Been away from this BB hence I missed this NR on NGC proprietary purification process. Thanks for posting.
General comments: It's a pretty comprehensive write-up, not only on the purification process to get their graphite (ay Bissette Creek) to 99.95% purity but also on the general background information on various kinds of graphite, their market demands. The writing provides a fair assessment of the graphite market situation, no hypes.
Perhaps, the company should have written up a bit more on its strategy which as I see it consists of 3 streams:
1. Dig the stuff up and mill it to produce high-quality large/extra large/jumbo flake graphite concentrates for sale straight from Bissette Creek facility (at a cost of about $800/tonne as indicated in the up-dated FS).
2. Purify the concentrates using its own purification process to produce spherical graphite a value-added product for battery application.
3. Develop its own proprietary process to coat the spherical graphite for use in Li-ion batteries.
Since graphite is a commodity (unlike gold), the graphite production will need to match the customer's requirements in terms of flake size, purity, electrical property, etc...To be able to make some profit, the company will need to sell its products. Depending on the market demand, NGC may want to go to Stream #2 and Stream #3 in addition to the basic production of high-quality concentrate (Stream #1).
The revised FS has indicated a potential profit margin for Stream #1. If the price for large flake graphite is of the order $1800/tonne then the profit would be about $1000/tonne which would translate into $20M/yr for a production of 20,000 tonnes concentrate/year. A profit of $20M/yr is excellent for a small company.
NGC can crank out the value-added products described in #2 and #3 and sell the products themselves to make better profit for their own graphite at Bissett Creek. They could process the value-added stuff using high quality graphite from other sources and charge a fee. Another option would be to license the purification and coating technologies, for a fee or royalty, to other companies.
The above options would give NGC an opportunity to tailor its activities to suit the market demand, as long as there are opportunity to make some profit for its shareholders. A very wise strategy, imo (i.e. not a one-trick pony).
Currently most of the pieces, including the important MCP, are in place for the construction of the mine and mill at Bissett Creek. NGC will be the first horse out of the gate. Its SP will move up once financing has been fully secured. Currently, it has a good chunk already arranged with Caterpillar. There are possibilities of debt financing, off-take arrangements (e.g. forward sale for up-front cash), licensing of proprietary processes, sale of royalty, and equity financing which is an option (but NGC would try minimize this as much as possible).
NGC is developing the Bissett Creek property by the book and in a methodological fashion. The company is run by a conservative management...no hypes. Consequently, I tend to believe in what they say, after doing my own DD of course.
goldhunter
