Elcora Resources (TSX: V.ERA, Stock Forum) has moved ahead of the pack of technical metals producers by intentionally following a paradigm that will govern the sector for years to come: vertical integration. Mining, refining and manufacturing industrial graphite specialties is the sole recipe for success for junior miners involved in the sector, yet a precious few are doing what, according to Jack Lifton, what the rare earth junior minors should have adopted 10 years ago. Elcora is one of those visionary companies and as such, was featured in a recent article penned by Jack Lifton for investorINTEL where Jack stated that, “from now on, no successful (i.e., profitable) production will come from any technology metals venture based solely on mining.”
Many investors have been fooled into thinking that rare earth metals mining is similar to base and precious metals mining, such as mining for gold, where the potential for success of a mining operation is based on the size and grade of a good deposit. This is not the case for technical metals and materials, such as graphite.
Graphite is a solid form of carbon that forms as parallel sheets of planar (flat) hexagonal molecules that possess a strong covalent bond, but are not nearly as tightly bonded to other parallel sheets of graphite materials. As a result, graphite is incredibly slippery. As the material can withstand the pressures and temperatures of most of our moving machinery, it has become a well-known lubricant used in such products as WD-40. Another popular and recently, an even more important use for solid graphite is an ideal electrode in the production of aluminum which globally is produced at a rate of almost 50 billion tons annually, using a tremendous amount of graphite in the process.
Graphite is also fundamental in the production of steel through the use of electric arc furnaces which makes up 28% of global and 80% of American steel production. There is no possible practical replacement for graphite in these uses.
Naturally occurring graphite is produced on a global scale of 1 billion tons with the highest grades, still a very important metric, being produced in Sri Lanka. So how does Elcora fit into all of this?
Jack Lifton had this to say in his editorial, “ELCORA’s business model is well described on its web site, and I urge you to read it, but suffice to say that ELCORA has taken ownership or control of several existing Sri Lankan high grade deposits that were worked in the recent past. This work was suspended when the easily accessible high grade materials were taken, but ELCORA has found that with modern graphite mining and concentrating techniques an even larger amount of high grade graphite than was recovered in the past can now be produced from the same deposits.”
He then added, “ELCORA has also decided to build a graphite processing (upgrading) operation that will be open not only to its own in-house produced material but also to off-takes from other Sri Lankan deposits and for tolling. In addition to the upgrading facility ELCORA says it will look at downstream value added product manufacturing.”
He went on to illustrate, “ELCORA is a Integrated Graphite “Company”, not just a mine. The developers of this company are in a real sense the antithesis of junior miners. They did not find a deposit and try to develop just it as is the case with all of the junior miners up until now; they selected a known deposit group and studied it along with graphite chemistry and technology to see how far downstream, in terms of product, they would need to go to have a profitable venture not dependent on any one deposit. The result was ELCORA.”
The company has a strong leadership with a tremendous base of experience within the sector, guiding the firm in a way that is noted to bring any natural resource project to completion.
With this type of vision and drive, Elcora and most anything else brought to market by its financial backers are worth a serious investment look.
Original article posted here.
Currently there are 39.6m outstanding shares with a market cap of $13.1 million.
FULL DISCLOSURE: Elcora Resources is a Stockhouse Publishing client.