not the most expensive. Though Tesla’s announcement boosted graphite and lithium companies, he observes, cobalt and nickel stocks somehow missed out.
“There are a multitude of factors which will ultimately determine the success or failure of the Gigafactory,” Berry concludes. “But it is clear that reliable supply of various energy metals remains at the heart of this strategy.”

Of Interest to Boeing, Tesla!

Summit, New Jersey (MMD Newswire) August 13, 2013 -- A new provisional patent application was filed July 10, 2013 by Gearhart Law for inventors Karim Zaghib, Gordon Chiu, Abdelbast Guerfi, and Amélie Forand. The application describes a new composition using a type of graphene. This novel material will be important for the energy industry, in everything from alternative energy storage and transmission to improved consumer products.
Today's consumers are not satisfied with the current inefficiencies in the devices we all use everyday. Additionally, these inefficiencies are holding back applications for use in, for instance, electric vehicles. The unique invention described briefly below could help advance the needs and demands of airplane manufacturers such as Boeing, auto manufacturers such as Tesla and the mobile computing industry. Imagine a smart phone or tablet that holds a charge for a month or more, or an electric car that has a battery the size of an orange. With the development of this new technology, it may not be that far off.

The entire energy industry is aiming for faster charging rates for batteries, greater safety, more capacity and longer energy storage times. These added benefits would lead to more efficient and more cost effective devices and products. This new technology has the potential to have a large impact on the energy industry; the invention is a material that has novel structural, conductive, and hybrid properties that allow it to act as an energy storage mechanism and as an energy conduit.
Alternative energy may also see a huge benefit from the new technology. Among the challenges in using alternative energy technologies are the abilities to store and transport the energy. Batteries must be able to store a large amount of energy, and conduits typically lose a large amount of energy as it is transported along power lines. Imagine being able to capture solar power in Arizona and using it to heat a home in North Dakota, all for a few pennies. This new technology is a step on the path to the realization of that vision.
What is this new technology?
The inventors have successfully formed a uniform composite containing carbon-coated lithium metal phosphate with Mesograf(TM), which is a graphene composition obtained from natural graphite. The material will be useful in storing and conducting energy. The patent will be jointly owned by HydroQuebec and Grafoid.
HydroQuebec is the world's expert and holder of the patents for developing lithium iron phosphate charging systems.
Graphene became well-known in the scientific community in 2010, when Andre Geim and Konstantin Novoselov won the Nobel Prize in physics for their work with it. Graphene is a material composed of pure carbon, with atoms arranged in a regular hexagonal pattern, and can be described as a one-atom thick layer of the mineral graphite. Graphene has high conductivity, thousands of times higher than copper. This means that it can transport electricity highly efficiently. It is also the strongest material ever discovered. Graphene is very light, weighing only 0.77 milligrams per square meter. Graphene can be made in many forms, each performing differently in respect to varied physical parameters.
Dr. Gordon Chiu is Vice President and co-founder of Grafoid Inc., a collaborative venture with a significant graphite entity, whose mission is to develop, patent and secure the global rights for specific graphene technologies. The joint venture is based in New York City. Described as an "execution-driven businessman," Dr. Chiu has combined domestic and international experience in the chemical, technology, medical, and related industries. A lecturer and corporate advisor, Dr Chiu is engaged in the discovery and research of graphene on behalf of Grafoid and provides advice on project selection with a view to increasing overall uses and applications of graphite/graphene. Dr. Chiu holds a B.S. degree summa laude in chemistry from Rensselaer Polytechnic Institute and graduated with an M.S. degree in chemistry from Seton Hall University with honors. He is a former research scientist at Pfizer and Merck & Co. and has strong links to Wall Street and Asia. Dr. Chiu is globally distinguished by his acceptance as an MD/PhD candidate under the National Institutes of Health's Medical Scientist Training Program at the Mount Sinai School of Medicine. He jointly combined his cumulative training with an ND degree in naturopathic medicine from the University of Bridgeport.
Dr. Karim Zaghib obtained his MS in 1987 and his PhD in 1990, both in electrochemistry from the Institut National Polytechnique de Grenoble, France under the direction of Bernadette Nguyen. In 2002, he received the HDR (Habilitation à Diriger la Recherche) in materials science from the Université de Pierre et Marie Curie, Paris, France. Dr. Zaghib has published 131 papers, 85 patents, and served as editor or co-editor of 11 books. He was organizer or co-organizer of 37 symposia, meetings and workshops. In June 2010, he was the General Chair of the International Meeting on Lithium Batteries (IMLB) in Montréal, Québec. He is very active in ECS, and recently completed his term as the Chair of the Energy Technology Division. Dr. Zaghib is the recipient of the International Electric Research Exchange (IERE) Research Award (2008) in Iguaçu, Brazil and the International Battery Association (IBA) Research Award in January 2010.
Richard Gearhart is the Founder of Gearhart Law. He has twenty-four years of experience in intellectual property law, in both corporate and private practice environments. Richard has a passion for entrepreneurship and startups. Gearhart Law is a personal start-up, so when inventors come to him with their ideas, Richard and his team are supportive and always willing to help. After only 6 years in business, Gearhart Law has helped over 500 entrepreneurs and inventors, and Richard has built a referral network of service providers who can help entrepreneurs with all aspects of launching their businesses.
Gearhart Law is an Intellectual Property (IP) firm located in Summit, New Jersey. Our team of professionals specializes in drafting and prosecuting patents, trademark filings and prosecution, drafting and reviewing licenses and agreements, conducting due diligence for both investors and entrepreneurs, drafting legal opinions, patent enforcement, and other legal matters related to IP. We file domestically and internationally, and have attorneys who speak multiple languages.
Visit our website www.GearhartLaw.com and our blog www.PatentPuzzle.com.
GEARHART LAW 41 River Road Summit, New Jersey 07901 [phone] Media contact: Elizabeth Gearhart Email: [e-mail] Phone: [phone] work 862 703 8368 cell Address: 41 River Road Summit, NJ 07901
Website: www.GearhartLaw.com
Blog: www.PatentPuzzle.com

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Bloomberg News

Tesla to Use North American Materials Amid China Pollution Worry

By Jack Kaskey and Simon Casey March 29, 2014

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Tesla Motors Inc., which manufactures the $71,070 Model S, says the “vast majority” of the graphite it uses right now comes from Japan and Europe and is synthetic, not mined. Photographer: Gianluca Colla/Bloomberg
Tesla Motors Inc. (TSLA:US), the electric vehicle maker co-founded by Elon Musk, plans to source all the raw materials for its proposed $5 billion U.S. battery factory in North America.
The Silicon Valley company won’t look overseas for the graphite, cobalt and other materials needed for its so-called Gigafactory, said Liz Jarvis-Shean, a spokeswoman.
“It will enable us to establish a supply chain that is local and focused on minimizing environmental impact while significantly reducing battery cost,” she said in an e-mail.
Story: From Tesla to Dunkin' Donuts, One Firm's Quest to Fine-Tune the World
The move comes amid heightened interest in curbing graphite pollution and a widespread corporate sensitivity about avoiding the use of industrial minerals from troubled parts of the world. China’s government, for example, has begun to shutter mines producing graphite, a major ingredient in lithium-ion batteries, over air-quality issues, Bloomberg News reported March 14.
Tesla, which manufactures the $71,070 Model S, says the “vast majority” of the graphite it uses right now comes from Japan and Europe and is synthetic, not mined. The Palo Alto, California-based company prefers the synthetic variety, Jarvis-Shean said.
Natural graphite mined in China accounts for most of the material used in batteries worldwide, according to London-based Industrial Minerals Data. China, the biggest graphite producer, is closing dozens of mines and processing plants even as global demand soars.
Story: Chinese Automaker BYD Gets Greenlight to Sell Electric Vehicles in Beijing and Shanghai
High Costs?
The Tesla purchasing strategy is unique in the battery industry, according to Sam Jaffe, an analyst at Navigant Research. To make it work, analysts who follow the industry say Tesla may need to turn to graphite mines in Canada that have yet to be built. For cobalt, they say Tesla may have to go beyond existing Canadian output and look at prospective supplies in Minnesota and Idaho.
“It’s very patriotic of them to do that, but it costs, and already the costs of these electric vehicles are quite high,” said Edward R. Anderson, chief executive officer of Tucson, Arizona-based TRU Group Inc., a consultant.
Story: Fiat's 'Baby' Jeep Renegade Hails From Italy
Tesla’s plan will cut the per-kilowatt hour cost of its batteries by more than 30 percent and reduce “logistics waste,” Jarvis-Shean said.
The company is targeting the costs and pollution associated with transportation in the metals industry, Navigant’s Jaffe said. Graphite, cobalt and other commodities often travel thousands of miles from mines to processors and then on to manufacturers and consumers.

Gigafactory’s Size

The Gigafactory is important for commodity markets because of its sheer scale. While Tesla has yet to select a site in the western U.S. for the plant, plans that were first revealed in February envisage the production of enough rechargeable lithium-ion batteries each year by 2020 to power 500,000 Tesla vehicles. The factory would singlehandedly double world output of lithium-ion units.
Story: Live Updates from Bloomberg Businessweek Design 2014
Sourcing the materials on that scale in North America may disrupt commodity markets, said Stuart Burns, co-founder of London-based pricing and analysis company Metal Miner.
“It really depends on how quickly Tesla ramps up their production and to what extent they are working with the supply chain already to ensure the capacity is in place,” he said.
The factory is so big that without more cobalt supply there will be a global shortage, according to Burns. Right now, about half the world’s cobalt is mined in the Democratic Republic of Congo, a war-ravaged nation whose mining industry has been beset by allegations of corruption.
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Congo’s Cobalt

Tesla says it gets its cobalt from the Philippines, where Sumitomo Metal Mining Co. started up a nickel-cobalt mine last year. There are only a few other viable new sources of cobalt, while global demand is rising 5 percent or more each year, said Stephen English, a cobalt trader at SFP Metals in London. “There are still a lot of cobalt units untapped in the Congo,” he said. But mining investors in Congo face power shortages, a lack of basic infrastructure and political instability. Congo remains the world’s most destitute nation, according to the United Nations Development Programme’s measure of health, education and income.
“The country’s mineral wealth, its most valuable assets, are being milked for a very small number of people,” said Daniel Balint-Kurti at Global Witness, a London-based non-profit group that investigates the exploitation of natural resources.

Conflict Minerals

While neither cobalt nor graphite are regarded as so-called conflict minerals, Tesla’s purchasing strategy has parallels with efforts to eliminate the use of materials produced in war zones such as eastern Congo, Balint-Kurti said. This year U.S. electronics manufacturers such as Apple Inc. and Intel Corp. are being forced for the first time to disclose whether they use minerals mined in war zones.
The U.S. hasn’t mined cobalt since 1971 and has 301 tons remaining in a government stockpile, according to the U.S. Geological Survey. Tesla may look to Idaho, where Formation Metals Inc. is developing a cobalt mine. The Vancouver-based company needs to raise $120 million to complete the project, said Rick Honsinger, a spokesman. Formation plans to approach Tesla about using its “ethically sourced” cobalt to avoid the political risks of Congolese metal, he said.
Just 2 percent of graphite is mined in Canada and none in the U.S., according to U.S. government data. In 2012 the U.S. produced 141,000 metric tons of synthetic graphite, made by super heating petroleum coke, a byproduct of oil refining, according to the USGS.

Cleaner Process

Another five or six graphite mines are needed to meet demand from rising battery production, said Gareth Hatch, founding principal at Technology Metals Research. Several projects in Canada will help boost supplies in the next few years, even though prices are still likely to rise, he said.
Producing graphite in North America would be a cleaner process than in China, where enforcement of environmental regulations is lax, Navigant’s Jaffe said.
Telsa’s biggest impact in the U.S. and global economy may eventually be in “changing how businesspeople operate, how they make their decisions, and how they approach problems,” he said.
To contact the reporters on this story: Jack Kaskey in Houston at [e-mail]; Simon Casey in New York at [e-mail]
To contact the editors responsible for this story: Simon Casey at [e-mail] Ken Wells
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