Tuesday, 15 January 2013

Focus Graphite inks definitive option for Lara Exploration's Caninde project in Brazil

Focus Graphite (CVE:FMS)(OTCQX:FCSMF) has signed a definitive option deal with Lara Exploration (CVE:LRA) for Lara's Caninde graphite project in Ceara State, northeastern Brazil. 
Under the terms of the deal, Focus will have two separate options to acquire a total 60% undivided interest in the property, subject to an underlying royalty to a third party on 11 exploration licenses. 
The royalty will amount to 2% of gross revenue from production sales, to a lifetime maximum of R$750,000. 
In exchange for these rights, Focus has committed to staged exploration expense payments over 5 years, as well as to 500,000 shares to Lara within three years, and the reimbursement to Lara of certain claim acquisition costs. 
Focus will be the operator of the exploration program at the project throughout the duration of the agreement. 
The first option deal, for a 51% stake, will see Focus carry out exploration on the property totalling $2.5 million by the third anniversary of the agreement. 
For another 9% interest, Focus will have to undertake more exploration, including a further 5,000 metres of drilling, and complete a positive preliminary economic assessment, taking total expenses to at least $4.5 million within five years. 
If Focus should not exercise its second option, Lara and Focus will enter into a joint venture, with Focus holding a 51% stake and Lara holding the remainder. Otherwise, Focus will hold a 60% stake in the venture. 
Both parties will fund exploration according to their respective interests once a joint venture is formed. 
Focus Graphite is an emerging junior mining development company, and the owner of the Lac Knife graphite deposit located in the Cote-Nord region of northeastern Quebec. 
Last week, its shares advanced after the company announced the appointment of Benoit Lafrance as its new VP of exploration. The company is arming itself with experienced management as it develops its Lac Knife graphite deposit.           
In November, the company received a bullish outlook from analysts, as Fundamental Research Corp raised its fair value estimate on Focus after the fairly recent preliminary economic assessment (PEA) on the graphite explorer's Lac Knife deposit. 
The equity research firm, which also highlighted Focus' strong cash position, raised its fair value estimate on the company to $1.44 per share from $1.21 per share previously. 
Analyst Nicole Engbert noted the Lac Knife PEA shows high production rates, and three potential saleable products. The long-awaited PEA, which was unveiled in late October, showed average concentrate grades of 92% graphitic carbon.                  
The company says that Lac Knife is unique because of its cost-mitigating, high concentration of large, medium and small flake graphite. Flake graphite - the most actively pursued type of graphite and associated with next-generation technologies - is made up of layers of graphene, which is the mineral’s base structural element.

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