Mason Graphite Inc. (CVE:LLG) has been the best-performing graphite company in the S&P/TSX Venture composite index (INDEXTSI:JX) this year, and for good reason: Where most graphite companies are hitting a wall on institutional interest for their projects, Mason continues to attract investment.
Amid the agony and defeat of the Great Bear Market in mining that consumed the TSX Venture Exchange from 2012 to 2016, graphite was supposed to be a bright spot in an otherwise dark and dreary decade. Four years later, however, the hype has not matched the promise, as is so often the case with junior TSX Venture-listed companies.
But there are exceptions.
The best performing graphite company in Canada throughout this period continue to be Mason Graphite. The stock opened at $0.60 in late 2012, dropped as low as $0.25 in October 2013, recovered to $1.08 at the beginning of 2014, and drifted back down to a low of $0.29 at the outset of 2016.
Since then, however, the stock has traded as high as $1.60, and currently sits in the $1.30 – $1.40 range, for year-to-date performance of 348.28 per cent.
Not bad in the worst mining bear market of the century.
So what’s Mason doing that differentiates it so dramatically from the other 120 companies that have a graphite property.
Mason has a few things going for it, which collectively, set it apart from all the other graphite companies out there.
First and foremost, Mason was spawned from Stan Bharti’s Forbes and Manhattan group — a management and consulting umbrella firm that has had as many as 29 operating companies listed in Canada, and has put more than a few mines into production. They have global access to capital and attract A-list board members like Larry King.
The second consideration is the calibre of the project, which has stood out among graphite deposits anywhere in the world for its outstanding grade and quality. There are places on the site where the graphite is so predominant that bulldozers slip and have difficulty climbing on its slick rises.
The Lac Guret property is located 285 km north of the city of Baie-Comeau, Quebec. Mason acquired the project from Quinto Mining. Quinto was ultimately acquired by Consolidated Thompson Iron Mines, which was a Forbes and Manhattan, for its iron ore holdings. If you recall, iron ore was pushing through US$70 a tonne in December 2009, ultimately peaking at nearly $180 per tonne in 2010.
That catalyzed an acquisition boom in companies looking to take advantage of the rising price. With Lac Guret falling outside of the interest of its new owners, it was sold to Mason for US$15 million in cash as well as warrants in graduated payments.
The grade has proven to be extraordinary.
Samples collected in 2004 were found to assay as high as 90 per cent Cg. The most current 43-101 Mineral Resource Estimate has total measured and indicated resources of 65.7 million tonnes grading 17.19 per cent Carbon graphite. The estimate is part of a revised and updated feasibility study dated September 2015.
Mason has been able to attract institutional capital in the course of the last two years that includes some of Quebec’s largest pension and investment funds at incrementally higher valuations, whereas the rest of the graphite complex in Canada has more or less found investors lacking of any substance.
Currently, the company has working capital of $28 million, and looks set to head to the next phase of mine development on the back of its current feasibility study.
James West is an investor and the author of the Midas Letter, an investing research report focused on Canadian markets. The views expressed here are his own and are presented for general informational purposes only — they should not be construed as advice to invest in any securities mentioned.
James West and/or associated funds do not own shares in any securities mentioned in this article. For the full Midas Letter disclosure policy, click here. Postmedia and Midas Letter have a revenue sharing arrangement.