The world will look to Vancouver when it comes to feeding the globe’s growing appetite for graphite.
Zimtu Capital Corp. (TSX: V.ZC, Stock Forum ) President David Hodge made the tongue-in-cheek comment during a graphite conference that drew more than 250 investors to Vancouver, British Columbia this week.
They showed up to hear keynote speaker Chris Berry discuss the outlook for the sector and listen to presentations by officials from a number of Vancouver-based graphite explorers, including Strike Graphite Corp. (TSX: V.SRK, Stock Forum), Lomiko Metals Inc. (TSX: V.LMR, Stock Forum) and Solace Resources Corp. (TSX: V.SOR, Stock Forum). Solace is changing its name to First Graphite Corp.
It was a day when Northern Graphite Corp. (TSX: V.NGC, Stock Forum), saw its stock price hit a 52-week high of $2.25, after soaring from 71 cents in December 2011 . Based in Ottawa, Northern Graphite is considered to be the front runner in the graphite exploration field.
Strike Graphite rose 9% to 31 cents February 23, on news that airborne surveys have identified a 25 kilometre-long conductive horizon at its Simon Lake graphite property in north eastern Saskatchewan.
On the same day, Focus Metals Inc. (TSX: V.FMS, Stock Forum) gained 10% to close at $1.14, after announcing a bought deal private placement of flow-through shares that could raise up to $10 million for exploration at the junior’s Lac Knife graphite project in Quebec.
Graphite is an industrial mineral that is normally associated with steel production, lead pencils and golf clubs. As recently noted by Stockhouse, a number of key themes have combined to put graphite on investor radar screens. They include export restrictions in China, (the producer of roughly 70% of the world’s graphite) and speculation that an already growing market will be spurred on by demand from new applications, including lithium-ion batteries, fuel cells, and nuclear reactors.
“There is believed to be excess capacity in China, however many expect supply to be constrained through export quotas and [value added taxes],’’ said Berry, a New York City-based junior metals analyst and co-author of the Morning Notes newsletter.
With estimated annual production of about 1.2 million tonnes, the graphite market is relatively small in comparison to other metals and minerals. World production of copper, for example, amounts to about 16.1 million tonnes annually.
“If we look at the market for “today’s uses” of graphite and assume that it grows at 5% year-over-year to 2020, world consumption will grow to 1.86 million tonnes,’’ Berry said.
Future demand may also be driven by “next generation” graphite products, including Graphene, a one-atom layer thick piece of graphite that is 200 times stronger than steel, he said.
Still, the Holy Grail in the graphite exploration business is the high purity, large flake graphite which is consumed by the battery industry.
Standard Graphite is currently exploring on ground near Renfrew, Ont., surrounding the former Black Donald mine which produced large quantities of high purity graphite from 1896 and 1950.
Meanwhile, Northern Graphite is hoping to begin mine construction at its Bissett Creek graphite project, which is located about 100 kilometres east of North Bay, Ont. The junior has initiated a bankable feasibility study for the property after recently completing a NI 43-101 economic assessment.
For its part, Zimtu is exposed to any developments via its equity interests in Lomiko Metals, Strike Graphite, and Standard Graphite Corp. (TSX: V.SGH, Stock Forum).
“Essentially, we are opportunists,” said Hodge. He said Zimtu tends to focus on juniors engaged in early stage exploration, often before they go public. “We stick with these companies for the long term,’’ he said.