The following is a Q&A interview with Big North Graphite Corp.
, Stock Forum
President & CEO, Spiro Kletas.
For those who don’t know, tell us about Big North Graphite and why graphite is important?
Big North Graphite is a graphite exploration and development company focused on select projects in Mexico and Canada. Of particular note, Big North has been pursuing an amorphous graphite business, producing and selling graphite from our project in Sonora, Mexico. The Company sold 760 tons of graphite in the last half of 2013. More recently, the Company announced that we signed an LOI to acquire the El Tejon Flake Mine and Mill in Oaxaca, Mexico. The El Tejon project is the only past producing flake project in Mexico (to the best of my knowledge) and shut down in 2002 due to low graphite projects. The Company’s goal is to accelerate the re-start of the El Tejon flake graphite mine to compliment our amorphous graphite project in Sonora.
Big North also owns large flake graphite projects in Ontario and Quebec, Canada that we look to explore and advance along side the production and sales business in Mexico.
Graphite is a critical material in a number of industries including batteries, steel making and refractories, automotive parts, lubricants, water based paints and many more. Some years ago the price of graphite saw a significant drop and subsequently, there was very limited exploration or development of graphite projects. The supply/demand fundamentals for graphite have changed significantly over the last couple of years. The price of graphite has increased significantly and the graphite market is projected to grow moving forward. As a result, we believe that there is a real opportunity to create a successful business for our shareholders now and for the future.
Congratulations on your breakthrough 2013. Can you tell us more about those accomplishments?
Thank you. Yes. 2013 was an exciting year for Big North Graphite, despite the challenging times in the public resource markets. Big North acquired an interest in three past producing amorphous graphite mines in November of 2012. We spent the first half of 2013 working on accelerating the re-start of the Nuevo San Pedro mine*. In April, we started the assembly of a processing facility near the town of La Colorada, to be used for stockpiling, crushing, grinding, screening, drying and sizing of the amorphous graphite to the specifications of individual future customers. Further, as part of our business plan, we started a program of buying unprocessed amorphous graphite from local producers that do not have processing capabilities. We process the purchased graphite and re-sell it, realizing an increase in sales volume and the difference in prices.
In May, Big North started test mining and in August, we announced the first sale of 200 tons of semi-processed, run of mine product to a customer within Mexico. Our goal has always been to create a successful business for our shareholders by selling graphite into the market and, of course, sales is a vital component to that. We were of the first junior graphite companies to do so. We believe graphite is a race to the finish line, as there is a finite market, and only those companies that can get a product to the market as soon as possible will win.
How is your Sonora Mexico Amorphous Graphite project progressing?
Things are going well for us in Sonora. We continue to focus on increasing production, enhancing processing, growing sales and securing long-term off take partners. Our goal is to continue to grow the amorphous business substantially.
You’ve recently announced your acquisition of the El Tejon Flake Graphite Mine and Mill, tell us about it and how it fits into your 2014 business strategy.
We are very excited about this acquisition. The El Tejon Property is the only flake graphite mine to have produced in Mexico. The mine and mill were originally built in 1980. El Tejon was an open pit mine, and the mill was used to crush, mill, float, dry, screen and pack the final product which was then sold to customers. The mine was operated until 2002 and closed due to low graphite prices. Historically, the mine produced approximately 20% large flake graphite (higher selling price) and 80% medium and fine flake graphite.
We are very excited to add this project to Big North's portfolio of graphite assets. Our strategy has been to be among the first to be able to supply graphite to the market. Not only does the El Tejon Property represent near term production potential, but also the ability for the Company to fast track our entry into the flake graphite market. The project is in an area of good infrastructure and access. As a past producer, many of the infrastructural needs of a mining project have been previously addressed. We believe that this project will be an excellent compliment to our current amorphous graphite projects in Sonora State and, as they contain different types of graphite, will supply different markets.
Cesar Guajardo recently joined your Board of Directors, tell us about Mr. Guajardo and how will his experience help move Big North Graphite forward.
Mr. Guajardo brings with him a wealth of knowledge and experience in the graphite sector, specifically in Mexico. He was the former Chairman of the private company that operated El Tejon, so he has an intimate knowledge of the mine, the product and its former customers. Further, his relationships with the local community will be very helpful for our goal of re-starting the El Tejon Mine. He has 18 years of experience in the graphite market and that experience and knowledge is invaluable to us.
What are some key challenges you face as you enter 2014?
The challenge continues to be the capital markets and the availability of investment capital required for projects to move forward. So far, we have been successful in our financings but it has been a tremendously challenging time in that regard for many companies.
From a business perspective, the challenges are different. Unlike some other commodities where there are always buyers, in graphite you have to find your buyers for your product. I have always said that in the graphite business “it doesn’t matter what you think you can produce, rather, only what you know you can sell.” This is why we believe graphite is a race. We intend to win the race. We will continue to work towards securing long-term off take agreements for our products.
Why should investors be thinking of investing in Big North Graphite?
The Board and management have a passion, vision and long-term game plan to make this company successful for our shareholders. To the best of my knowledge, Big North Graphite is the ONLY junior graphite company to make multiple graphite SALES. Our goal is to grow our amorphous graphite business and to add to that by fast tracking our recently acquired flake graphite mine and mill. We aim to add value in the near terms for the shareholders and to create a successful, cash flowing business over the long term.
What can we expect from your team this quarter?
Investors can expect Big North to work diligently towards our above stated goals. The Management and Board are working on a number of exciting initiatives to take the Company to the next level. Please stay tuned to our news releases. And always feel free to contact the company for further information.
* 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.