VIDEO
AUDIO
TRANSCRIPT
Maurice Jackson:
Our feature issuer is establishing itself to become one of the world’s leading in graphite producers. Now speaking of DNI Metals, trading on the CSE, symbol DNI, and on the OTC, symbol DMNKF. Joining us for our conversation is Dan Weir, the executive vice chairman of DNI Metals.
Dan, you have some good news for us today, and I’m looking forward to this interview. DNI shareholders have been awaiting some company updates, let’s get everybody up to speed because I know that you’ve been working laboriously since our last discussion and want to share the fruits of your labor.
All too often when I talk to speculators, they focus on the tangibles. I’d like to remind our readers that the intangibles are equally important, which leads to today’s press release entitled: ‘DNI sponsors clean water day in Madagascar’.
What can you share with us?
Dan Weir:
It’s very important. We take fresh water for-granted; we can walk over to our taps, we can brush our teeth, we can drink the water. In most places in the world that’s not what happens. There are approximately 21 or 22 million people that live in Madagascar and according to US AID there over 11 million people in Madagascar don’t have fresh water.
We started a drilling program in April of last year, and part of that program the government wants you to work with the local community; it’s called CSR or community relationship that they want us to help the community. In fact, they make it mandatory that you do certain things for the local community in order to operate a drilling program. As part of that because we had a drill rig there, we drilled a water well for the local village. They had a small soccer field that was built on the side of the hill and kind of sloping, what we did is because we had the bulldozer there, we went in and we leveled out a whole nice big field and built them a nice soccer field. When I was there a couple of weeks ago, there was tons of kids out playing soccer, so it was really great to see that they were actually using that.
They also had asked us … When we were developing the project, we had to put some roads in off the main paved highway and as part of that we took and extended the road right back to their village. So now it’s about a three kilometer road that goes round their village right out to the paved highway, which they never had before. They always used to just walk back and forth basically on a small path through the bush.
The other thing we did, when we were putting in the road … Remember, these people are very poor, they grow fruit trees and basically live off the fruit and the rice that they grow. When we were putting the roads in, we did knock down some of those trees, the fruit trees. We went and planted and we probably planted two or three times as many fruit trees as we ever knocked down all along the side of the road, it helps stop the erosion and it also gives them fruit trees. And also we compensated the people for that too meaning that any fruit trees that we knocked down we actually paid them for that as well.
We worked very hard with the local people, and I’m very exciting in the future in working with all the local people and potentially making their lives better with the development of a mine because we can give them jobs and we can help them with all sorts of other things to improve their lives.
Maurice Jackson:
This is quite remarkable. I had the pleasure of going to Madagascar twice last year to visit the DNI projects. What a wonderful group of people there in the community and I know they welcome DNI’s initiatives. Just from a personal standpoint because I know you have a very intimate relationship with the community there, how does this event impact you?
Dan Weir:
It’s pretty amazing that we were able to sponsor the event number one, and number two, in being able to give people fresh water … I remember back in February of 2017, we were there on the property looking and deciding where we were going put the roads, the route for the roads. And one of the routes we looked at was going further to the north and coming in from the north. We ultimately brought the road in from the south to the main zone and to the village, but we looked at bringing a road in from the north.
And a group, there was about five or six of us, we kind of split apart because I wanted to go look over here and see if the road could go that way, a couple of the other guys went the other way. We got separated and I ended up back at the village. And I didn’t have any water with me; I’d left my water bottle with one of the other guys. I went over to this small hut and I asked: “do you have any water?” They had a barrel, they put a cup in the water and handed it to me, and I looked in the cup and it was a reddish color; it almost looked like rust, and I’m thinking, “Oh my God, these people actually drink this water all the time.”
Now, that we were able to drill a well and give them fresh, clean water right in their village, you know what, that’s a pretty good feeling I can tell you.
Maurice Jackson:
Well kudos to you, I tip my head off to you sir. Job well done there. What kind of response was DNI receiving from the community?
Dan Weir:
The community is very supportive of us coming in here and developing this project, increasing their standard of living. Again, they’re looking for jobs. The statistics in Madagascar is somewhere around 80% unemployment rate in Madagascar. The average person lives off or earns less than 50 cents a day, so if we can provide good jobs for the locals, that is huge, and they welcome us with open arms.
Maurice Jackson:
Switching gears, the press release also referenced DNI update, what type of updates do you have for us sir?
Dan Weir:
A couple of things, and let’s touch on about three different things that we’ve been working on. I just spent about a month in Madagascar; I’ve been back a little over a week. The focus of me going over there was to meet with a number of our contractors, get a lot of quotes for equipment and everything else for the pilot plant that we’ll have in operation before the end of the year. 1) I’m going to provide an update about the pilot plant, 2) an update about the bulk sample that we took from the property in November and we shipped it to India and had it tested. 3) And then we’ll talk a little bit about the arbitration with Cougar.
First of all, let’s talk about the pilot plant and getting all of that organized. We’re very luck, 50 kilometers down the road from our property is a Caterpillar dealership. I’ve been in there getting quotes from them, but there is also Komatsu, there are a number of other companies in Madagascar where we can get all of the equipment that we need. And what I need by equipment, I mean the rolling stock or the excavators, the bulldozers, everything like that. So I’ve been organizing and getting that all ready. The pilot plant itself, we have engineered and designed it.
So Maurice, what I want to do is again talk more and more about the pilot plant here, but let’s start with the big picture. Let’s start with where we are in Madagascar, then we’re going zoom in to where the pilot plant is possibly going to go. We have an opportunity of a couple of different locations where we can put it, and then I’m goingtalk a little bit about the components that we got for the pilot plant.
Most of our listeners have seen this before but here are our two properties, we have the Vohitsara property, this L-shaped and the square-shaped property called the Marofody. You can see that historically, the USGS or the US Geological survey did put these maps together and showed where historically there was graphite mines and where they were found. You can see that there are numerous north south lines on both of our properties.
Now, we’re 50 kilometers to a port; we always stress this and we make sure that people understand that and also remember that one of the reasons why we were focused in this area that they’ve been producing graphite for 100 years. There is an operating mine just to the south here, there is another operating mine right here right now, and historical mines throughout this whole area.
Maurice Jackson:
Dan, if I may just interject here for someone who’s listening here. This port that you just referenced here, this is a world class port, correct?
Dan Weir:
That is correct, yeah. It sits right up here only 50 kilometers away. There was a billion dollars spent on it within the last 10 years and there was an announcement by a Japanese firm where they were going to extend it out even further out to take the newer ships. Currently, it can take the second largest container ships in the world. The biggest ships in the world can’t come in here yet because of depth, but they’re expanding that out. Every day there are container ships that come in and out of this port, so shipping graphite is very simple for us with multiple, multiple different carriers coming in and out of here.
The other thing is … And let’s just talk a little bit about Saprolite again just to remind people the reason why we’re focused on this areas because of the saprolitic type material. It’s a weathered rock. You can see here where most of Madagascar is very, very dry. Where we are, the wind comes in off the ocean and as the warm moist air comes in there is a ridge that runs along the coast, it goes up 1400 meters and it dumps all the water in this area. Saprolite is just another terms for weathered rock in a climate that is hot and gets lots of rainfall, that’s where you find it. Let’s zoom in now.
The main highway that you saw before is this line that runs north south here. We have the entrance here is a road to our second property called Marofody and this is the entrance, the road that we built into our first area. When we build the pilot plan, we have a couple of different locations where we can put the pilot plant. And it will be modular that over time we may move it to a few different places. Let’s look at the Marofody property, which is that square property that we have. We have a very good gravel road that runs into the property here. There is a nice big river out here because we’re going to need water. When you’re processing the graphite through the plant, it’s about 50% water and 50% of the ore or the dirt that we feed into the plant to make it move through the plant.
We have an opportunity where we can put the processing plant here and the tailings out here. These are a bunch or rice paddies. That will be right next to the road, that might be one place where we’ll set up the pilot plant. A couple of the other areas where we could set it up out here in the Marofody, there are the graphite areas, so this will be a mine, this will be another mine. Again, the road runs up through the middle. We can set up the pilot plants here, put all the tailing down here. We’re still close enough to the river to bring up the water to be able to use it.
Water, people it’s a concern, people always ask about water. There is two reasons for the tailings ponds. One, is to get rid of the dirt once we have taken the graphite out of the ore. The second is we collect the water. And what we do is, is when we make what you call a tailings pond where the water settles here and all the fine material or the dirt or the dust in the water falls down to the bottom and we can reuse that water. What we’ll happen is we will reuse about 90% of the water through our processing plant, we’ll have to make up with about 10% of the water on a daily basis because out in the tailings ponds you get some evaporation from the water, so we’ll have to bring in some clean water in conjunction with that; it’s just called the make-up water.
That’s one opportunity is on the … Or a couple of different opportunities on the Marofody property where the pilot plant will be situated. On the Vohitsara property, the property that we have done all the drilling on, we have the main zone here with an outline of the main zone. This is the road that we built that comes into the main zone over here. The village that I mentioned just sits right to the side here, and the water well that we built or drilled just sits right in here.
The river, there is a smaller river that runs through here but there’s lots of flow through that. We’ll have plenty of water for the property. We enter our road; our new road comes in off here. I’m just gonna zoom in a little bit here. We’ll put a warehouse right here so the trucks can be loaded right here and then taken right up to the port, the containers actually on the truck goes right up to the port and get shipped out. There is a big area here that is currently a rice paddy; it will be a perfect location for a tailings pond.
This is the south west zone that we’ve drilled off, so there lots of ore that we can bring from there, and we can bring the ore over down the road from the main zone to put it here where the processing plant will go here. As I said to you before Maurice, we have multiple choices whether we want to built the … Put the pilot plant on the Vohitsara property first or over on the Marofody property. Those would be one of the two areas. What I’m going do now, we’re going switch over here and we’re going look at the flow sheet for the processing plant.
As I mentioned, the ore will be brought over to the processing plant; it’ll be stock-pilled. It will then go through the processing plant. We have mentioned in other interviews where graphite is what you call, it’s hydrophobic; it hates water. So think of oil and water, they don’t mix; they try and get away from each other. Graphite is very similar to that; tries to get away from the water.
This looks very complicated, but I’m gonna break it down here a little bit. And just keep in mind the whole purpose of this is to separate out the graphite, which is what we want to sell and getting rid of the dirt or the tailings that go out to the tailings pond. It’s not that complicated, it’s fairly simple, but I’ll break it down through this.
So, it gets fed in … In most operations if this was a hard rock deposit, this would be a massive big area. You’d have multiple crushers, grinding circuits, and this would be cost over a third of your project … A third to a half of the project just in this area, and the cost of all these different grinding mills and everything else in a hard rock circuit, can be very expensive for us because we’re starting with that saprolitic type material. Think of clay material or sandy type material.
What we’re doing is, is we’re dropping it into a hopper; we put it through a roll crusher, a trammel and then a polishing mill. And really all we’re doing is basically breaking up something of the crumbs. We’re adding water to it as we do that and it’s just breaking up some of the crumbs, there is isn’t this hard rock where we got to crush and grind it, this is simply breaking up some of the crumbs before we put it into the flotation tanks.
Once we get it through the polishing mill, then it gets put into the conditioning tank and into what we call the first set of flotation tanks, which is what is called a rougher. We use terms like rougher and cleaner; I’ll explain that as we go along.
The rougher is taking the initial ore, separating out some of the graphite, the graphite flows down here to a cleaning circuit, and you’ll have multiple different cleaning circuits depending on what your client wants, depending on the purity that the client wants. As we put it through each one of these cleaning circuits, we’re purifying it as it goes. We also have built within the cleaning circuit, a secondary regrind circuit because in some cases what happens is if you have the flakes of graphite some of the ore or the dirt, we call it dang, gets caught in between the different flakes. So using a small regrind circuit, we can break apart those flakes and get rid of the material in between, which then gets fed back into a cleaning circuit and away you go.
There are two other flotation cells here. As the tailings are fed out of the rougher, we put them into a couple different scavenger cells. What the scavenger cells are doing is trying to get as much material out of there as we can. It captures much of the graphite, which is then fed back into the rougher circuit there and also here before it goes out to the tailings pond.
The dirt flows this way out to the tailings pond, the graphite flows back to the rougher over here, and then down through the cleaning circuits, the purification circuits, and then ultimately out of the last cleaning circuit it goes into what we call a centrifuge. A centrifuge is simply, picture your washing machine at home for your clothes, once it’s gone through the washing cycle, it spins around really, really first and it tries to get out as much water as it can before you put into the dryers. And we’ll have diesel dryers; it’s a big long cylinder that the material gets feed through as it’s drying, then it goes out into a screening area, gets sorted to different sizes, put into bags and shipped whether it’s to Korea, to India, and United States. Multiple times we’ve talked about those are our primary area that we’re focusing on.
The next slide shows where these all gets laid out on the property. So Maurice, our pilot plant will be all built in containers. These squares here are representing 40-foot containers, so here I’m giving you the layout where everything is going be laid out on the property.
The flotation cells that I mentioned, here is the rougher, you have your scavenger circuits here, then you have your different cleaning circuits. Each one of those gets a 40-foot container. Just to let you know, we designed this plant to make sure that it would fit in containers. This is the biggest plant that you could build that would fit into containers; just to clarify that. That was one of the criteria that we did when we were designing this.
You basically have seven containers sitting there, the rest of the material including the conveyors and the trammels and some of the polishing mill out the front, they’ll come into a container but they’ll be set up on concrete pads out in this area. Stockpile for all the material will go here, then once it’s gone through all the container circuits or the flotation cells, it gets brought out to the centrifuge, the heaters, the dryers, and everything else.
You can see here we need an area that’s about 48 meters by about 60 meters across this way. We don’t need a big area for this, but I really want to show everybody that we have it all engineered, designed exactly how we want to lay all this out, and how we want to proceed with the pilot plant.
So Maurice, in conjunction with the information I gave you from all the different flow sheets there, there’s couple of other points I want to make about the pilot plant. We went out and we’ve already gotten quotes from three different groups in China, one group here in Canada. One of the Chinese groups has said to us that if we go with them that they can build the pilot plant within 60 days. Remember, it all gets put into containers. And it will take about 30 days for shipping. It probably takes another 60 days by the time we clear customs in Madagascar, get it to the property and set all the plants up.
We believe in the timeframe we have here that by the end of the year and hopefully sometime in the fall that we will be producing graphite from the pilot plant. I’m very excited about what we’re doing. As the pilot plant is being built in China or here in North America, we will be preparing the site, everything will be organized ready. The tailings pond will be built. Everything will be ready; we’ll probably even have a stockpile of material so that when the containers and everything get over there, we can start going right away.
This is quite exciting news for shareholders and a great combination of tangibles and intangibles. Before we close Dan, give us an update on the litigation with Cougar Metals?
Cougar metals, I’m gonna refer everybody to the press release because it’s a press release or the information in the press release was put together by our lawyers, so I think it’s better that people just go to our press release and read the wording that we put in there. This will stop me from getting into trouble at all with my lawyers and the whole arbitration process.
One other thing here we have Maurice, that we didn’t mention was the bulk sample. In October, November we went in and took in a 40-ton bulk sample, 20 tons from the south-west zone, 20 tons from the main zone, we shipped part of that, we shipped 20 tons of it to India. The Indian group is one of the largest producers in India; they’ve been producing graphite for about 80 years. They ran the material through their processing plants and they were very happy with the results that they got out of that. From those results, we have been in negotiations and I’m glad to say that we are in final discussions about them buying material from our pilot plant. That’s going very well. Stay tuned, over the next little while we should have some further news out on that.
Maurice Jackson:
Looking forward to hearing about another off-take agreement there. Dan, what is the next answered question for DNI Metals, when should we expect the response and what determines success?
Dan Weir:
I think the biggest question that all of us have had, and definitely shareholders keep reminding me of this, is getting the environmental license for both the Vohitsara and the Marofody properties. The other reason why I was in Madagascar was I was working on that as well. We’re very close to completing all of that. I know it’s taken longer than most people expected; it’s taken longer than I expected to complete this. Let’s put this in perspective, from the day that we put a geologist and the biologist out on the site was about 12 months ago to complete the environmental study. That’s taken seven months to do all the field work, create a 500-page report … And remember, we created 500-page reports for each property, they’ve all been filed, all the filing fees have all been paid for all of these, and we’re just waiting for the license to be granted to us.
That whole process has been about seven months. You can see how efficient the Malagasy process is in getting a license. You try and get an environmental license in the United States, you’re not talking seven months, you’re likely talking seven years. So it’s great and I know all of our shareholders want to see this happen as fast as possible, so do I, trust me. But we are basically at the one-yard line here and it is getting done. I assure you that we’ll have this very soon.
Maurice Jackson:
What is plan B if plan A doesn’t work?
Dan Weir:
Plan A has always been that we wanted to get this project into production. The pilot plant is part of that, is getting samples because we know, and this is what most don’t understand about a graphite project, is that we’ll produce hundreds of different products, the key here is getting clients, it’s getting people that want to buy our material. Getting this pilot plant up and running as soon as possible so that I can provide samples … And I’m not talking about one-kilogram type samples, I’m talking about 20-ton type samples that we need to be able to deliver to potential customers. That is extremely important and that’s what we’re doing.
A lot of other different graphite projects around the world, what they focused on was your traditional way of moving a mining project forward where they went out, they bought a project, they drilled it, did a resource study, did feasibility studies, and tried to then go out and raise some money to put it into production. In a graphite project, we have shown that that does not work, you’ve got to basically go out and get a pilot plant, get it going, get samples, build a customer base, and then you can build your final plant and start selling to your customers and work with your customers.
That’s always been plan A. Plan B, I don’t really like plan B. Plan B would go back, keep drilling, do a resource report, do all sorts of other studies. Plan B really doesn’t work for a graphite project, you want to focus on plan A, get a pilot plan up and running, and with that pilot plant we can have some cash flow as well. That’s the most important thing when you’re building a graphite company.
Maurice Jackson:
Last question, what did I forget to ask?
Dan Weir:
I don’t know. I think we covered pretty much everything here today Maurice. I really appreciate the fact that you’ve been to the properties, and I know how excited you were about seeing this being developed, seeing the pilot plant get going here, so you know what? The local people are happy, I love working with all the local people and get going here on this project is absolutely amazing, and having spent a month in Madagascar, I love being there and we’re so excited about getting the pilot plant up and running and ultimately selling to our customers.
Maurice Jackson:
Dan, if investors want to get more information regarding DNI Metals, please share the contact details?
Dan Weir:
Yes, you can get a hold of me anytime. My email address is Danweir@dnimetals.com or I’ll give you my cell phone, it’s 416-720-0754.
Maurice Jackson:
And as a reminder, DNI Metals is listed on the CSE, symbol DNI, and on the OTC, symbol DMNKF. And last but not least, please visit our website www.provenandprobable.com, where we interview the most respected names in the natural resource space. You may reach us at contact@provenandprobable.com.
Dan Weir of DNI Metals, thank you for joining us today on Proven and Probable.
Thank you, Maurice.
As a reminder, DNI metals is the sponsor of Proven and Probable and that we’re proud shareholders of DNI Metals for their virtues conveyed in today’s message.
Proven and Probable LLC receives financial compensation from its sponsors. The compensation is used is to fund both sponsor-specific activities and general report activities, website, and general and administrative costs. Sponsor-specific activities may include aggregating content and publishing that content on the Proven and Probable website, creating and maintaining company landing pages, interviewing key management, posting a banner/billboard, and/or issuing press releases. The fees also cover the costs for Proven and Probable to publish sector-specific information on our site, and also to create content by interviewing experts in the sector. Monthly sponsorship fees range from $1,250 to $4,000 per month. Proven and Probable LLC does accept stock for payment of sponsorship fees. Sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.
The Information presented in Proven and Probable is provided for educational and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. The Information contained in or provided from or through this forum is not intended to be and does not constitute financial advice, investment advice, trading advice or any other advice. The Information on this forum and provided from or through this forum is general in nature and is not specific to you the User or anyone else. YOU SHOULD NOT MAKE ANY DECISION, FINANCIAL, INVESTMENTS, TRADING OR OTHERWISE, BASED ON ANY OF THE INFORMATION PRESENTED ON THIS FORUM WITHOUT UNDERTAKING INDEPENDENT DUE DILIGENCE AND CONSULTATION WITH A PROFESSIONAL BROKER OR COMPETENT FINANCIAL ADVISOR. You understand that you are using any and all Information available on or through this forum AT YOUR OWN RISK.”
All Rights Reserved.