Source: Maurice Jackson for Streetwise Reports 10/01/2018
With graphite an in-demand metal for lithium-ion batteries and other uses, Dan Weir, executive chairman of DNI Metals, in conversation with Maurice Jackson of Proven and Probable, discusses the supply and demand situation for graphite, his company’s recent settlement with Cougar Metals, and DNI’s production plans.
Maurice Jackson: Joining us for a conversation is Dan Weir, the executive chairman of DNI Metals, which has established itself to become one of the world’s leading graphite producers.
We have some important topics to address today for current and prospective shareholders regarding Cougar Metals and production. Before we discuss that, what is graphite, where is it used, what are the global supply and demand fundamentals, and what is the unique value proposition that DNI Metals presents to the market?
Dan Weir: Thanks for asking that question, Maurice. It is good to provide an update on our view of the graphite situation around the world. I consistently talk to a lot of people in the industry. And here’s our view. Now, our view is going to be very different than many other graphite projects in the world. But I like to inform people about what’s going on in the world, specifically in the graphite space, because everybody starts jumping up and down and talking about batteries and excitement and everything else. That is very important in the graphite space. But I want to explain some other fundamentals that are happening out here in the market.
I would like to provide a brief history lesson about DNI, and what our game plan is going forward in the graphite space and why we think we can be one of the leaders in the world in the graphite space. In 2015, we came in and took over DNI Metals. It was basically a shell; it had a very large polymetallic deposit in Alberta. The capex on that was $3.9 billion. It didn’t make a lot of sense. The previous management knew that it couldn’t raise the money to do anything, and we came in and took over DNI.
DNI has been around since about 1954 and has been public for many of those years. I’m very lucky now to be the CEO and chairman of the company. The reason why we came in to DNI was to refocus the company specifically on graphite. Our group, which includes some of our directors and other people who we work, with have done a lot of work in the graphite space, built graphite mines in both Canada, Australia, Sri Lanka. One of our directors operated mines in Sri Lanka and Canada as well.
We know and understand the graphite space. We knew that in order to take advantage of the graphite space, in order to be a producer and be profitable in the graphite space, you had to go look for deposits that are in this weathered-type material called saprolite and laterite. You find it in climates that are hot and have lots of rainfall.
We first went to Brazil and searched for the right deposit. We tried to buy a couple deposits there. We realized Brazil is a very difficult place to do business; it’s extremely bureaucratic. What was exciting about Brazil was that it is the second largest producer of graphite in the world behind China. I’m going to come back to China in a minute.
DNI decided to go from Brazil and look to other places that had that same saprolitic type of material. Certain parts of Madagascar had been producing graphite for over 100 years, and I want to emphasize that the area in which we are, 50 kilometers from the port, is an area that’s fairly close to the ocean. There is a ridge that runs along the east coast of Madagascar; it’s like a mountain range close to an ocean. So, think of Vancouver where the winds coming off the ocean, they climb up a plateau, or up a mountain, and they dropped a lot of rainfall in a certain area. That’s what we have in Madagascar.
In and around us there is a company called Ambatovy. It is owned by Sherritt International Corp., a nickel producer in Canada; Sumitomo Corporation, a very large Japanese firm; and the Korea Resources Corp. (KORES). It spent $8 billion in our area developing a nickel, cobalt deposit in these laterites, or this weathered type material. The advantage of this weathered material is you can go in with an excavator, dig it up and process it. DNI’s costs will be significantly lower as compared to hard rock deposits that you find in China, and specifically Canada, Germany, Sweden, other places in the world that would have these hard-rock type deposits.
It is critical that investors understand specifically why we’ve gone to Madagascar. We know that the costs for production are lower than what we would have found throughout the world. And this is precisely why we’ve strategically identified Madagascar for our operations.
We all know graphite is in pencils. We all know that graphite is a great lubricant. We put it on our bicycle chains. However, what most people don’t understand is that 50% of the world’s graphite is used in the steel-making industry (not batteries). It has a very high heat tolerance and you can line all the crucibles, or all the molds, to produce steel.
The other area that is growing is the lithium ion battery area. Up to 30% of a lithium ion battery is made up graphite. So, by comparison, everybody starts talking about nickel, cobalt and lithium, only 2% of a lithium ion battery is actually lithium. So, you can see here that one of the largest components of a lithium ion battery is graphite.
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From:: The Gold Report