Monday, 14 January 2013

Focus Graphite shares advance as it appoints new VP of exploration

Focus Graphite (CVE:FMS)(OTCQX:FCSMF) shares advanced Monday after the company announced the appointment of Benoit Lafrance as its new VP of exploration. 
Lafrance, whose appointment is effective immediately, replaces Tony Brisson, who resigned to pursue other interests.      
"Mr. Lafrance's addition to Focus Graphite's management, particularly his experience in mineral exploration as well as his strong academic background in metallogenic studies brings additional strength to our core management team to develop new projects and evaluate future domestic and international opportunities with a view to increasing shareholder value," president and CEO, Gary Economo, said.              
Before joining Focus, Lafrance served three years as a scientific researcher for CONSOREM, an applied research group for mineral exploration. His previous experience includes four years with Cogitore Resources Inc. as a senior geologist, and five years with the Quebec Government geological survey. 
Shares in Focus gained more than 5.5 per cent to 76 cents this afternoon. 
The company is arming itself with experienced management as it develops its Lac Knife graphite deposit in Quebec.           
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.                    
With a mine life of 20 years, the open pit operation is expected to yield 300,000 tonnes per year, with life-of-mine production of 928,000 tonnes of concentrate at 92% graphitic carbon on average, or approximately 46,600 tonnes of concentrate per year.
Pre-tax net present value - at a 10% discount rate - was estimated at $246 million with a 32% pre-tax internal rate of return and a pre-tax payback period of 2.8 years.
Initial capital cost was projected at $154 million, inclusive of $33 million and $24 million in working capital and contingency (25 per cent), respectively.
Three products are expected to be produced from the operation - two concentrates with fine and medium flake sizes, and a high purity battery-quality product. 
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. 
The Fundamental Research analyst compared Focus' Lac Knife project to Northern Graphite's (CVE:NGC) Bissett Creek graphite project, which has a net present value of $71.1 million at an 8 per cent discount rate and an IRR of 15.6 per cent.
Overall, the report said Focus has a larger contained graphite tonnage and a targeted large/medium flake production rate of more than double that of Northern’s rate.  
Indeed, Focus has decided to go straight to off-take and financing arrangements, eliminating the need for a new feasibility study. It has already initiated contacts with several major graphite consuming groups in North America, Europe and Asia.

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