Lomiko Metals (TSXV: LMR) is trying to leverage the recent lithium boom without actually mining any lithium. It says it has found a backdoor into the lithium story, driven by electric vehicles — and it’s graphite.
“Lithium only has a certain amount of shelf life,” Lomiko president and CEO Paul Gill says during a telephone interview with The Northern Miner. “So people buying all this lithium, they’re going to have to turn it into batteries pretty quickly, so they’re going to need graphite to do that.”
Gill says that every lithium ion battery in every electric vehicle contains lithium, but far more graphite.
“The market for electric vehicles is going to take off and there’s going to be a lot of demand,” Gill says. “It may not be the same cost factor, but you need way more of it, which is going to chew up the supply.”
Lomiko’s most advanced property is its 80% owned La Loutre flake graphite property, located 117 km northwest of Montreal and 53 km east of Timcal’s Lac des Îles graphite mine in southern Quebec. The property has a contiguous block of 42 mineral claims totalling 25 sq. km. Canada Strategic Metals (TSXV: CJC) owns 20% of the property.
La Loutre has 18.4 million indicated tonnes grading 3.19% graphite with 16.7 million inferred tonnes grading 3.75% graphite at a 1.5% cut-off rate. The resource lies within the central metasedimentary belt of the Grenville province and includes quartzofeldspathic rocks, quartzite, biotite gneiss, marble and locally pegmatitic quartzofeldspathic rocks.
Before Lomiko, Gill was the vice-president of business development for Canadian copper company Norsemont Mining. Hudbay Minerals (TSX: HBM; NYSE: HBM) bought Norsemont for $512 million in 2011. When he tried to figure out what the next “big market” would be, he ended up in graphite.
“It’s the weirdest thing, but graphite has better applications in all of the things that copper does,” Gill says. “It’s more conductive — thermally and electrically.”
He thinks lithium has already taken off, but graphite hasn’t. And that’s where he sees an opportunity. He says a preliminary economic assessment will come in May after Lomiko carries out more metallurgical studies and drilling on La Loutre.
Lomiko also announced in early January 2018 at the Consumer Electronics Show in Las Vegas that it would launch a cryptocurrency mining company called Promethieus in conjunction with its 25%-owned subsidiary SHD Smart Home Devices Corporation.
SHD creates home technologies that use graphite as a heat sink. Promethieus may one day use technology containing graphite to manage heat in the power-intensive crypto-currency mining world. Another of its subsidiaries, Graphene 3D Lab (TSXV: GGG), converts graphite into graphene. In developing these companies, Lomiko has created a web of interconnected businesses.
“We wouldn’t drop mining,” Gill says. “Mining is our focus because we believe graphite has a 20-year life. All these other things are just really good ideas to fill in time until we keep reporting on graphite.
“Because the way investors are these days … they’re jumping here and jumping there, and looking for anything that’s hot.”
Gill adds that Lomiko developed its business this way is to make sure its shareholders know that Lomiko is “aware of different things that will create value.”
“If we don’t do this as a small company, there are too many months that pass without news on the graphite, so we’ll lose interest and people consider it dead money,” Gill says. “We’ve lost money. Even though we’ve developed our graphite side, we’ve lost value in the eyes of the shareholders because we just can’t move as fast as you need to. You need to have other things that you can speak about and develop to create value.”
Lomiko has two other properties in Canada, besides La Loutre. Its wholly owned Quatre Milles graphite property lies 17 km north of Sainte-Véronique, Que., and its Vines Lake polymetallic property is in the Liard mining district of British Columbia.
Shares of Lomiko are valued at 22¢ with a 52-week range of 8¢ to 33¢. The company has a $7-million market capitalization.
“You’re hoping for the home run in graphite, which is where we’re working toward,” Gill says. “But in the meantime we can make money on all these other ones and launch some pretty interesting companies.
“It’s definitely a more sophisticated response than trudging along, looking for rocks in the ground and hoping to sell it to Hudbay.”