VANCOUVER — It’s been a wild ride through commodities for explorer Lomiko Metals (TSXV: LMR; US-OTC: LMRMF) over the past five years. But president and CEO Paul Gill says the company is positioned to grow in the graphite space thanks to a key property acquisition and new graphite technology partnerships.
Lomiko began in 2008 as a lithium play with a pair of properties in Chile and Nevada. Rocky markets and water-rights troubles threw a wrench in those plans, but the graphite wave in early 2012 prompted the company’s acquisition of a 100% stake in the Quatre Milles project, accessible by road 175 km northwest of Montreal.
“As exploration moved along we looked at where the market was going, and graphite got a little bit saturated at that time, which resulted in the price correction,” Gill explains during an interview.
“We looked at other ways we could use the graphite, and we zeroed in on the evolution of graphene. We started circulating educational materials on graphene, and then Graphene Labs called us in February 2013 and said: ‘We really like what you’re doing and we’d like to work with you.’”
Lomiko allied with Graphene Laboratories — a private U.S.-based company that has registered US$1.5 million in graphene sales through its online store — to develop a vertically integrated supply chain for large-scale graphene production. The partners are aiming to secure a supply of high-quality graphite from Quatre Milles, which would give Graphene Labs access to cheaper raw materials.
“Quatre Milles is still a big part of the story because that material is the basis of the conversion process that Graphene Labs has a patent on,” Gill explains, noting that this process requires large-flake graphite with a minimum 98% carbon purity.
“Recently they’ve been working with that graphite. The problem for them is that they’re buying that graphite from an intermediary, and the cost of that material is 50%, or more of the graphene development costs, so the margins are small. The upside is that if the technology takes off, we can provide the materials for the process.”
Graphene’s properties — including high conductivity, mechanical strength and high specific surface area — make it an ideal electrode material for electrochemical devices used in clean energy applications. Graphene also shows promise for super-capacitors and next generation lithium-ion batteries.
According to Gill “the beautiful” part of the proposition for Lomiko is that it allows it to build “three pillars of value creation” at Quatre Milles: The company can outline zones of high-purity, large-flake graphite for its graphene alliance, while at the same time hitting battery storage and traditional graphite markets with lower-purity and amorphous material.
“The problem with a lot of mining companies today is that you really only have one way to win,” he says. “We have three avenues: the actual graphite mine, the lithium-ion batteries and finally the graphene sphere. It’s a good way to manage risk.”
And the upbeat story let Lomiko closed a US$5.5-million public offering in March, wherein it issued 27 million units at 11¢ per unit, along with 4.7 million flow-through units at 13¢ per unit. Each unit consists of a share and half of a warrant. Each full regular warrant entitles the holder to buy a share for 15¢ with 18 months, while each full flow-through warrant entitles the holder to buy a share for 20¢ within 18 months.
Gill says US$2 million is earmarked to compelete a maiden resource estimate and preliminary economic assessment (PEA) at Quatre Milles, while another US$1 million will be put into investments in the technology sector.
Lomiko invested US$350,000 in a Graphene Labs start-up, that develops high-performance graphene-enhanced materials for 3-D printing. With the technology, operational products like cell phones and computer chips can be produced using 3-D printing methods. The investment could give Lomiko a 15% equity stake in Graphene 3D Lab, which is in the midst of a reverse takeover of MatNic Resources (TSXV: MIK).
Meanwhile, resource-definition drilling at Quatre Milles is due to start soon, with the goal of wrapping up work in the field by November. The program will entail 100 holes drilled to 100 metres deep over a 200- by 300-metre area.
Lomiko finished 23 drill holes in 2012 over Quatre Milles’ East claim block to test graphitic horizons and electromagnetic conductor targets that could host graphite along a 1.1 km segment of a 1.7 km long corridor. Highlights include: 19.5 metres grading 6.23% graphitic carbon from 31 metres depth in hole 12-16; 40 metres of 3.7% carbon from 11 metres depth in hole 12-22; and 43 metres of 3.7% carbon from 7 metres depth in hole 12-23.
“We’ve done drilling that defines an area close to surface and has good purity and large flake —that’s where we’ll go back in and define the resource,” Gill says. “The process will really help us define some value for the company, and that’s important when you’re a smaller junior like ourselves.”
The company aims to wrap up its PEA by early 2015.
“We want to get a bulk-sample permit as well since it’s really important to get that material out of the ground and tested for different end uses. We don’t want to go for these big projects that will cause a lot of environmental problems or trigger a lot of red tape. We want to define specific areas that have the high grade because the demand just isn’t out there for a huge graphite deposit.”
Lomiko shares have traded within a 52-week window of 5¢ to 19¢, and closed at 6¢ on 150,000 shares traded at press time.
The company has 121 million shares outstanding for a $7.3-million market capitalization.