Focus Graphite (V.FMS) announced two offtake agreements with Grafoid Inc..
Focus estimates it could record approximately US$17.2 million in revenue under the first 10-year term of an agreement for graphite used in Grafoid’s graphene renewable energy projects, if fully exercised, and; approximately US$385.4 million in revenue under the first 10-year term of the second agreement, for graphite used in automotive and other polymer applications, if fully exercised.
Under the initial terms, Grafoid would pay Focus Graphite C$1 million over a 12-month period, for each agreement, with the first payments being on or before September 30, 2015, for the right of first refusal for its planned purchases.
In the press release announcing the agreements Focus CEO Gary Economo stated, “These initial off take agreements represent a concrete example of Focus Graphite’s value-added, mine-to-technology markets business strategy. Focus Graphite’s technology graphite supply vision has been, and continues to be the cornerstone of our business mission for creating shareholder value and for the Company’s future prosperity. In this regard, our strategy leads the way into diverse technology markets on a global scale.”
We spoke to Economo June 23, 2015.
“Graphite is an industrial mineral.” said Economo, “Before you mine it you have to have it sold by way of off take agreements. You have to have the off takes so people will finance the mine.”
The Grafoid off take agreements join an off take agreement signed with an unnamed Chinese conglomerate and announced in December 2013. Economo tells us that “There are a handful, five companies actually, looking at further off take agreements.”
Lining up those off take agreements is critical to funding the estimated 166 million dollar cost of the mine at Lac Knife, Quebec. “With these off take agreements a little more than half of the graphite production at Lac Knife has found a home.” said Economo.
From Grafoid’s perspective the Lac Knife graphite is excellent material for its graphene driven operations. Grafoid is a privately held company with patented, proprietary graphene technologies that require flake graphite for its Mesograf™ graphene battery-related developments, and for its polymer application developments.
“On the polymer side Grafoid has a process which produces a graphene laced polymer which is 200% as strong as that same polymer without graphene,” said Economo, “The Grafoid process adds graphite to the polymer. As it mixes the graphite delaminates layer by layer and the delaminated layers are graphene. You end up with a much stronger polymer.”
Plus, the Grafoid graphene infused polymer is also significantly cheaper. “The polymer we are using costs about $5.00 a pound. The Lac Knife graphite costs about $1.00 a pound. We use around a 35% loading so the cost of the final material is 30% less for a material which is 200% stronger.”
“It is a big step in the new composite materials world.” said Economo, “We’ve had automotive users, who are already using this polymer, looking at our material. A single automotive user would take up thousands of tons of the material.”
Focus Graphite owns 7.8 million shares of Grafoid valued at $39 million USD and in the off take announcement Focus indicated it would be divesting itself of one to two million of these shares. While Grafoid is a private company and its shares are not traded on a public exchange, it has recently completed acquisitions which valued its shares at $5.00 USD. The proceeds of this divestment are ear marked for the further progress of Focus Graphite’s Lac Knife Project.