Lomiko Metals

Our friend Paul Gill is pushing ahead in the graphite exploration business with Lomiko’s La Loutre Flake Graphite Project located in Quebec. However the company is also working in the cryptocurrency space with a new investee company, Promethieus Crypto Currency.

You can read a full overview of Lomiko in a new issue of Strategic Metals and Rare Earths Letter International here (PDF)

We’ve been talking to Paul Gill, President and CEO of Lomiko Metals (V.LMR), for several years as the company has evolved. Lomiko’s goal has always been to develop graphite properties in Quebec. But like many graphite producers, the questions of timing, grade, purity and CAPEX have all had impacts on Lomiko’s path forward.

“Right now,” said Gill, “the worldwide demand for flake graphite is holding steady at around 120,000 tons per year. But that market will rapidly expand as companies like Tesla and Volvo bring electric cars to the mainstream market. But we are also seeing a shift in supply. A few years ago China was supplying 90% of the market, now that is down to 60%.”

“The prediction is that by 2020 the worldwide demand will increase by 50,000 tons per year and there is going to be a supply gap as China continues to reduce production.” said Gill, “The base price at the moment for 94% pure flake graphite is around $1200 a ton, for the 99.99% pure graphite needed for batteries and the nuclear industry the price is closer to $2500 a ton.”

“In fact, most of the graphite used by Tesla is actually synthetic graphite which is derived from petroleum coke,” said Gill. “You have to bake that coke for 60 minutes at 2500 degrees Celcius to get synthetic graphite and that is hardly an environmentally friendly process. So now battery companies are looking seriously at natural graphite which can be converted to Li-ion battery anodes much cheaper with less energy consumption.  The problem has always been there is not a steady supply of graphite material in North America.”

For an explorer like Lomiko, the key factors in assessing a deposit and becoming that steady supplier are grade, purity, quantity, the cost of upgrading and a mine plan which makes sense.

“We’ve been working on the La Loutre deposit in Quebec since 2015,” said Gill. “We drilled it in 2015 and we’ve kept drilling. We had a 43-101 report in March 2016 which gave us 18 million tons grading 3.9% indicated and another 16.7 million tons grading 3.75% inferred.”

“The go/no go question for us was purity and flake characteristics. We had many samples with a purity of 90%+, with samples grading as high as 99.999%. 1/3 to 2/3 of the ore produced graphite material was large flake using a fairly simple extraction process. We are pretty certain we can increase the recovery of large flake by adjusting the crushing and floatation cycles.”

“What we are looking forward to, where the fun is going to be, is in our next reporting cycle on the Refractory zone where we have concentrated most of our recent drilling. We are seeing double the grade we had in the Graphene-Battery Zone. In our next 43-101 report  will include very high grades on the order of 14% across intercepts of up to 100 meters.”

“We’re drilling right now and we should have enough holes drilled and results in to publish a revised 43-101 by December or January,” said Gill.

Part of Lomiko’s strategy is to plan to mine “pods” of graphite. “We want concentrations of shallow, near surface, high grade, high purity graphite with great flake characteristics. We see outcrops at surface. So far we have identified 14 or 15 of these pods.” said Gill. “You need a decent number of them because end users want security of supply. You have to prove your long term supply to the end user.”

Lomiko has fulfilled the option conditions which have given it an 80% stake in the La Loutre property and Gill is confident that the company will end up owning 100% of the property outright.

At the same time, Lomiko, like many of its graphite peers, has been battling headwinds raising equity financing. At the end of June, the company announced a 1.2 million dollar private placement combining flow through and hard dollar units.

“There was some initial difficulty,” said Gill. “The junior market was being flooded with marijuana and lithium offerings and it was tough to gain traction.”

However, Lomiko was able to announce the completion of its first, $500,000 tranche in early July and Gill is confident that the placement will be filled.

“People are looking at batteries and realizing that cobalt and graphite are key components,” said Gill. “So we are getting funding commitments and one commitment leads to another. We also have special situation investment funds interested in the Lomiko story.”

From the timing perspective Lomiko wants to finish up the drilling needed for its updated 43-101 including the higher grades of the Refractory Zone. Then the company wants to move on to a Feasibility Study of the La Loutre deposit. “We need hard numbers on the CAPEX,” explained Gill. “If it is under 100 million it should be a go, if it is under 50 million it will be a home run.”

With its near surface, high grade, pod mining, low CAPEX, strategy, Lomiko is positioning itself to start filling what the company believes is a growing graphite supply gap. When that gap appears Lomiko is poised to go into production quickly and efficiently to fill it.

At time of writing, Lomiko was trading at 21 cents  with22.3 million shares outstanding and a market cap of $ 4.4 million.