GreenLight Resources has two Graphite projects one a past producer, both are located in Atlantic Canada. Both projects have potential for large flake graphite, and the company is advancing its workprograms on these properties.

1. May 1st, 2012
GRAPHITE
SECTOR OVERVIEW
GRAPHITE –Black Gold of the 21st Century
What is graphite?
Why are companies suddenly exploring for it?
Why the rush?
These are some of the questions that investors have already found answers to
through the multitude of companies presently active in the sector. However, this
is not all what investors want to know. What has not been properly addressed is
what makes one deposit stand out above others, how to recognize a company
with the right assets and what to expect from exploration companies in the next
12 to 24 months.
Northern Graphite Corp. (TSX.V: NGC)
Price (04/30/2012) $2.22 In this report we review the fundamentals behind graphite supply and demand
Avg. Volume 90 Days 802,600 which are ultimately pointing towards supply shortage in the upcoming years.
52 week High/Low $3.42 - $0.71 Our model for future graphite supply and demand suggests that a minimum of 4
Shares Outstanding (M) 45.6 new mines and as many as 23 will be needed to go into production outside of
Market Cap ($M) 100.3
India and China between now and 2020 to satisfy the growth in demand.
Focus Metals Inc. (TSX.V: FMS)
Price (04/30/2012) $0.98
Avg. Volume 90 Days 619,802 CONCLUSION
52 week High/Low $1.33 - $0.52 This report reviews 36 companies and 98 properties which are presently being
Shares Outstanding (M) 90.4 explored for graphite across the globe. We separate these companies based on the
Market Cap ($M) 92.2 stage of their project into three risk groups. The Top Tier is made up of 3
Talga Gold Ltd. (ASX: TLG) companies with advanced projects and 3 with historical resources that could be
Price (04/30/2012) $0.51 quickly upgraded to 43-101 status. This group offers investors both short and
Avg. Volume 90 Days 261,032
long term growth.
52 week High/Low $0.52 - $0.12
Shares Outstanding (M) 46.4 M&I Inferred
Flagship M&I Inferred Recovery Purity
Market Cap ($M) 21.8 Company Location Grade Grade Flake Distribution
Project (Mt) (Mt) (%) (%C)
(%Cg) (%Cg)
Flinders Resources Ltd. (TSX.V: FDR)
Northern Graphite Corp. Bissett Creek ON, Canada 25.98 1.81 55.04 1.57 97.1 96.7 80% @ +32/+50/+80
Price (04/30/2012) $2.16 Focus Metals Inc. Lac Knife QC, Canada 4.94 15.76 3.00 15.58 85.9 N/A 85% @ +48/+65/+150/+200
Avg. Volume 90 Days 213,802 Talga Gold Ltd. Nunasvaara Sweden 3.6 23 N/A N/A 87% @ +80/+140
52 week High/Low $3.02 - $1.60 Flinders Resrouces Ltd. Woxna Sweden 6.93* 8.82* N/A 94* 68% @ +80/+200*
Shares Outstanding (M) 44.5 Uragold Bay Resources Inc. Asbury Mine QC, Canada 0.58* 10* 85* 90* 75% @ +80/+200*
Market Cap ($M) 96.2 Standard Graphite Corp. Mousseau East QC, Canada 1.11* 8.28* N/A N/A 60% @ +100*
Uragold Bay Resources (TSX.V: UBR)
Price (04/30/2012) $0.035
The Mid Tier includes 12 companies with established targets, most of them drill
Avg. Volume 90 Days 682,611 ready. We expect several large discoveries to come from this group that could
52 week High/Low $0.07 - $0.02 offer the largest return for investors in the graphite sector.
Shares Outstanding (M) 156.1
Market Cap ($M) 5.5 The Lower Tier comprises the remaining 18 companies forming the highest risk
Standard Graphite Corp. (TSX.V: SGH) investment at the moment in the sector.
Price (04/30/2012) $0.465
Avg. Volume 90 Days 298,554 Disclaimer: The opinions put forth in this report are those of the mining analyst. Great care should
52 week High/Low $1.08 - $0.12 be taken when making judgments based on this report. Please see the legal disclosures at the end of
Shares Outstanding (M) 22.4 the report for more information.
Market Cap ($M) 10.4
ANALYST: Kiril Mugerman SECTOR: Mining kmugerman@iagto.ca (514) 284 4175

2. Graphite Sector Overview May 1st, 2012
Table of Contents
CARBON –OIL, DIAMONDS, GRAPHITE AND MORE .......................................................... 3
PROPERTIES OF GRAPHITE ...................................................................................................... 4
TYPES OF GRAPHITE AND GRAPHITE DEPOSITS .............................................................. 4
GROUP I (FLAKE) – METAMORPHOSED SILICA & CARBONATE RICH SEDIMENTARY ROCKS ........................ 5
GROUP II (AMORPHOUS) – METAMORPHOSED COAL / CARBON RICH SEDIMENTS ........................................ 6
GROUP III (VEIN / FLAKE / AMORPHOUS) – HYDROTHERMAL / SKARN / MAGMATIC .................................... 6
LAB WORK – GRADE, SIZE AND METALLURGY ................................................................. 6
GRADE DETERMINATION .............................................................................................................................. 6
FLAKE SIZE DETERMINATION ....................................................................................................................... 7
PROCESSING AND BENEFICIATION................................................................................................................. 8
USES OF GRAPHITE ..................................................................................................................... 9
SYNTHETIC / NATURAL ................................................................................................................................. 9
SPHERICAL FLAKE GRAPHITE ..................................................................................................................... 10
EXPANDED FLAKE GRAPHITE ..................................................................................................................... 10
GRAPHITE IN BATTERIES & ENERGY STORAGE APPLICATIONS ................................................................... 11
GRAPHITE IN NUCLEAR APPLICATIONS ....................................................................................................... 11
GRAPHENE – THE MIRACLE MATERIAL ...................................................................................................... 12
GLOBAL RESERVES, PRODUCTION AND FUTURE TRENDS .......................................... 14
GRAPHITE PRICES ..................................................................................................................... 17
WHY THE RUSH FOR LARGE FLAKE - THE COST FACTOR .......................................... 19
GRAPHITE – FROM EXPLORATION TO MINING............................................................... 20
KEY CHARACTERISTICS OF GRAPHITE DEPOSITS ........................................................................................ 21
GRAPHITE EXPLORATION - CLASS OF 2012 ................................................................................................. 22
CONCLUSION ............................................................................................................................... 28
LEGAL DISCLOSURE ................................................................................................................. 29
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3. Graphite Sector Overview May 1st, 2012
CARBON –OIL, DIAMONDS, GRAPHITE AND MORE
Carbon forms a multitude of compounds both organic (e.g. oil, gas) and
inorganic (e.g. calcite, carbon dioxide) but additionally, takes on crystalline
forms composed purely of carbon (diamond, graphite and coal). These
minerals are among several carbon allotropes, or structural variations of the
element carbon. Other allotropes include graphene, fullerenes and other
structures which are part of a large area of research in the fields of
nanomaterials and high-technology. All allotropes form distinct shapes and
exhibit different physical properties (Figure 1).
Figure 1: Carbon allotropes
Some allotrope structures of carbon: a) diamond; b) individual layers are graphene / combined layers
form graphite; c) lonsdaleite; d-f) fullerenes; g) amorphous carbon / coal; h) carbon nanotube
Source: Wikipedia: Carbon
Graphite was already known to the prehistoric man, later used by the
Egyptians and it became well known in the 16th century after the discovery of
the Borrowdale mine in England. Uses of graphite since then evolved from
the early refractory uses to pencils, applications in the steel manufacturing,
the electric industry and today in the energy storage applications.
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4. Graphite Sector Overview May 1st, 2012
PROPERTIES OF GRAPHITE
Graphite is a non-metallic, opaque mineral of grey to black color with
metallic luster. It possesses properties of both metals and non-metals, which
make it ideal for many industrial applications. The mineral is flexible, soft
(1-2 on the Mohs scale), compressible and malleable. It has low frictional
resistance which gives it a greasy texture making it an efficient lubricant. It is
thermally and electrically conductive. Its melting point is above 3,550°C in a
non-oxidizing environment and the vaporization temperature is around
4500°C and mostly infusible. It is nontoxic, chemically inert and has high
resistance to corrosion. Graphite has low thermal expansion and shrinkage
with high thermal shock resistance. Graphite has low density (1.1-1.7 g/cm3)
relative to conductive metals such as aluminum and copper. Ultimately, all
its properties vary depending on the purity and size of the graphite crystal. 1
TYPES OF GRAPHITE AND GRAPHITE DEPOSITS
Overall, natural graphite takes on three distinct types (flake, vein and
amorphous) that differ in purity, crystal size and shape and deposit style. All
three kinds form platy hexagonal crystals giving them their flaky appearance.
Amorphous graphite does not exhibit this texture due to the small size of the
crystals and instead, appears as massive graphite. In addition, there is
engineered synthetic graphite manufactured by calcination and subsequent
graphitization of petroleum coke with purity reaching up to 99.99% carbon.
The general requirements for the majority of graphite deposits are simple –
high grade metamorphism (prolonged heat exposure under high pressure
conditions) of carbonaceous or graphitic country rocks. These metamorphic
conditions are typically found where large mountain building events took
place in Earth’s history (e.g. the metasedimentary unit of the Grenville
Orogeny), high grade metamorphic basement rocks (e.g. the Precambrian
shield) or at the contacts of the two. Figure 2 shows some of the major
graphite provinces in relation to these geological occurrences. A variation of
factors such as the composition of the country rock, tectonic setting,
temperature, pressure, oxygen and other conditions will determine the
deposit style and the type of graphite present. A minority of graphite deposits
will form under different conditions such as contact metamorphism (skarn
style), hydrothermal, magmatic or residual styles of mineralization. The main
styles of deposit and the types of graphite associated with them are described
below2.
1
Merchant Research & Consulting Ltd. Graphite market review 2011 and various graphite producers filings
2
Industrial Minerals & Rocks: commodities, markets and uses. 7th Edition, 2006
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5. Graphite Sector Overview May 1st, 2012
Figure 2: Global potential for graphite deposits
Arrows are pointing to major graphite occurrences around the world
Source: USGS, IAS
GROUP I (FLAKE) – METAMORPHOSED SILICA & CARBONATE RICH SEDIMENTARY
ROCKS
This group of deposits constitutes a large part of global graphite production.
In the case of the silica metamorphosed rocks, the deposits are typically
associated with quartz-mica schist, quartzite and gneiss. These types of
deposits show average grades of around 10%-12% Cg (Graphitic carbon),
but can go as low as 2% and as high as 60% Cg. The mineralized zones are
in the form of lenses or layers depending on the degree of structural
deformation and range from flat lying to sub vertical. Even though these
deposits are known for their large flakes, crystal size actually varies a lot,
reflecting the grain size of the parent sedimentary rock. Graphite is relatively
well disseminated in, less deformed, lower grade layers with widths over
50m in thickness while lenses tend to be smaller and higher grade. In length,
individual deposits can extend over several thousands of meters. The purity
of the graphite in these deposits tends to be between 85% and 98% carbon.
Examples of such deposits in Canada are Bissett Creek and Lac Knife.
In the case of the carbonate rich metamorphosed rocks, the deposits are
hosted within marbles often intertwined with quartzite and gneiss. The
average grade in marble hosted deposits ranges from 1% to 10% Cg. These
deposits tend to be structurally complex with large variations in grade over
short distances. These deposits can produce the entire range of flake sizes
with purities between 85% and 98% carbon. The best example of such
deposits is the Lac-des-Iles mine in Quebec, Canada.
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6. Graphite Sector Overview May 1st, 2012
GROUP II (AMORPHOUS) – METAMORPHOSED COAL / CARBON RICH SEDIMENTS
The amorphous graphite deposits are formed by metamorphism of coal or
carbon-rich sediments and constitute a large part of the global graphite
production. The product is microcrystalline graphite less than 70 microns
(200 Mesh) in size. Graphite is found in seams similar to coal deposits and is
often folded and faulted. The deposits typically range from 30% to over 90%
Cg with content of non-graphitic content varying significantly from one
deposit to another. Graphite from these deposits tends to be of lower purity
ranging from 60% to 90% carbon. Some of the best examples of such
deposits are found in China and Mexico.
GROUP III (VEIN / FLAKE / AMORPHOUS) – HYDROTHERMAL / SKARN / MAGMATIC
These deposits can be associated both with metamorphosed calcareous
sedimentary and with non-calcareous host rocks. The styles of mineralization
are uncommon, poorly understood and additionally, highly localized. The
best example is the high purity Sri Lanka deposits that run at over 90% Cg
with a purity of over 98% carbon. Depending on the host rock and the heat
source, these deposits can produce both amorphous graphite and flake
graphite (Woxna deposit, Sweden) with variable grades and purities. Overall,
these types of deposits have high variability in flake size, purity and resource
size.
LAB WORK – GRADE, SIZE AND METALLURGY
Graphite exploration companies often quote historical graphite grades, visual
grades and flake size. Unfortunately, this only works as a very rough
indication at best for both grade and flake size. We discuss below various
analytical methods presently accepted, what they are used for, what results to
expect and how to interpret them.
GRADE DETERMINATION
To determine the grade in either a surface or drilling sample, the most
accurate method used today is the LECO test which uses nitric acid digestion
versus in contrast to older methods like the LOI, Double-LOI and
Thermogravimetry which use heating and burning of the sample at different
temperatures under various atmospheric conditions. To illustrate, the Bissett
Creek deposit shows a 30% to 40% reduction in graphitic carbon content
when analyzed by LECO versus Double-LOI test.
As for visual estimations of grade and flake size, these can be highly
subjective estimates. In core, graphite tends to smear easily making it look
more graphitic than it actually is.
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7. Graphite Sector Overview May 1st, 2012
FLAKE SIZE DETERMINATION
The next step in identifying the economics of the deposit is to determine the
flake size distribution. This is done in several steps starting with a
petrographic thin-section study and a microprobe analysis. This gives an
accurate indication of flake sizes in the sample, but in no way does this
indicate whether these flakes would be easily liberated, concentrated and
whether their size would be conserved. In many cases, the processing and
beneficiation procedure will break down some of the larger flakes and create
finer graphite particles. This study does provide an initial indication to the
initial grinding needed to liberate the flakes using floatation.
The flake sizes to be used in determining the economics of the deposit should
come from analyzing fully processed samples by either wet or dry screening,
with the final measurements done under a microscope.
Figure 3: (A) Thin section microprobe analysis (~ 150 Mesh)
(B) Processed dry (+12 Mesh) flake graphite
A B
Source: (A) Zenyatta Ventures and (B) Northern Graphite fillings
The actual flake sizes are reported in either microns or mesh sizes and are
usually distributed between several sizes indicating what percentage of the
recovered graphite flakes fall into large, medium and fine categories. Several
versions of the categories exist with one of the more common ones presented
in Figure 4. The “+” and the “–” before the mesh size are used to describe a
range, with “+” indicating that particles larger than that specific size are
retained in a sieve while the “–” indicates that particles finer than that
specific size pass through the sieve. For example, “–48 +80” means that the
majority of the flakes are retained by the 80 mesh sieve but pass through the
48 mesh sieve.
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8. Graphite Sector Overview May 1st, 2012
Figure 4: Mesh Sizes & Graphite Classifications
US Sieve Mesh Microns Millimeters
Graphite Classification Common Material
# Size (µm) (mm)
4 4 4760 4.760
LARGER FLAKES
+48 MESH 8 8 2380 2.380
EXTRA LARGE 16 14 1190 1.190 Typical ground coffee
FLAKE 25 24 707 0.707 Beach Sand
30 28 595 0.595 Table salt
50 48 297 0.297 Sugar
-48 TO +80 MESH
60 60 250 0.250 Fine Sand / Human hair
LARGE FLAKE
70 65 210 0.210
-80 TO +100 MESH 80 80 177 0.177
MEDIUM FLAKE 100 100 149 0.149
120 115 125 0.125
FINER FLAKES
-100 TO +200 MESH 140 150 105 0.105
FINE FLAKE 170 170 88 0.088
200 200 74 0.074 Portland Cement
230 250 63 0.063
325 325 44 0.044 Silt
-200 MESH
400 400 37 0.037 Plant Pollen
AMORPHOUS
1200 1200 12 0.012 Red Blood Cell
4800 4800 2 0.002 Cigarette Smoke
Source: AGM Container Controls Inc.
PROCESSING AND BENEFICIATION
The recovery of flake graphite is generally achieved through flotation and
screening after primary crushing and grinding. Grinding size is project
specific and requires multiple optimization test runs to achieve the ideal
recovery and flake sizes. The main additive used in froth flotation to assist
graphite separation from gangue minerals is pine oil. The flotation process is
repeated several times in order to clean the graphite concentrate. Additional
upgrading of the carbon grade can be achieved through thermal treatment or
acid leaching.
The concentrate is analyzed for any undesirable oxides or trace metals, for
flake size distribution, humidity level and for final carbon grade – key
parameters that determine the selling price. That concentrate can then be
submitted to end-users for product evaluation.
The main problem expected at the beneficiation stage is complications with
overall recovery and of the larger graphite flakes. Recovery of the larger
graphite flakes might require significant finer grinding that will eventually
destroy the larger flakes and reduce the graphite selling price. Recoveries are
expected to exceed 90% in most cases but ore bodies flooded with silica or
which are significantly oxidized might show much lower recoveries. A
potential solution could be acid upgrading or acid liberation, but this is cost
intensive and will likely make a project uneconomical.
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9. Graphite Sector Overview May 1st, 2012
USES OF GRAPHITE
The uses of graphite, both existing and up and coming, have been
extensively presented by the exploration companies and analysts, discussed
by newsletter writers and graphite related websites. Graphite has been
referred to as the material used in every industry yet in small enough
quantities that no one talks about it. The major consumers of graphite are the
steel and refractory industries at over 40% of global production followed by
lubricants and expanded graphite applications and carbon products. The
biggest growth is currently in the energy applications. Graphite substitution
is not considered a major issue especially in the traditional refractory,
lubricant and steel industries. In the more emerging uses, graphite could
eventually be engineered out later in the future either due to high costs or due
to the emergence of a superior composite material.
Below is a short summary of some of these uses divided by synthetic, natural
or processed graphite together with a quick review of graphene and its
potential uses.
SYNTHETIC / NATURAL
There is a certain overlap in uses between natural and synthetic graphite that
is controlled by price and purity. Synthetic graphite, less conductive than the
natural counterpart, is significantly more expensive. It can be engineered to
the exact required specifications through one of its various forms, the main
kinds being:
Primary – 99.9% purity synthetic graphite is made in electric
furnaces from calcined petroleum coke and coal tar pitch. Main
usage is in electrodes and carbon brushes.
Secondary – powder or scrap synthetic graphite is produced from
heating calcined petroleum pitch. Main usage is in refractories.
Fibrous – produced from organic materials such as rayon, tar pitch
and other synthetic organic polymer resins. Main usage is in
insulation and as a reinforcement agent in polymer composites.
Alternatively, natural graphite can be upgraded to the same specification
through intensive thermal and chemical upgrading. China introduced low
cost chemical purification methods for fine graphite in the ‘90s but these
methods are not economical in Western countries. Since then, processing and
purification has been improved and projects with high purity large flake
graphite that require less purification have emerged. Natural graphite has
another advantage in that it can be processed into other forms such as
spherical and expanded graphite. Each of these forms changes graphite
properties and makes it more adaptable to specific industry requirements.
With these advancements, the overlap between synthetic and natural graphite
applications is expected to grow.
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10. Graphite Sector Overview May 1st, 2012
SPHERICAL FLAKE GRAPHITE
Spherical flake graphite (SFG) is produced from milling flake graphite into
spherical shapes. Due to the strong anisotropic nature of graphite crystal, i.e.
its properties change from one plane to another, the process is needed for
applications where properties of the crystal flat plane (basal) are favored over
those of the crystal edges or vice versa (Figure 5). This is particularly
important for energy storage applications like Li-Ion batteries where graphite
is used as the anode material. The SFG can undergo additional surface
coating which stabilizes the material and enhances its performance. SFG sells
at a premium when compared to natural flakes with prices starting at $5000/t
for non-coated and increasing significantly for coated spherical graphite.
Production methods of SFG are well established and can be adopted by
mining operations to increase product value. The process is destructive in
terms of flake size as 30% to 70% can be lost to low value small size
fragments. Loss ratio is project specific.
Figure 5: Spherical flake graphite
Source: Angew. Chem. Int. Ed. 2003, 42, 4203-4206
EXPANDED FLAKE GRAPHITE
Expanded graphite or exfoliated graphite is produced by a chemical
treatment that forces the graphene layers in graphite to separate and therefore
expand in volume in an accordion-like fashion. Similarly to spherical
graphite, this is done to take advantage of one graphite crystal plane over the
other. In the case of expanded graphite, it often undergoes rolling to form
sheets or other mechanical processes to prepare the graphite for specific
applications.
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11. Graphite Sector Overview May 1st, 2012
Figure 6: Expanded flake graphite – theory and microscope view
Source: Asbury Carbons filings
GRAPHITE IN BATTERIES & ENERGY STORAGE APPLICATIONS
Fuel cells, Li-Ion and other kinds of batteries and photovoltaic solar cells
represent some of the largest growth areas for graphite. Presently, the
industry is still evolving in terms of materials and compositions being highly
variable. Therefore flake, synthetic and polymers of graphite and other
materials have been used to date. For example, our research indicates that the
amount of graphite used in the anode of Li-Ion batteries varies based on
cathode and anode chemical composition, energy and size requirements and
other factors. Based on that, a light vehicle battery could consume as much as
20x more graphite as it does lithium metal or it could be as little as 5-10x.
R&D work is presently underway by many manufacturers experimenting
with graphite-silicate polymers, various spherical graphite blends, purities
and other materials. We expect graphite parameters in the batteries and
energy storage industries to fluctuate significantly over the next 2-5 years as
standards are adopted, fuel cells developed and electric, hybrid and plug-in
vehicles grow in demand.
GRAPHITE IN NUCLEAR APPLICATIONS
From the earliest days of the nuclear power industry, graphite was one of the
main components in the traditional reactor where it was used as the
moderator in nuclear control rods. For this particular application, high purity
graphite is required and therefore the material of choice is predominantly
synthetic. On the other hand, generation IV nuclear reactors (e.g. pebble bed
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12. Graphite Sector Overview May 1st, 2012
reactor) are expected to be able to use both synthetic and natural graphite.
The fuel in the reactor is uranium dioxide particles coated by synthetic
graphite embedded in machined graphite spheres made of natural and
synthetic graphite. Exact ratios are hard to estimate as the only prototype is
still being developed in China. Industry estimates are that anywhere between
25% to 75% graphite is expected to be natural with the rest synthetic. This
can amount for as much as 200 tonnes of natural graphite for the
commissioning of the HTR-PM prototype in China and then an additional 40
to 70 tonnes to renew the fuel spheres. We believe it could become a high
volume application for natural graphite.
GRAPHENE – THE MIRACLE MATERIAL
An additional source of growth for graphite demand is the applications of
graphene, a one atom thick layer of carbon atoms arranged in a honeycomb
lattice that ultimately forms flakes of graphite when stacked together.
Produced in laboratories for the first time less than 10 years ago, the material
is a hot topic of research in the scientific community and in the R&D labs of
high tech companies. Graphene has a unique set of properties that show
potential to be used in a wide range of applications such as transistors, high
sensitivity sensors, transparent conductive films for touch screen displays,
more efficient solar cells and electrodes in energy storage devices. IBM has
already fabricated a simple graphene based integrated circuit and Samsung
has demonstrated a prototype flexible display, supposedly graphene based.
One of the main obstacles to all these applications becoming a reality is the
lack of economically viable large scale graphene production. Several
methods exist to produce both natural graphene (from flake graphite) and
synthetic graphene, but all have certain limitations. Graphene production is
still in its infancy and therefore it is hard to speculate which manufacturing
method, whether natural or synthetic, will become the method of choice.
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13. Graphite Sector Overview May 1st, 2012
Figure 7: Graphite uses
Expanded Spherical
Usage Synthetic Amorphous Flake Vein
Graphite Graphite
Graphite fibers, nanotubes & nanoparticles - Insulation,
reinforcing agent in polymers for solar cells, electrical circuits,
military, wind energy, aerospace and automotive applications
Refractories - crucibles, carbon-magnesite bricks (liners in
electric arc furnaces and steel ladles), alumina-graphite casting
ware, gunning and ramming mixes for monolithic refractories,
stopper heads for steel ladles
Batteries & energy storage - batteries, fuel cells, photovoltaic
solar cells
Construction materials - fillers, infrared shielding, heat
conductivity, heating systems, etc…
Industrial paint pigment and coatings - high resistance to
weathering and inertness
Lubricants - used in forging, thread anti-seize agent, gear
lubricant in mining equipment, drilling mud additives
Electrical components, powder metallurgy, plastic and resin
additives
Carbon brushes and bearings in motors & generators
Electrodes for electric arc furnaces
Graphite grinding wheels - mirror grinding and polishing
Friction materials - brake linings, pads
Nuclear reactors
Foundry mold facings
Pencils
Rubber additives
Steel making - carbon raiser additives
Catalysts
Graphite foil, heat sinks, gaskets, seals
Flame retardants additives
Graphene
– Major source; – minor source of graphite for that particular use
Source: SGL Group, Superior Graphite, Asbury carbons, Industrial Minerals and other graphite producers
public filings, IAS
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14. Graphite Sector Overview May 1st, 2012
GLOBAL RESERVES, PRODUCTION AND FUTURE TRENDS
Current global reserves are estimated at 76Mt of graphite. China holds over
70% followed by India and Mexico at 14% and 4% respectively (Figure 8).
As exploration picks up over the next several years, a significant increase in
world reserves is expected.
Figure 8: Global Reserves - 2011
1%
1% China
4% 8% India
Mexico
Madagascar
14% Brazil
Other Countries
72%
Source: USGS, IAS
Current production of natural graphite comes predominantly from China
(70%) and India (12%). The remaining production is distributed between
Brazil, North Korea, Canada, Sri Lanka, Mexico and several countries in
Europe and Africa. Similar to many other metals, China has dominated in
graphite production since the late ‘90s when the country flooded the market
with cheap flake and amorphous graphite.
Going forward, China still holds the largest reserves and it should be in
position to scale up their production. With the introduction of a 20% export
duty, a 17% VAT, new regulatory measures and the consolidation of existing
graphite mines, China has clearly indicated that it is trying to preserve their
graphite resources. These measures created supply restrictions at a time when
demand was growing, causing the price increase seen over the last 24-36
months. Besides China, Asia has additional major producers in India, North
Korea and Sri Lanka that can increase production organically.
In North America, Canada has the largest potential in adding supply. It
already has one major producer and several existing deposits close to
infrastructure that could be taken to production in the next 2-3 years. The
United States has not produced graphite in over 20 years but has included
graphite in the critical resources list in 2010. It has one active exploration
project in Alaska. Mexico has large reserves, the technical expertise and the
infrastructure to significantly increase its amorphous graphite production.
In South America, Brazil is the major source of graphite production with
large enough reserves and infrastructure to allow production growth.
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15. Graphite Sector Overview May 1st, 2012
Europe has been commercially producing amorphous, flake and vein type
graphite for over 500 years and is in position to increase its production if
graphite prices remain at current levels. There are multiple active or recently
operational mines throughout Europe including Norway, Ukraine, Austria,
Germany, Romania, Czech Republic, Sweden and Turkey. Past producing
mines are already in the process of being reopened and exploration activity
has picked up. We see strong production growth coming from Europe in light
of higher prices and supply risks.
Australia has been a graphite producer in the past but its main large flake
mine was shut down in 1993 due to declining prices. Since then, exploration
for graphite has restarted and the mine is being reactivated. Australia has all
the ingredients to become a large flake producer over the next few years.
Africa is currently a small graphite producer with Madagascar and
Zimbabwe the two main producing countries. Previously a large producer,
many mines also closed due to declining graphite prices. All African graphite
deposits are plagued with poor infrastructure, high energy costs and high-risk
geopolitical jurisdictions. African graphite is world renowned for its large
and high purity flake that command high prices in today’s markets. There are
many deposits identified in African countries such as Mozambique, South
Africa, Uganda, Angola, Tanzania, Ethiopia and Namibia with several
exploration and production companies already busy acquiring the properties.
Africa has the potential to increase its production, however with the high risk
associated with operating on the continent, it would take the right
combination of deposit, location and company to start production of an
industrial metal that is yet to show its true face.
Figure 9: Production of Natural Graphite
Country Production (t) 1.2
Brazil 76,000 Total India China
Canada 25,000 1.0
China 800,000
.8
Graphite (Mt)
India 140,000
North Korea 30,000
.6
Madagascar 5,000
Mexico 7,000
.4
Norway 2,000
Romania 20,000 .2
Sri Lanka 8,000
Ukraine 6,000 .0
Other Countries 185,000
Total for 2010 1,125,000
Source: USGS, IAS
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16. Graphite Sector Overview May 1st, 2012
Looking at the period starting from 1994 to 2010 (Figure 9), the production
of natural graphite maintained a stable demand all the way until 1999 when
demand started growing at an overall annual rate of 4% to 6%. This growth
is attributed to both traditional uses of graphite coming from the
development of BRIC countries as well as from advances in the high tech
uses of graphite.
Assuming there was no major excess in supply in the mentioned period, we
use linear regression to estimate our base case growth in graphite demand at
approximately 2.5%. We then consider two growth scenarios, one at 4% and
the other at 6% (Figure 10). The 4% case assumes that amorphous and vein
graphite grow at a stable 2.5% annual rate (same as base case) and flake
graphite grows at an increasing annual rate from 4% to 8%. In this case, the
proportion of flake graphite to total demand grows from an initial 34% to
40%. The 6% growth case assumes the demand for all types of graphite
increases equally.
Based on these growth parameters, we estimate the number of additional
mines that will need to go into production to satisfy the global demand from
2012 to 2020. We take into account a conservative estimate for mine
depletion, organic growth and new mines in India and North Korea and
consider two cases for China: one at 1% production growth and the other at
2% growth. We assume that new mines will predominantly open in Canada,
Europe, Brazil, Australia, Africa and Mexico with an annual production
ranging between 15-20Ktpy.
Figure 10: Summary of Supply & Demand Estimates
Additional Mines Required
Annual Demand
1% China 2% China
Growth
Growth Growth
2.5% Base Case 7 4
4% Growth Case 12 8
6% Growth Case 23* 23
*23 additional mines are not enough to meet the demand in that specific case
Source: IAS
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17. Graphite Sector Overview May 1st, 2012
Figure 11: Estimated Supply and Demand – 2011 to 2020
2.0
1.9 1% Production Growth in China
1.8
1.7
Graphite (Mt)
1.6
1.5
1.4
1.3
1.2
1.1
1.0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Supply Estimate (23 new mines*) Supply Estimate (12 new mines) Supply Estimate (7 new mines)
Demand @ 6% Demand @ 4% Demand Base Case
2.0
1.9 2% Production Growth in China
1.8
1.7
Graphite (Mt)
1.6
1.5
1.4
1.3
1.2
1.1
1.0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Supply Estimate (23 new mines) Supply Estimate (8 new mines) Supply Estimate (4 new mines)
Demand @ 6% Demand @ 4% Demand Base Case
*23 additional mines are not enough to meet the demand in that specific case
Source: IAS
GRAPHITE PRICES
The recent increase in graphite prices is undoubtedly the main cause for the
increased interest in this industry today, however ironically it is this metric
that has the least amount of data available. Graphite prices, just like most
industrial metals, are negotiated directly between the buyer and the seller
based on a common posted price. The main data available today is supplied
by Indusrial Minerals Magazine, the source of most graphite specific
research in the industry (Figure 12). The main parameters used in pricing
graphite are flake size and purity along with other factors such as ash content
and composition, humidity and sulfur content determining the final price.
The variation in these parameters creates a price range for a specific flake
size and purity as seen in Figure 12. The benchmark purity in the industry is
94-97% C for natural graphite. Increase in flake size at a constant purity adds
a gradual premium to the product (Figure 13) while a decrease in purity at
the same flake size causes a significant decrease in price (Figure 14). Prices
for upgraded purities or modified products such as spherical or expanded
graphite are not commonly quoted but are known to go as high as $20,000/t.
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18. Graphite Sector Overview May 1st, 2012
Figure 12: Graphite Price 2000-2011: Large Flake +80, 94-97% C
Source: Northern Graphite, Industrial Minerals Magazine
Figure 13: Average Graphite Price 2010-2012: Variation in flake size
$3,000
Large Flake +80 94-97%C
Medium Flake +100 94-97%C
$2,500 Amorphous 80-85%C
$2,000
$1,500
$1,000
$500
$0
Source: Industrial Minerals Magazine, IAS
Figure 14: Average Graphite Price 2010-2012: Variation in purity
$2,500
$2,000
$1,500
$1,000
Medium Flake +100-80 94-97%C
$500
Medium Flake +100-80 90%C
Medium Flake +100-80 85-87%C
$0
Source: Industrial Minerals Magazine, IAS
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19. Graphite Sector Overview May 1st, 2012
Looking at the last 20 years, graphite prices sustained a low at below $1000/t
from the early 90’s to 2005 caused by the low cost Chinese graphite
production. Subsequently, new demand from the green tech sector, export
restrictions, stricter environmental regulations, mine depletion and rising
energy and transportation costs have all contributed to a rebound of graphite
prices in the recent years. Looking forward, and not withstanding significant
global events, we estimate future large flake and high purity graphite prices
based on the rebound level seen in the last 2 years together with our demand
growth base case model (Figure 15).
Figure 15: Average Graphite Prices 2010-2012: Variation in purity
1.6 2,900
1% Production Growth in China
1.5 2,800
Graphite Price ($/t)
Graphite (Mt)
1.4 2,700
1.3 2,600
1.2 2,500
1.1 2,400
1.0 2,300
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Supply Estimate (4 new mines) Demand Base Case Avg. Large Flake +80, 94-97%C Estimated Price
Source: IAS
WHY THE RUSH FOR LARGE FLAKE - THE COST FACTOR
It is now fairly clear what potential graphite holds if all these new
technologies are adopted over the next 10 years. The main question
remaining is if the hunt for large flake deposits is justified or not? Do you
really need large flake or can the cheaper fine and amorphous material do the
same job?
Our discussions with manufacturers of graphite end products have
highlighted one common theme – all flakes can be worked with, but the
purification cost does not always allow it. As a rule of thumb, the larger the
flake, the higher the purity of the concentrate and therefore less treatment is
required to bring the graphite to above 97% C. This reduces production costs
for the miner who can then sell it at prices normally achieved through
chemical and thermal upgrading. The Chinese cost structure and lax
environmental regulations have allowed this purification at low cost in the
past, suppressing prices throughout the ‘90s. Recent changes in these
regulations and increases in energy and transportation costs have driven the
prices up to levels where high purity and thus larger flake deposits outside of
China can once more be economical. Prices for the lower quality amorphous
and flake graphite destined to traditional uses that do not require major
chemical and thermal upgrading, are significantly lower; production margins
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20. Graphite Sector Overview May 1st, 2012
are therefore less economical for projects outside of China. In addition to
that, indications are that production of SFG, which commands premium
prices, is more cost efficient when manufactured from larger flake as loss is
minimized.
Overall, there are mixed indications as to how much large and high purity
flake graphite China can produce at low cost going forward. Deposits with
larger flake production are therefore better positioned to weather the storm if
China does increase production significantly forcing prices down again.
GRAPHITE – FROM EXPLORATION TO MINING
Graphite is a common mineral that is found in many geological environments
but is mostly found in trace quantities or as an alteration mineral. Based on
the type of graphite explored, for a deposit to be economical it needs to have
a combination of characteristics. The exploration part is relatively quick and
straight forward. Initial discoveries are done by prospecting for graphite
showings in outcrops. This is then followed up by a geophysical conductivity
survey, also known as electromagnetic survey (EM), which is used to better
delineate the mineralized zones. The EM survey is very efficient due to
graphite’s conductivity. Nonetheless, due to the structural complexity of
many graphite deposits, anomalies may result from interfering conductive
effects and therefore need to be accepted only as an indication of potential
mineralization and not the size of the deposit. Furthermore, the lower grade
disseminated deposits might not respond well to an EM survey and therefore
could be identified primarily by prospecting. These potential targets would
then be followed up by surface mapping and sometimes trenching used to
understand the structural complexity of the ore body and to plan the drilling
exploration program. This concludes the target generation stage.
The next stage is the resource identification and definition portion which
includes drilling and metallurgical studies. Drilling programs are relatively
shallow as most deposits tend to be open pit operations. Some high grade
amorphous and vein graphite mines are underground but still relatively
shallow. Based on these parameters and depending on the structural
complexity of the deposit, around 10,000 to 15,000m of drilling are required
to properly delineate an ore body. Metallurgical sampling should begin
shortly after initial drilling as this will determine the economics of the
project in terms of recovery, separation, purity and flake distribution. Ideally,
a resource estimate should be produced once initial metallurgical data is
available. Without metallurgical data, even a large deposit might prove to be
uneconomical as recoveries, purity and flake distribution might prove to be
non favorable. The cost of these two stages will vary depending on the
existing infrastructure, jurisdiction and the remoteness of the project.
Overall, these costs could range from $2M to $5M and depending on the
pace of exploration, could be completed as quickly as 12-24 months.
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21. Graphite Sector Overview May 1st, 2012
Not all graphite discoveries follow that order. Some ore bodies are identified
through exploration for massive sulphides, gold and other metals. In that
case, the timeline and the cost structure changes. An example of that is the
Green Giant deposit of Energizer Resources where the company used to
explore for vanadium and the Albany deposit by Zenyatta Ventures that was
first explored for massive sulphides.
Pre-feasibility, feasibility, permitting and development are project specific in
terms of time but as a rough estimate, total cost is expected to be between
$100 and $200M.
KEY CHARACTERISTICS OF GRAPHITE DEPOSITS
For a graphite deposit to be economical, we estimate that the ore body needs
to contain over 500,000 tonnes of in situ graphite to support over 20 years of
mine life at a production rate around 15 to 20Ktpy. Most flake deposits are
relatively low grade and primarily open pittable operations. Hydrothermal,
magmatic, vein and amorphous deposits can be both open pittable and
underground. The economics of every deposit depend on five key
parameters:
Ore body geometry (shallow, flat dipping, etc.)
Recoveries (flake liberation from simple crushing and grinding)
Grade & Size
Purity of graphite (without chemical or thermal upgrade)
Flake size distribution
Out of these 5 parameters, grade & size act as a buffer between purity and
flake distribution and ore body geometry and recoveries (Figure 16). The two
main factors controlling the price of graphite are purity and flake size
distribution which are related. As mentioned earlier, without using any
thermal or acid beneficiation, as flake size increases so does the purity and
therefore the price of graphite. On the other hand, main operating costs of the
deposit will depend on the geometry of the deposit and recoveries.
Considering that most graphite deposits will be structurally complex, the
geometry of the ore body will determine the amount of waste rock processed
while mining. To summarize, the steeper the deposit or the lower the
recoveries, the higher the purity and larger flake size are required to make a
project economical.
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22. Graphite Sector Overview May 1st, 2012
Figure 16: Key parameters for a graphite deposit
Grade & Size
Recoveries & Purity &
Ore Body Geometry Flake Distribution
Source: IAS
GRAPHITE EXPLORATION - CLASS OF 2012
The last time a large number of graphite projects were being explored or
developed was during the ‘90s. Since then, the best deposits were either
acquired by large graphite producers (e.g. IMERYS, GK Graphite) or by
state owned companies, the smaller deposits abandoned and several mines
mothballed. The class of 2012 will face a similar destiny as we do not expect
the majority of the junior exploration companies to take their deposits into
production. Only the best deposits, if discovered in the beginning of the
demand growth cycle, have the potential to get developed by the actual
exploration company. The key to development will be vertical integration
through graphite upgrading although it will require a competent management
team with the industry knowledge and experience. Other projects will get
acquired by the likes of IMERYS and GK Graphite with the potential of
more major producers such as Superior Graphite and Asbury Carbons
returning to mining and exploration. Finally, a push by companies from
China and India is expected to take place as both nations look to secure
supply outside of their own borders.
As of end of April 2012, we identify 36 public exploration companies that
are targeting graphite. The number of projects exploded as of November
2011 when project acquisitions from private owners grew to over 12 projects
per month (Figure 17). Now, this amounts for a total of 98 projects
distributed across North and South America, Africa, Europe and Australia
(Figure 18).
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23. Graphite Sector Overview May 1st, 2012
Figure 17: Global growth in number of graphite projects
120
Number of Projects
100
80
60
40
20
0
Pre Nov Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12
2011
Source: Graphite focused exploration companies public filings and IAS
With such a large number of projects being added, it is inevitable that a large
portion of them will end up as low quality targets, never reaching
development or even resource definition drilling. We therefore use all the
key characteristics presented in this report to create categories into which we
classify all the 98 projects (Figure 19). Based on this division, we isolate 6
companies with 7 projects that we focus on as our Top Tier. This is followed
by 12 companies in the Mid Tier and 18 companies in the Lower Tier.
Companies with projects across several categories are ranked based on their
most advanced project. The 6 categories are defined as:
1. Target generation – Projects that are undergoing historic data
compilation with ongoing or historical geophysical work. Some of
these projects have been staked strategically close to existing or past
producing mines and require reconnaissance field work. Other
projects have been staked based on showings of graphite during
exploration for other metals.
2. Early stage exploration – Projects with active field work (trenching
or drilling), with historical drilling targeting graphite or with past
producing assets from 20 to 60 years ago. Assay results and early
metallurgical data is sometimes available.
3. Resource definition & historical resources – Active drilling
delineating a resource or projects with historical resources that
require confirmation drilling.
4. Advanced exploration – Active drilling to increase and / or upgrade
the resource with ongoing metallurgical test work. Projects with
recent history of commercial production including historical
resources, metallurgical work and historical infrastructure.
5. PFS & BFS – Projects with ongoing pre-feasibility or bankable
feasibility studies.
6. Development – Development of the mine and the processing
facilities.
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24. Graphite Sector Overview May 1st, 2012
Figure 18: Geographic distribution of graphite exploration projects
Total North South
Stage Companies Africa Europe Australia
Projects America America
1 27 69 50 0 1 0 19
2 14 22 12 1 2 5 2
3 2 2 2 0 0 0 0
4 3 4 1 0 0 3 0
5 1 1 1 0 0 0 0
6 0 0 0 0 0 0 0
Companies Tracked: 36 Projects Tracked: 98
Source: Company Filings
Figure 19: Stages of exploration by company – as of May 1st, 2012
Top Tier
6 companies
Mid Tier
12 companies
Lower Tier
18 companies
Note: Several companies appear in multiple categories as they have several projects in different stages.
Source: IAS
In addition to these companies, we are tracking several private companies
that are intending to go public in the upcoming months with projects that
would fit the top and mid tier categories. For the projects in the lower tier,
we expect some to reach the mid tier status by the end of the year.
A performance analysis of the three individual groups (Figure 20-22)
highlights that investor interest in early stage graphite projects reached a
saturation point in April. The Mid Tier companies representing the fastest
growth potential with their drill ready projects grew steadily in the last 6
months while the Top Tier companies peaked in early April.
The Top Tier companies have the highest expectations as they need to
produce quality results and make the right moves to bring their projects
closer to production in order to benefit from the first mover advantage and
the high graphite prices. The Mid Tier group will supply the next crop of
high quality projects offering the largest growth potential in the short term.
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25. Graphite Sector Overview May 1st, 2012
The Lower Tier has the growth potential investors are looking for but due to
financing risks and lower project quality will see a large amount of projects
abandoned over the next 12-24 months.
Figure 20: 6 Month performance of Top Tier companies
Source: Goolge Finance
Figure 21: 6 Month performance of Mid Tier companies
Source: Goolge Finance
Figure 22: 6 Month performance of Lower Tier companies
Source: Goolge Finance
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26. Graphite Sector Overview May 1st, 2012
Figure 23: Comparison of Graphite Invested Exploration Companies
160 SYR.AX Top Tier
140 Mid Tier
Lower Tier
120
Market Cap ($M)
NGC
100 FDR
FMS
80
60
EGZ
40 AXE.AX LRA
TLG.AX GPH ZEN
20 SGH
SRK
LMR
UBR
Source: Bloomberg, IAS
Figure 24: Comparison of Top Tier Graphite Exploration Companies
M&I Inferred
Mkt Cap Flagship M&I Inferred Recovery Purity
Company Ticker Projects Jurisdiction Grade Grade Flake Distribution
(M$) Project (Mt) (Mt) (%) (%C)
(%Cg) (%Cg)
Northern Graphite Corp. NGC 100 1 Bissett Creek Ontario, Canada 25.98 1.81 55.04 1.57 97.1 96.7 80% @ +32/+50/+80
Focus Metals Inc. FMS 84 1 Lac Knife Quebec, Canada 4.94 15.76 3.00 15.58 85.9 N/A 85% @ +48/+65/+150/+200
Talga Gold Ltd. TLG.AX 19 7 Nunasvaara Sweden 3.6 23 N/A N/A 87% @ +80/+140
Flinders Resrouces Ltd. FDR 95 1 Woxna Sweden 6.93* 8.82* N/A 94* 68% @ +80/+200*
Uragold Bay Resources Inc. UBR 5 2 Asbury Mine Quebec, Canada 0.58* 10* 85* 90* 75% @ +80/+200*
Standard Graphite Corp. SGH 11 13 Mousseau East QC & ON, Canada 1.11* 8.28* N/A N/A 60% @ +100*
*Historical data. Non 43-101 compliant.
Source: Bloomberg, Company filings, IAS,
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27. Graphite Sector Overview May 1st, 2012
Figure 25: Mid and Lower Tier Graphite Exploration Companies
Mkt Cap
Company Ticker Tier Projects Jurisdiction
(M$)
Archer Exploration Ltd. AXE.AX Mid 31 9 Australia
Canada Rare Earths Inc. CJC Mid 3 5 Quebec, Canada
Energizer Resources Inc. EGZ Mid 45 1 Madagascar
Graphite One Resources Inc. GPH Mid 21 1 Alaska, USA
Greenlight Resources Inc. GR Mid 2 2 NS & NB, Canada
Lara Exploration Ltd. LRA Mid 29 1 Brazil
Lomiko Metals Inc. LMR Mid 7 1 Quebec, Canada
Soldi Ventures Inc. SOV Mid 3 2 Quebec, Canada
Strike Graphite Corp. SRK Mid 14 3 Sask. & QC, Canada
Syrah Resources Limited SYR.AX Mid 162 2 Mozambique, Tanzania
Velocity Minerals Ltd. VLC Mid 6 3 Quebec, Canada
Zenyatta Ventures Ltd. ZEN Mid 22 1 Ontario, Canada
Amseco Exploration Ltd. AEL Lower 3 7 Quebec, Canada
Anglo Swiss Resources Inc. ASW Lower 9 1 BC, Canada
Atocha Resources Inc. ATT Lower 2 2 Quebec, Canada
Big North Graphite Corp. NRT Lower 2 2 QC & ON, Canada
Bravura Ventures Corp. BVQ Lower 1 3 Quebec, Canada
Canadian Mining Company Inc. CNG Lower 2 1 Mexico
Caribou King Resources Ltd. CKR Lower 2 3 Ontario, Canada
Cavan Ventures Inc. CVN Lower 2 2 QC & Sask, Canada
First Graphite Corp. FGR Lower 5 3 QC, BC & Sask, Canada
Galaxy Capital Corp. GXY Lower 2 2 Quebec, Canada
Geomega Resources Inc. GMA Lower 12 1 Quebec, Canada
Kent Exploration Inc. KEX Lower 3 1 New Zealand
Lincoln Minerals Ltd. LML.AX Lower 25 1 South Australia
Logan Copper Inc. LC Lower 1 1 Quebec, Canada
Monax Mining Limited MOX.AX Lower 10 1 South Australia
Pinestar Gold Inc. PNS Lower 3 9 NSW, SA & W. Australia
Rare Earth Metals Inc. RA Lower 6 1 Ontario, Canada
Terra Firma Resources Inc. TFR Lower 2 1 Ontario, Canada
Source: Bloomberg, IAS
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28. Graphite Sector Overview May 1st, 2012
CONCLUSION
Growth in demand has triggered Chinese export regulations which in
turn have resulted in a price increase, forming ideal conditions for the
graphite sector and attracting many exploration companies across the globe
in a short period of time. Our analysis of the entire sector confirms the
supply shortage scenario highly speculated by the industry and suggests that
a minimum of 4 new mines and as many as 23 will be needed to go into
production outside of India and China between now and 2020 to cope with
the growth in demand.
We identify 36 companies, out of which 6 qualify for our Top Tier category.
These companies operate the most advanced projects that could be taken into
production in a short time frame. Companies in this group are likely to enjoy
the first-mover advantage and produce returns for investors in both the short
and the long term. In our Mid Tier, we identify 22 projects operated by 12
Companies that have legitimate targets still requiring several exploration
campaigns to delineate the deposit. We expect several large discoveries to
come from this group that could ultimately provide the largest return for
investors in this sector. Our final group, the Lower Tier, represents the
highest risk category with many projects expected not to be taken even to the
initial drilling stages.
As the exploration season heats up, investors will need to look for the first
indications of which companies are wasting time and which are advancing
step by step in establishing the right deposit, the right management and most
importantly the right graphite to start production in the next 3 to 5 years.
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29. Graphite Sector Overview May 1st, 2012
LEGAL DISCLOSURE
Investment Recommendation Rating System
Top Pick: The stock represents our best investment ideas, the greatest potential value appreciation.
Strong Buy: The stock is expected to deliver a return exceeding 13% over the next 12 months.
Buy: The stock is expected to deliver a return between 9% and 13% over the next 12 months.
Hold: The stock is expected to deliver a return between 5% and 9% over the next 12 months.
Sell: The stock is expected to deliver a return lower than 5% over the next 12 months.
Speculative Buy: Stock bears significantly higher risk that typically cannot be valued by normal fundamental criteria.
Investment in the stock may result in material loss.
Distribution of Ratings, as of April 30, 2012
Coverage
Rating
Universe
Top Pick 2%
Strong Buy 21%
Buy 14%
Speculative Buy 21%
Hold 7%
Tender 5%
Not Rated 30%
Sell 0%
100%
General: The information and any statistical data contained herein were obtained from sources which we believe to be
reliable but are not guaranteed by us and may be incomplete. The opinions expressed are based upon our analysis and
interpretation of this information and are not to be constructed as a solicitation or offer to buy or sell the securities
mentioned herein. All opinions expressed herein are subject to change without notice.
Research analyst certification: The authoring research analyst(s) certify that the publication accurately reflects his/her
personal opinions and recommendations about the issuer company and that no part of his/her compensation was, is, or
will be directly or indirectly related to the specific recommendations or views as to the securities or the company.
Copyright: This report may not be reproduced in whole or in part, or further distributed or published or referred to in
any manner whatsoever, nor may the information, opinions or conclusions contained in it be referred to without in each
case the prior express written consent the institutional department of Industrial Alliance Securities.
Company related disclosures:
Issuer Company Ticker Applicable Disclosures
Northern Graphite Corp. TSX.V: NGC 7a, 8b
Disclosure Legend
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30. Graphite Sector Overview May 1st, 2012
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