Eagle Graphite Inc.

High Carbon Flake Graphite for the Worldwide Market.

This profile is part of a paid investor education campaign.*

Overview

Eagle Graphite Incorporated (TSXV:EGA) owns the only natural flake graphite production facilities located in western North America. The Black Crystal quarry and processing plant, 35km west of Nelson, British Columbia, is production-ready with permits and a 5-year quarry plan in place.

The Black Crystal facility is the only graphite producer operating in the burgeoning electric vehicle market of western North America. The quarry host material is naturally well-suited to low-energy, low environmental impact processing that in turn produces high-purity graphite flake products for use in both conventional and emerging industries.

Through exploration at both the established quarry site, and at new exploration targets immediately adjacent to the plant facility, Eagle Graphite has expanded its 2014 resource estimate. As of May 2018, the measured and indicated resource is 19.23 million tonnes averaging 1.35 percent crystalline flake graphite, and the indicated resource measures 23.92 million tonnes at 1.30 percent crystalline flake graphite. It is also conducting work to show that Black Crystal graphite is suitable for use in lithium-ion batteries.

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Eagle Graphite is led by a highly experienced management team, a significant number of whom have been involved with the project since 2001. “We have enjoyed the luxury of excellent continuity of key people throughout the life of the project. This has allowed us to refine our processing methods to produce the superior quality that we see in our output today,” explains Eagle Graphite President & CEO, Jamie Deith. The management group currently controls over one half of the shares.

Company Highlights

  • One of only two existing graphite producers in Canada and the United States.
  • Favourable mining jurisdiction.
  • First mover advantage with existing infrastructure and permits.
  • Experienced management team closely involved with the Black Crystal graphite quarry for more than a decade.
  • Quarry permits in place; substantial expansion of permits possible without Environmental Assessment.
  • Simple, proven conventional processing plant with graphite easily liberated.
  • Light environmental footprint with no acidic tailings. High carbon flake ranging from 94% to 99% purity.
  • Preliminary results show exceptional reversible capacity for lithium-ion battery anodes.
  • Offtake agreement in place with demand exceeding current production capacity.
  • Strategic location for electric vehicle demand from western North America and Asia.
  • Exploration work programs completed with updated resource published in May 2018.

Key Property: Black Crystal Graphite Quarry & Plant

Eagle Graphite’s Black Crystal graphite quarry and plant is located in British Columbia’s Slocan Valley, 70km north of the U.S. border. The land package comprises two leases covering 300 hectares which are valid through to 2032 with the option to renew. The area is surrounded by 2,300 hectares of additional undeveloped mineral claims.

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Plant Site

The quarry and plant are both accessible year-round by forest service road. Rail loading facilities are located in the nearby cities of Nelson and Trail. The plant is strategically located to the hydroelectric grid and a large creek from which Eagle Graphite has a permit to draw water for flotation. The surrounding communities have a long mining history with established infrastructure and a skilled labor force.

Historically, the Black Crystal plant produced at a rate of 4,000 tonnes per year. Eagle Graphite acquired a 100 percent interest in the project in 2006 and immediately invested in updating the operation with new screening, loading and hauling equipment. The processing plant was upgraded with improvements to the flotation and drying stages.

Low transportation costs

The high cost of transporting materials great distances from producer to end-user facility is unavoidable for most graphite consumers. The greater the distance, the greater the cost; especially for bulk transport. Eagle Graphite’s Black Crystal plant facility is located close to Spokane, Washington and the port city of Vancouver, B.C., offering efficient and cost-effective shipping of high-purity graphite flake products to destinations worldwide.

Black Crystal is the closest flake graphite project to Reno, Nevada at 955 miles with a direct link via nearby rail. Eagle Graphite’s internal research on transport costs shows at least a $100/per tonne savings for customers over its nearest competitor.

Production ready facility with offtake agreements in place

The Black Crystal project was granted a Quarry Permit in 2015 by the BC Ministry of Energy and Mines as a replacement of the mining permit acquired in 2001. The permit can be expanded substantially without environmental assessments. The Quarry Permit allows Eagle Graphite to bring the Black Crystal quarry and plant back into production once the requisite financing is available.

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Working pit with excavator, Black Crystal Quarry

Under the Quarry Permit, the Ministry has also approved a five-year quarry plan for the Black Crystal project.

Eagle-Graphite-Quarry-Plans

Eagle Graphite has already secured an offtake agreement with a long-established North American end-user in the conventional market for 3,000 tonnes per annum through to 2023. A Letter of Intent with the customer includes plans to extend the agreement until the end of 2031, and increase the graphite quantities to as much as 12,500 tonnes per annum.

Increased graphite demand expected as North American EV market expands

By 2020, graphite consumption for electric vehicle (EV) production in western North America is expected to exceed 93,000 tonnes per year, eclipsing all other flake graphite applications in the continent.

Where will that supply come from? For now, most of the world’s graphite production comes from China, where government crackdowns on polluters is already depressing graphite output. Very few production centres exist outside of China, and Eagle Graphite is the only listed company with existing production capacity in all of North America.

There are a number of junior exploration and development stage projects in the pipeline; however, Eagle Graphite is far more developed than its peers and has a significant geographical advantage.

“From the perspective of an EV manufacturer, we really do not have any peers. There are simply no other junior projects in North America that are close to our level of development,” explains Jamie Deith, Eagle Graphite President & CEO.

Energy-efficient, environmentally conscientious production

Marketing EVs as an environmentally-friendly alternative to vehicles that run on gas is a hard sell if the materials used to power those EVs are themselves tainted with a heavy environmental footprint. And most graphite producers today can’t say their projects are squeaky clean given the energy-intensive, acid-based processes used to recover and purify the material for the market.

“Our operation, however, has distinct environmental advantages. End-users will never be embarrassed about our environmental footprint,” states Mr. Deith. Not only is the Black Crystal quarry the sole graphite producer in western North America, it’s possibly one of the world’s cleanest graphite operations.

The majority of graphite production comes from hard rock deposits, from which graphite extraction is a laborious and expensive process. The standard processing method for battery-grade graphite uses hydrofluoric acid—a highly reactive and dangerous material.

“In today’s market for lithium-ion batteries, natural graphite supplies come almost exclusively from China and the most prevalent way to purify that graphite is through the use of hydrofluoric acid—cheap, but environmentally expensive. So are the byproducts. Conscientious use means even greater costs to handle the waste products which can be quite expensive,” explains Mr. Deith.

Black Crystal’s environmental advantage over other deposits is due in large part to the environmentally benign host rock. The very nature of the Black Crystal quarry has allowed Eagle Graphite to adopt a more sustainable approach compared to operations which extract graphite from hard, acid-producing rock, and then purify it using hydrofluoric acid.

Rather than a hard rock or clay-type deposit, the Black Crystal quarry is composed of an alkaline sandy material with loose graphite flakes that are easily separated from the host material. In contrast to hard rock deposits, Black Crystal requires no costly mitigation of environmentally hazardous waste.

Production at Black Crystal is via a multi-stage water-based flotation system. The process does not require energy-intensive grinding of plant feed, includes a recirculation pond to minimize water consumption and produces no acidic tailings waste. The finished product is non-toxic and non-reactive. By-products from the operation are both environmentally benign and marketable. Primary sand and gravel by-products are sold to local buyers.

High-purity graphite flake products

The Black Crystal operation is capable of producing high-purity (94% to 99%) carbon flake graphite that is naturally low in sulphide. No other graphite producers are known to be able to achieve better purity using conventional flotation methods. In fact, most graphite mines around the world have difficulty achieving purities of 94% grade, the base grade at Black Crystal.

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Graphite Flakes with coin for size

“The majority of our product has exceeded that, reaching 95% to 96%. And we can produce product at a high grade of 98% and 99% with just flotation techniques,” said Mr. Deith.

The host rock at the quarry yields up graphite flake easily, without the need for grinding of the plant feed. Most other producers by contrast have operations in hard rock or clay from which it is difficult to separate the graphite from the host materials without compromising flake quality.

Expanded resource estimate

In May 2018, Eagle Graphite announced an updated resource estimate for the Black Crystal quarry, following work conducted by Tetra Tech Canada Inc. It outlined a measured and indicated resource of 19.23 million tonnes averaging 1.35 percent crystalline flake graphite. This is 3.5 times the previous estimate released in 2014, which was conducted to validate the 2002 resource.

The new resource estimate also presented an inferred resource of 23.92 million tonnes at 1.30 percent crystalline flake graphite, 4.5 times the 2014 inferred resource.

The Quarry Permit granted by the B.C. Ministry of Energy and Mines also allows for exploration of the Beau Zone adjacent to the processing plant. In Q2 2015, Eagle Graphite initiated its 2015 exploration program on the Beau Zone. The zone was first discovered in 2002 on an outcrop exposure about 100 metres from the plant with further graphite mineralization discovered in an electrical grounding drill hole adjacent to the plant. During the 2002 drill program, the graphite zone was transected in five of seven holes.

“The exploration work around the plant has greatly improved our understanding of the structural geology of the deposit. While there is no certainty of establishing any incremental resource estimate, we would be very pleased if it does turn out that way. Having a resource available this close to our plant could significantly broaden our options for further development of the project. For the near term, we anticipate that simply updating the resource model to incorporate recent work programs around the established quarry will result in a significant upgrade to the existing resource estimate.” commented President & CEO Jamie Deith.

In addition to expanding the current resource, Eagle Graphite’s near term objectives also include demonstrating that the graphite produced at Black Crystal quarry—with further processing—is suitable for use in Li-ion batteries. “Investors typically want to know if we are contenders for the EV supply chain—one of our objectives this year is to prove we are the graphite company in the best position to be part of that supply chain,” explained Mr. Deith.

Financing for Expansion

In 2017 Eagle Graphite announced a financing agreement, subject to close, with US Capital Partners of San Francisco for US$30 million in project financing. Mr. Deith added that “Successful closing on this facility would see the resumption of graphite production and further development and expansion of Black Crystal. By further advancing the project we are cementing our position as a ready source for this critical material, and setting ourselves even further apart from our competitors.”

Since then, the company has continued its financing initiatives, closing a $1.59 million private placement in January 2018.

Management

Jamie Deith — President & CEO

Mr. Deith has been a graphite company executive for nine years, and has total executive experience spanning 20 years. He is a former Managing Director at TD Securities, where he was co-head of a highly profitable global business unit in charge of exotic financial derivatives. Since 2004 he has been a Director of a successful private company specializing in treatment of sleep disorders.

Tim Logie – CFO 

An entrepreneur & former fund manager, Mr. Logie brings 20 years of experience in financial markets.  He has traded and managed instruments across all major asset classes, including currencies, derivatives, high yield bonds, commodities and equities.  He was in charge of pricing exotic securities at Vertex One and handling the firm’s currency exposures.  He has started 10 businesses in the last 3 years and is passionate about helping others.

Torey Marshall – EVP of Business Development

Torey Marshall BSc(Hons), MSc (Geology) brings to the Company over 15 years of global resources experience, particularly in the project financing arena. He is presently the Principal at Vibrante Solutions Pty Ltd (his own consulting firm), and a Director of African Power & Coal (private company). His previous roles include those of Managing Director and Chief Executive Officer of WAMA Gold, Managing Director and Chief Executive Officer of Rampart Energy Ltd. and Earth Heat Resources Ltd. He has been involved in the identification of circa $500m in funding to progress various resources projects around the world. His particular area of expertise is assisting companies fully realize their asset base and opportunities, rebuild their market appeal, and accelerate growth on existing projects through achieving scalable financings when required.

Vernon (Rory) Miller — Operations Superintendent

Mr. Miller has been with the Black Crystal project since 2007. He is a fully qualified supervisor under the British Columbia Mines Act.

Victor Learmonth–Superintendent

Mr. Learmonth has been with the Black Crystal project since 2001. He has supervisory experience with numerous mining projects, including Black Crystal.

Steven Brunelle — Director

Mr. Brunelle has experience as an Officer and Director of numerous resource companies. He is the former President, CEO and Director of Amerix Precious Metals, and brings more than 30 years of experience as a Geologist to Eagle Graphite.

Brian Bapty, Ph.D. — Director

Dr. Bapty is a Partner at Northland Bancorp. He has more than 15 years of experience in capital markets.

Robert Matter, P.E. — Director

Mr. Matter is a Principal Mining Engineer with Brown and Caldwell. He brings more than 25 years of project engineering experience, including resource estimation and mine operating plans.


 

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