Q&A interview with Big North Graphite (TSX: V.NRT) President & CEO, Spiro Kletas
By Stockhouse Editorial Staff
Can you tell me about Big North Graphite and say what it does?
Big North Graphite (V.NRT
, Stock Forum
) is a graphite development and exploration company focused on select projects in Mexico and Canada. The Company recently acquired three past-producing amorphous graphite mines in Sonora, Mexico and is working towards accelerating the restart of the Nuevo San Pedro amorphous graphite mine. Big North is currently in the Test Mining phase at Nuevo San Pedro.
Recently, Big North announced that the Company had started the assembly of a processing plant that will be used for crushing, screening, sizing and drying of graphite to the specifications of future customers. Further, the Company has commenced a strategy of buying unprocessed amorphous graphite from local miners who do not possess the ability to process or ship to end users. Big North also owns high priority, large flake graphite exploration projects in Ontario and Quebec, Canada.
Congratulations on your first sale of graphite, can you tell us more about it?
Thank you. We were pleased to announce last Thursday (Aug 15) that Big North Graphite made its first graphite sale.
The Company sold 200 tons of amorphous graphite, mined from the Company’s Nuevo San Pedro mine and additional feed mines located in Sonora Mexico, to a customer within Mexico. What is exciting for Big North is that we were able to sell the graphite in our inventory, essentially as soon as we had it. We sold it as run of mine and semi-processed. It shows that there is a demand for amorphous graphite. Amorphous graphite represents the largest segment (by tonnage) of the natural graphite market. Big North is the only TSX.V company pursuing this market. As such, we believe that our ability to grow the company is fantastic and our future looks bright.
Can you outline your strategy moving forward and say how you differ from others in the field?
Our immediate goal is to grow our amorphous graphite business by continuing to increase production and sales. We have always stressed that we intend to build a strong company anchored on revenue, cash flow and profits. Our first sale was a great step for Big North but we are definitely not stopping there.
We are different from other junior graphite companies in several ways. First, we are one of, if not THE first junior graphite company to see revenue from our projects. This is exciting for us and our shareholders. Second, as I mentioned earlier, Big North is pursuing amorphous graphite while most other juniors are chasing large flake projects only. Amorphous graphite is a larger market and has far less competition at this point. The vast majority (approx. 90%) of the world’s amorphous graphite supply comes from China. Many end users are looking for alternate sources of supply. We believe that we have put the company in a position to be successful over the long term.
Tell us more about your Sonora Mexico Amorphous Graphite project and what stage is it at?
In November of 2012, Big North Graphite acquired 100% (less an NSR) of 2 past producing amorphous mines and a 50/50 JV on a third past producing mine. These were previously operating mines that shut down due to the price of amorphous graphite. The area has a rich history of graphite production. Infrastructure is in place, including roads and a rail line located approx. 10km to the west. Sonora is known to be a mining friendly environment. There is graphite mine located close to our project that has been operating for approx. 50 years and a major US graphite co has been supplying the market from this area for quite some time.
The company decided to begin business by re-starting the Nuevo San Pedro Mine*. We spent the first 5 months completing development work in order to re-start the project. Heavy equipment was delivered and repair and construction of haul ways and existing access roads to the mine site were completed. The underground workings were cleared and stabilized for safety and will allow for mining to begin. Two new drills and support equipment and a compressor were delivered. Electric generator power and a cable winch were installed for extracting graphite from the lower levels. The second and third levels of the mine were cleared and stabilized. The existing rail in the mine was repaired. On the main level, electrical and ventilation systems have been installed and the previously delivered winch was installed.
In April, Big North announced the start of the assembly of a processing facility to be used for stockpiling, crushing, screening, sizing and drying the graphite to the specifications of individual future customers. On May 24 of this year, the company began test mining at Nuevo San Pedro, as suggested in the company’s NI43-101 technical report.
We believe that we have made significant progress in a short amount of time. The Management and Board have a long term vision and strategy for the Company and we are working towards implementing that strategy as soon as possible.
What do you think you can do with that project over time?
There is a lot of opportunity for further growth in the Sonora Mexico area for Big North Graphite, in the meanwhile, we are working at continuing to grow our production and sales in the amorphous graphite business.
What are the key challenges that you face in this current market?
Financing in this market has proven to be difficult for many junior companies. Fortunately, Big North Graphite recently oversubscribed a small financing. Of course, with industrial minerals, you must find buyers for your product. Unlike gold or silver, this is a finite market and you must have a home for whatever you produce, or else you will essentially be stuck with it. I always say, “In graphite, it doesn’t matter what you think you can produce, rather, what you KNOW you can sell”. As such, our focus is closing sales and off take agreements. This will be very important for the company.
Why should investors be thinking about investing in Big North Graphite?
I think Big North Graphite is attractive to investors because we have decided to take a unique approach to the graphite space. Big North is the only TSX.V company pursuing amorphous graphite…the largest segment of the natural graphite market. Big North has a long-term strategy, which the Management and Board are working diligently towards implementing. Big North is the first to make a sale of product that we mined. Further, Big North Graphite is looking to grow our amorphous graphite business and continue to make SALES…meaning that Big North intends to keep money coming IN the door which is rare at this point in the junior graphite space. For investment purposes, the company is still at early stages in price and market capitalization.
What are the key goals for the remainder of 2013?
The key goals are to grow the graphite business, continue to make sales and look for long term off take partners. The goal is to start cash-flowing for our shareholders, therefore decreasing the need to dilute. Lastly, the Company will look to leverage our contacts in the graphite business in order to add shareholder value.
* The Company has not established mineral resources and has not completed a valid mining study (as defined by NI 43-101) to support its production decision at the Nuevo San Pedro Mine. Historically, a production decision under these circumstances results in much higher economic or technical risk. Furthermore, without a pre-feasibility or feasibility study and a graphite reserve, there can be no assurance that operations at Nuevo San Pedro will be profitable.
Disclosure: Big North Graphite is a Stockhouse client.