Transcript of interview between Proactive Investors and Gary Economo, President and CEO of Focus Graphite
Harry Norman: Hello, this is Harry Norman for Proactive Investors and welcome to another Proactive audio interview. Today is the 13th June 2012 and I am talking on the phone somewhere between Ottawa and Montreal, with Gary Economo, President and CEO of Focus Graphite, listed on the TSX Venture Exchange, general mining sector, stock ticker FMS, share price 73 cents Canadian, market capitalisation $68.72 million Canadian. Focus Graphite is also listed in the US on the OTCQX and on the Frankfurt Exchange. Web address: focusgraphite.com. Gary, thank you very much for joining us for this interview.
Gary Economo: Thank you for having me.
Harry Norman: Why graphite? Why now?
Gary Economo: Graphite is becoming a material that is in very, very high demand for specific key applications in the high tech industry, which include the electrification of the transportation industry, and in the lithium batteries that drive these vehicles; both cars, buses, bicycles, as well as many other applications for lithium batteries today.
And today is a key time in the graphite sector, because many new applications have been discovered in the scientific communities, which will utilise graphite. So we’ll see an increase in the demand for graphite across many different sectors, as well as China’s effect on trying to control the graphite market, where they currently hold about 76% of the world supply of graphite.
Harry Norman: Gary, please give investors a brief introduction to Focus Graphite, the company’s assets, and your strategies for building the company.
Gary Economo: Focus Graphite has three key assets, the Lac Knife graphite deposit, Labrador Trough which is a very early stage exploration property and Kwyjibo, which is a Rare Earth project.
Our key focus will be on graphite deposit at Lac Knife. And one of the things that differentiates us from everyone else in the graphite, because this is our mine to market model, where we will use our very low cost graphite from the Lac Knife deposit, to produce end use materials for the industry.
Harry Norman: You have described Focus Graphite’s 100% earned Lac Knife graphite deposit in Quebec, as the highest grade, large natural flake deposit in the world. Why are high grade, large natural flakes important? And how big is the Lac Knife deposit?
Gary Economo: Lac Knife deposit is approximately 8 million tonnes, grading 16%, which is the highest grade in the world of any known graphite deposit. It is also open in all directions. There could very well be 5 to 6, or 10 times more graphite than we already know about. And we’ll be drilling this summer to find out how big this thing really is.
It’s very important to have a very high grade deposit, mainly for the cost. It is the Lac Knife deposit and Focus Graphite will be the lowest cost producer in the world, compared to many other companies where grading 2 to 4, to 6 to 8%, a 16% deposit gives us the lowest cost production material
Harry Norman: Please talk us through the preliminary economic assessment for the Lac Knife graphite deposit, and your plans for taking Lac Knife into production.
Gary Economo: The preliminary economic assessment will be available in approximately four weeks. And our plan is to use the PEA to complete our financing and to take Lac Knife into production by the end of 2013. The PEA, along with seven companies that we’re working with for off-take agreements and/or long term purchase agreements, will allow us to complete our financing without going into a very long term, complete bankable feasibility study
Harry Norman: Who are l’Institut de recherche d’Hydro-Québec, or IREQ? What does Focus Graphite’s agreement with IREQ cover? And what are the terms of this agreement? And what work is at hand?
Gary Economo: l’Institut de recherche d’Hydro-Québec is a division of Hydro-Québec. And their mandate is to develop technologies and products, materials and complete systems, in order to advance the electrification of the transportation industry. So their mandate is to find ways to build better, faster, longer lasting, higher capacity electric vehicles, with a variety of materials. And graphite being the key material that is used for the anode of the lithium batteries. It is also a material that can be mixed with other minerals and other materials to create performance specifications.
So we are working very closely with them in future development of materials using graphite, as well as licensing their technology to purify the graphite and to make the anodes, which we will sell to the companies that have licensed their complete battery technologies around the world.
Harry Norman: Focus has a 40% interest in Grafoid Incorporated, which was created to develop proprietary methods of manufacturing graphene. What can you tell us about the work Grafoid is doing and about its applications?
Gary Economo: Yes. Grafoid has developed an extremely low cost, environmentally friendly process to manufacture graphene from the Lac Knife deposit. Graphene is the world’s thinnest, strongest material. It is the strongest material known to man. It is electrically conductive, thermally conductive and it’s flexible. It is a material that will change the way we work, listen and communicate.
The applications are literally endless. It can replace silicone. It can make much better portable ** [0:05:36] cells to replace the silicone that’s used in solar cells today. It’s used in medical applications, the construction industry. It will make better material for storing energy, super-capacitors, and many, many other applications.
Grafoid is the patent holder, exclusive licensee of these manufacturing patents. And is now working with Rutgers University, and a number of other universities, and Fortune 500 companies around the globe, in applications for graphene.
Harry Norman: In May, Focus Graphite had $27 million Canadian in the bank. Please talk investors through the company’s capital structure and financial situation going forward.
Gary Economo: We have just over $26 million in the bank. We have approximately, just under 100 million shares issued and outstanding, 117 million shares fully diluted. We will be raising money over the next six months to complete our mine and the processing facilities, probably in the form of a convertible debenture.
Harry Norman: Please talk us through what investors can expect from Focus Graphite over the next 18 months to 2 years?
Gary Economo: That’s just going to expect to see a high growth company, that is set to capture the anode business in the lithium battery sector. As well as develop many new applications with a very high quality, purified graphite as well as our graphene technologies. Our goal is to become the largest and best graphite supplier in the world.
Harry Norman: On June 4th, Focus signed a letter of intent to earn up to a 60% stake in the Canindé graphite deposit in Brazil. What was compelling about Canindé?
Gary Economo: The two key things that we looked at was the size, the vastness of this particular deposit. It’s a fairly high grade and goes for about 16 kilometres. The other thing was the geographical location. We want to establish a footprint in different parts of the globe. If we’re going to become a world leader in graphite production and supply, we will need to have production facilities in various parts of the world. So this is our first step in accomplishing that task.
Harry Norman: What can you tell us about Focus Graphite’s Kwyjibo and Labrador Trough properties, Gary?
Gary Economo: The Kwyjibo properties are Rare Earth copper deposits in Kwyjibo, Quebec. And the Labrador Trough properties is a very early stage IROC type of a deposit in Northern Quebec. Both of these projects will be spun out into new companies and/or optioned down to other mining juniors over the next little while. So the focus can just be totally focussed on the graphite business.
Harry Norman: Remember, Proactive Investors is not an investment advice service. Make sure you register at proactiveinvestors.com or proactiveinvestors.de for our weekly newsletter, which will keep you informed about our articles, events and interviews. Thank you for listening.