Proactive Investor's  Instablog

Proactive Investor
Send Message
Proactiveinvestors is a leading multimedia news organization, investor portal and events management business with offices in New York, Sydney, Toronto and London. Proactiveinvestors operates five financial websites in four languages providing breaking news, comment and analysis on hundreds of... More
My company:
My blog:
  • Focus Graphite Unveils Positive PEA For "World-Class" Lac Knife Graphite Project 0 comments
    Oct 29, 2012 2:42 PM

    Focus Graphite (CVE:FMS)(OTCQX:FCSMF)(FRANKFURT:FKC) Monday unveiled what it called positive results for the preliminary economic assessment (PEA) on its flagship Lac Knife graphite project in Quebec.

    The PEA was prepared by Roscoe Postle Associates (RPA), in collaboration with Soutex and "demonstrates that the project has robust economics and excellent potential to become a profitable producer of graphite", Focus said in a statement.

    "This is a great day for the Canadian graphite industry, our shareholders and the province of Quebec," Focus Graphitepresident and CEO Gary Economo said.

    "Lac Knife is a world-class resource and the publication of our Preliminary Economic Assessment confirms Focus has the potential to become one of the highest-grade lowest-cost producers of graphite in the world.

    "We enter a new phase now, where we can expedite our financing, advance customer off-take agreements, and construction of our purification and anode facilities."

    The proposed life-of-mine production is seen at of 6.0 million tonnes of mill feed at a grade of 15.66% graphitic carbon, based on the initial mineral resource estimate disclosed in January.

    With a mine life of 20 years, the open pit operation is seen yielding 300,000 tonnes per year, with life-of-mine production of 928,000 tonnes of concentrate at 92% graphitic carbon on average, or approximately 46,600 tonnes of concentrate per year.

    Pre-tax net present value - at a 10% discount rate - is seen at $246 million with a 32% pre-tax internal rate of return and pre-tax payback period of 2.8 years.

    Initial capital cost is seen at $154 million, inclusive of $33 million and $24 million in working capital and contingency (25 per cent), respectively.

    Focus Graphite said that processing would take place through a sequence of crushing, grinding, flotation, magnetic separation, thickening and drying, producing a primary concentrate of graphite of various grades and flake sizes.

    Tailings will be directed through a sulfide flotation circuit in order to minimize the volume of acid-generating residues.

    Average graphite recovery of 91.3% is seen at the Lac Knife process plant. A thermal purification upgrade of approximately 40% of the primary concentrate, to 99.99% graphitic carbon, is expected by an existing producer with inherent purification losses of 15%.

    Focus Graphite's PEA also showed an undiscounted pre-tax cash flow of $926 million, $3.7 billion total net revenue and average unit operating cost of $68 per tonne, rising to $435 per tonne assuming thermal purification on a contract basis.

    Lac Knife itself is located in the Cote-Nord administrative region of Quebec. Fermont is the closest community and is located 27 km north-north east of the project. Road distance from Montreal to Lac Knife is approximately 1,300 km and by all-season highway 389, it is 500 km from Baie-Comeau to Fermont.

    The municipalities of Wabush and Labrador City, in Newfoundland and Labrador are located 30 km from Fermont, and Wabush is home to a commercial airport with regular flights to Sept-Iles, Quebec, and Montreal.

    At the property, graphite rich rocks have been identified from drilling undertaken in 1989 and more recently in 2010-2011 with 12 drill holes aimed at twinning the older holes with the objective of confirming the 1989 grade and lithology information.

    The mineralized zone extends approximately 650 metres in length and 120 metres in thickness. The company said there is potential for the delineation of additional mineral resources at greater depth and along strike to the south.

    A January 2012 resource estimate gave La Knife an indicated resource of 4.94 million tonnes grading 15.76% graphitic carbon and inferred resource of 3 million tonnes grading 15.58% graphitic carbon.

    Focus Graphite said that mining at Lac Knife will be carried out using conventional truck and loader open pit mining methods, with a life-of-mine strip ratio estimated at 1.12:1.

    Among the highlights of the production schedule, a short ramp-up to full production is seen with 270,000 tonnes produced in the first year and production of 300,000 tonnes per annum or 822 tonnes per day. Waste mining is seen averaging 335,000 tonnes per annum.

    In terms of processing and recovery, the selected process consists of crushing followed by a grinding and flotation separation circuit. The tailings generated by the concentration process passes through flotation cells to separate acid-generating tailings from clean non-acid tailings.

    The PEA is based on a concentrate average grade of 92% graphitic carbon and a recovery of 91.3% derived from testwork results conducted by SGS Canada.

    Although laboratory and locked cycle tests were performed with a slightly higher potentially mineable ore grade than estimated, no significant impact is expected on the anticipated recovery, the company said.

    The company has initiated contacts with several major graphite consuming groups in North America, Europe and Asia.

    Marketing efforts have been targeted to "high value end users", Focus said, requiring "superior quality product" in terms of product purity and flake size. Potential customers have already provided Focus with product quality requirements and projected annual demand.

    RPA has reviewed these expressions of interest and is satisfied that there are sufficient indications of demand to support the projected PEA production forecast.

    So far, Focus has identified the following major product opportunities: ultra high purity thermo processed battery grade product based on large flake, high purity concentrate, medium to fine flake graphite concentrate, -100+200 mesh, +90% graphitic carbon concentrate and fine flake concentrate, -200 mesh, +80% graphitic carbon concentrate.

    Focus Graphite also said it was presently in default because of its failure to file the PEA and supporting technical report under NI 43-101 and will continue to be in default until such time as it files the required report on the project.

    In compliance with guidelines, Focus issued today a default status report by way of present press release confirming the company's objective to file the PEA and technical report at the latest on October 31, 2012.

    The guidelines, among other things, require the company to issue bi-weekly default status reports by way of a news release so long as the PEA and technical report have not been filed.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Back To Proactive Investor's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers


More »

Latest Comments

Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.