The Tech Revolution Has Driven Up Graphite, Lithium and TM Stocks

1. The Tech Revolution Has Driven Up Graphite, Lithium and TM Stocks

2. Graphite. Lithium. Technology Metals. What do these metals and minerals have in common? They are playing bigger and more critical roles in widely used big kid toys like smartphones, tablets and electric vehicles. Investors can’t stay on top of every hot commodity but Luisa Moreno, mining analyst with Euro Pacific Canada, offers some companies developing graphite, lithium and REE resources for the toys and technology of the future in this interview with The Mining Report.

3. • The Mining Report: What are the key advantages of vein or lump graphite deposits over flake deposits? Luisa Moreno: Two advantages of vein or lump graphite deposits would be the natural high- grade purity of the graphite in the ground, as well as the relatively low cost of production, most of which comes from Sri Lanka. Another important point is that it is usually sold at a premium price relative graphite. to natural flake • TMR: Are there any advantages flake deposits have over vein deposits? LM: I think an advantage is that they have more applications. The graphite market is much larger. Vein depoflake sits are quite rare and make up less than 1% of the market.

4. • TMR: Flake graphite deposits can be high grade too, can’t they? LM: Flake graphite deposits can be high grade but you won’t find deposits grading 90–99% in the ground. Flake deposits tend to run 2–3% graphite. Some deposits in Quebec have 16–20% grade. It seems that there’s a correlation between grade and the recovery of larger natural flake. For instance, Northern Graphite Corporation ($NGC:CA) (NGPHF) has a deposit grading about 2% graphite yet it has been able to recover more large flake relative to others with higher-grade deposits.

5. • TMR: Which one should an investor prefer? LM: To start, investors should look at these graphite companies just as they would look at any other mining company. They need to understand the feasibility of the project—the capital requirements, operating costs, etc. For industrial and critical materials it is also important to understand size of the market, the project time to market, the type of product it will produce and how much it could be sold for. We talked about flake versus lump graphite deposits, but within the flake type products there are the finer flake, the medium and the larger flake, and it is important to understanding how much of each a mine can produce, as they are sold at different prices. The shape of the flakes and other characteristics also influence the price and applications. In the case of lump graphite, the market is estimated to be ~5,000 tons (5 Kt) per year, but it’s relatively rare. If there is a company with a lump or vein graphite deposit that requires low capital and operating costs, has secured an offtake agreement and the project has strong economics, which could potentially be a good investment.

6. • TMR: Where’s that 5 Kt coming from now? LM: It’s coming mainly from Sri Lanka. AMG Advanced Metallurgical Group N.V. (AMVMF) is a major producer. It’s a German firm that owns a subsidiary called Graphit Kropfmühl, which owns a lump graphite mine in Sri Lanka. The asset produces about 3 Kt of the 5 Kt estimated world production. The rest comes from a private company owned by the Sri Lankan government. Elcora Resources Corp. ($ERA:CA) has also secured a lump graphite deposit in Sri Lanka, and expects to bring the project into production in a short period of time. It seems that the company is attracting great interest from end-users looking for additional supply of lump graphite.

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