A couple of weeks ago Canada Carbon (V.CCB) (OTC:BRUZF) settled its litigation with the municipality of Grenville sur la Rouge. The shares took off like a rocket, trading from $0.115 to $0.23 on high volumes in a couple of days.
Today, March 5, 2020, CCB announced its first sale of its ultra-pure nuclear graphite. It is very significant news and the market has greeted it enthusiastically with over 1.9 million shares traded so far and a daily high of $0.33 cents. As I write CCB is trading at $0.30.
What the market has been signalling, so far, is the general significance of any sale in the graphite world. But the real value of today’s announcement is in the details which are just being understood.
First off, CCB is partnering with a world-class life sciences company, LGC Standards Company. LGC employs 2300 people, operates out of 19 countries and is headquartered in London, England. It provides Certified Reference Materials to labs and industrial research centres which they use to calibrate their instruments.
LGC’s initial order is for 50,000 grams of CCB’s purified graphite. Note the use of “grams” rather than the, more conventional, kilograms. This is not just trying to get a large number in a press release, it reflects how Certified Reference Materials (CRM) are actually sold. LGC is currently selling a lower purity graphite for $8.75 Canadian a gram. The ultra-high purity CCB graphite is expected to retail for more than that.
While Canada Carbon will not see all of that retail price, for estimation purposes it is not unreasonable to use $10.00 a gram which would mean Canada Carbon, on this initial order, on a 50/50 split would see roughly $250,000. The exact number is unknown at this point as the final selling price will be determined by LGC.
This is just the initial order: LGC and CCB have agreed that subsequent orders will be for 100,000 gram quantities. They are also in discussions to develop additional CRMs based on the Miller graphite, which would be expected to further increase the market demand.
We know from earlier disclosures that Canada Carbon has over forty 100 kilogram barrels of Miller graphite concentrate derived from its earlier bulk sampling in storage. That concentrate goes through a couple of purification steps to become the .99999 pure graphite required. But from a cost perspective, the concentrate has already been mined and paid for. It is just waiting to be processed.
What today’s announcement means is that the Canada Carbon graphite will be used all over the world as the standard reference material for high purity graphite. Brilliant marketing for CCB. Canada Carbon ultra-pure graphite will be introduced to the very people who are responsible for specifying the graphite to be used in industrial and nuclear applications. Better still, the CCB graphite will be provided by a company which has established a worldwide reputation for excellence.
In today’s release, LGC Vice President and General Manager, David Coler states, “Recent interest in the development of Generation IV small modular reactors for the generation of green energy led us to consider the material certification requirements for testing, certification and construction of this technology. We learned that there were no ultra-high purity graphite CRMs available in the marketplace. This agreement with Canada Carbon will allow us to satisfy this demand.”
Coler goes on to state, “We will also look for other opportunities in other applications which require high purity graphite material certification.” This opens up the potential for new books of business for Canada Carbon both as a CRM supplier and, down the line, as the supplier of choice for ultra-high purity graphite in non-nuclear settings.
Where Certified Reference Materials is a hugely lucrative business in itself, Canada Carbon has always seen its nuclear-grade graphite’s long-term prospects as tied to actual nuclear reactors. Even a small modular reactor requires hundreds if not thousands of kilograms of ultra-pure, nuclear grade, graphite.
The scientists and engineers who are designing the Generation IV small reactors are the target market for nuclear-grade graphite. With today’s announcement, Canada Carbon steps to the head of the line to supply that nuclear-grade graphite.
From an investor’s perspective, today’s announcement gives Canada Carbon something most junior mining companies never have: revenue. This reduces the need to go to the market to raise funds and allows Canada Carbon to complete the regulatory process to begin mining.
By becoming the Certified Reference Material for ultra-high purity graphite Canada Carbon has literally “set the standard” for nuclear-grade graphite. Which means, a little further down the road, Canada Carbon will be filling orders for 1000’s of kilograms rather than grams.
If you had “hit the bid” when my last article came out you would be up around 150%. As the market begins to understand today’s news and just how much blue sky it opens up for Canada Carbon that gain will look trivial. There is no reason CCB should not be trading at $1.50 now that its Miller ultra-pure, nuclear grade, graphite will be marketed as the world’s standard for graphite purity.
(That price will be left behind the day the first off-take for nuclear applications is signed but that is a mid to long term proposition.)
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.