Focus Metals (CVE:FMS)(OTCQX: FCSMF) said Monday that it has inked a licensing agreement with Hyrdo-Quebec's technology research institute, IREQ, allowing the junior explorer to develop a graphite purification facility and anode production facility for lithium-ion batteries.
The new, Focus-owned facility will transform first-production graphite sourced from the company's Lac Knife deposit in Quebec to battery-grade material.
Shares of the company rallied more than five percent Monday morning, to $1.02.
"This agreement represents a huge and significant milestone for us as we move through pre-development to production of our Lac Knife technology graphite deposit," said Focus CEO Gary Economo.
"Moreover, the marriage of Focus's Québec-based, world-class graphite deposit to the Québec-based global leader in processing technologies - especially in battery anode production- will leave Focus Metals well-positioned to secure its place as a quality supplier to the fast-growing lithium battery manufacturing sector."
Focus Metals is an emerging mid-tier junior graphite company and is the 100 percent-owner of the highest-grade technology graphite resource in the world, also known as Lac Knife in Fermont, Quebec.
With a grade of 16%, the company's CEO Gary Economo says it will be able to produce large and medium flake, battery-grade graphite at the lowest cost in the world, at just $350 per tonne.
In February, Focus raised another $10 million on top of the $20 million it raised last year, which it plans to use to cover exploratory drilling costs in 2012. Its Lac Knife project is currently in the midst of a preliminary economic assessment (PEA), with the report expected to be published in June.
The licensing agreement announced Monday consists of two parts, the first of which is related to Focus' development of a graphite purification process that brings Lac Knife's processed graphite to 99.95% carbon, for use in lithium battery applications.
The processing includes spherical shaping as well as thermal and chemical purification, the company said.
The second part of the deal provides for the production of anodes for lithium-ion batteries, with IREQ to provide technical support and to cooperate in future material and processing improvements.
The new purification and production facilities will be built in Québec, and will be owned and managed by Focus Metals.
The purification facility will be designed to produce 15,000 tons of spherical battery-grade flake graphite at peak by 2015, whereas the anode production facility will be designed to produce up to 5,000 tons of anodes.
The exact cost of the facilities and the financing required have yet to be determined, Focus said.
In exchange for the technology license, support and future commitments, IREQ will receive a licensing fee that will be paid in cash over a three-year period, representing less than 10 percent of the current working capital.
IREQ will also get a royalty fee based on a percentage of future sales, the parties said.
"This agreement reinforces our goal of becoming the lowest-cost technology graphite producer in the world," Economo said.
"To have an all-Québec technology agreement with a world leader in graphite anode development and patenting bodes well for our shareholders."
Economo also said that the battery-grade process will be incorporated into the Lac Knife PEA, due in June 2012.
The Lac Knife deposit contains 4.9 million tons of measured and indicated resource grading 16% carbon as graphite (Cgr) and 3.0 million tons of inferred resource grading 16% Cgr, the bulk of which is intended for use in technology applications.
IREQ is recognized globally as a technology source for renewable energy solutions, developing advanced materials for battery manufacturing. The institute, which partners with private firms, universities and government agencies in Quebec and abroad, holds more than 100 patent rights and 15 licenses for battery materials that are used by some of the world's largest battery manufacturers and materials suppliers.
"We believe that the high-grade graphite of the Lac Knife property, associated with our graphite purification and shaping technologies, will yield a quality product for Li-ion battery applications," said director of energy storage and conversion at IREQ, Karim Zaghib.
Hydro-Québec is Canada's largest electricity producer, owned solely by the Québec government. It invests $100 million per year in research.
Focus Metals, which also has direct ownership in graphene technologies and application development, listed 23 months ago, and in that time, its stock has risen some 1,000 percent.
The junior company holds a 40 percent interest in Grafoid Inc., a graphene investment, as well as research and development and patenting joint venture.