Focus Graphite

Looking Ahead to Offtakes, Permitting and Mine Financing

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

Overview

Focus Graphite Inc. (TSXV:FMS, OTCQX:FCSMF, FWB:FKC) is an advanced exploration and development mining company with the goal of becoming a low-cost producer of battery-grade graphite and value added battery products from its Lac Knife Project in Québec. Lac Knife is one of the most advanced graphite projects in North America and holds one of the highest grade flake graphite deposits in the world.

In 2012, Focus Graphite committed to a business model that exploited the high purity characteristics of its Lac Knife, Québec, flake graphite resource. Today, Focus holds the potential to become one of the lowest cost producers of graphite concentrate in the world.

At the same time, Focus invested in in-house technologies to produce value-added products for the battery-manufacturing sector.

The company’s technical achievements in high value graphite products were demonstrated through a series of value added processing and engineering announcements after they were presented at gatherings of the global battery industry in the United States and Europe.

Focus Graphite’s early adoption of a technology-weighted business development agenda is supported today by market events led principally by graphite trends initiated by China’s strategic economic policies, which include the electrification of its transportation industries.

China’s strategy, when combined with those of all other nations, are having a profound impact on the graphite sector and, a profound impact on Focus Graphite and on the strategy Focus set some six years ago.

Having been guided by the principle that China would someday be a net-importer of battery-grade graphite, Focus set four objectives to take advantage of the opportunity, namely:

  • Development of a portfolio of high-purity value-added graphite products
  • Ensuring its production costs could beat the competition
  • Establishing relationships in China and elsewhere in Asia and around the world, and;
  • Entering into long term supply agreements to de-risk the construction of the Lac Knife graphite mine

Focus has made substantial progress on all four objectives.

It has announced new products and has undertaken long-term battery testing to demonstrate the overall superiority of Lac Knife’s graphite versus synthetic and competitive sources of natural graphite. Focus has invested time and effort in building its international profile and brand, and has built a network for establishing long-term supply agreements.

The following announcements illustrate the company’s technological progress and include, but are not limited to:

Battery Products

Under the supervision of Dr. Joseph Doninger, Focus’ Director of Manufacturing and Technology, Focus achieved a number of significant in-house manufacturing and technological milestones that reflect the high quality and physical attributes of its wholly owned Lac Knife graphite resource.

Dr. Doninger is recognized globally as a leading expert in graphite engineering and processing.  His investigations have led to the development of innovative and proprietary technologies that in turn, resulted in the creation of novel graphite materials for use in current and next generation battery applications.

With demand for coated spherical graphite projected to rise dramatically over the next four years, Dr. Doninger’s achievements have met one of the company’s key strategic development objectives of producing high performing graphite products for the transportation, energy storage and consumer electronics sectors.

A number of value-added graphite technical developments have been published in a series of news releases, outlined below. Complete versions of the company’s news releases can be found on the Focus website at www.focusgraphite.com and on the SEDAR website.

Focus’ achievements in coated spherical graphite processing have interested potential customers globally in the battery manufacturing industry and long-term testing of its high purity graphite products – with various potential customers – has been underway since 2015.  Discussions leading to offtake agreements are continuing.

Long-term testing is a critical milestone for acceptance by potential offtake partners and perhaps the single most important element in determining the viability of our planned mine-to-manufacturing supply chain.

The following undertakings support Focus Graphite’s objectives of becoming a technology graphite supplier to the global market.

Life Cycle Testing

Long-term testing is the essential first step in determining the feasibility of a graphite source. Lac Knife’s graphite has demonstrated its superior performance.

On November 25, 2015 Focus Graphite published data showing that its Lac Knife standard grade of uncoated and coated spherical graphite exhibited essentially zero loss in capacity after 110 cycles versus two commercially competitive grades that showed losses of 4.4% and 6.4% over the same number of cycles.

In a presentation at the International Battery Seminar in Fort Lauderdale, Florida, on March 26, 2017, Dr. Doninger presented long-term cycling test results demonstrating that the zero loss in capacity of the standard grade of coated spherical graphite lasted for 250 cycles and showed a loss of only 4.5% in capacity after 570 cycles.

This is significant when compared with a competitive supplier’s spherical graphite, which we used for testing purposes, that lost 11.7% after 440 cycles and 10.5% after 510 cycles. With a better than 50% cycling performance in comparative testing, these results suggest that Lac Knife’s coated SPG could last beyond 2000 cycles in full sized batteries. These results are significant to battery manufacturers who factor life cycle economics as a key benefit to end-users.

Introducing “Superfine” Graphite to the Battery Industry

Fine grades of graphite are generally sold at discounted prices because the cost of processing battery grade materials makes them non-competitive. This is not the case with Lac Knife’s fine grades.

Focus Graphite is the first North American emerging graphite developer capable of producing battery grade graphite from fine flake grades residing within its mineral resource.

On May 27, 2014 Focus announced the development of its premium standard (medium) and fine battery grades, and its subsequent August 8, 2016 announcement of the successful purification of Lac Knife’s fine grade material to 99.99% purity.

Also in March 2017, Focus introduced a Superfine Grade to the battery market that the Company represented as a milestone in its ongoing efforts to continuously improve its products to meet industry demands. The superfine grade is intended for use in a diverse range of lithium-ion battery applications.

In commercial terms, the company reported its superfine development both enlarged its customer base, and; expanded its value-added product range. The new superfine grade of spherical graphite has a very high reversible capacity of 360 mAh/g and low first cycle loss of only 1.19%.

Highly Conductive Ultrafine and Expanded Graphite

High performing cathodes are critical for use in next generation Li-Ion batteries. Lac Knife fine graphite materials demonstrate superiority over competitive sources.

The third element of Dr. Doninger’s technology innovation was the announcement of Focus’ in-house development of highly conductive Ultrafine and Expanded graphite for battery cathodes.

These developments further expanded the company’s line of value-added Lac Knife graphite products for both lithium-ion and alkaline batteries.

Expanded graphite is a form of processed natural crystalline flake, featuring dramatically improved electrical conductivity in cathode mixes. Delaminated expanded flake is also preferable to conventional air-milled flake and/or premium quality synthetic graphite when higher conductivity properties are desired.

Dr. Doninger’s testing indicated the electrical conductivity of Lac Knife’s ultrafine and expanded graphite outperformed both commercially available synthetic and standard flake graphite by up to a factor of 10.

Silicon-Enhanced Lac Knife Graphite Anodes – Beyond Theoretical Performance in Li-Ion Batteries

Focus’ innovations in anode development have resulted in the highest performing enhanced anode versus those of any graphite mining developer.

On October 10, 2017, Dr. Doninger, presented a technical white paper and poster to the EVS30 Electric Vehicle Symposium & Exhibition in Stuttgart, Germany, announcing Focus Graphite had produced a silicon-enhanced graphite anode using Lac Knife graphite – a product that could double the capacity of lithium-ion power sources versus synthetic and standard graphite tested.

Dr. Doninger revealed that Focus had achieved 613 Ah/kg reversible capacity from a silicon-enhanced graphite anode for next generation lithium-ion batteries. Those test results, he said, pushed performance well beyond the prescribed limits of theoretical reversible capacity of 372 Ah/kg for lithium-ion battery cells.

Testing in CR2016 coin cells showed the Company’s initial efforts to introduce nano-sized silicon into Lac Knife spherical graphite anode materials were successful in nearly doubling the capacity of lithium-ion batteries currently, using synthetic and standard flake graphite in the anode mix.

Much work has been reported in scientific literature to add lithium to the graphite used in the anodes, but continuing stability problems caused by the swelling of the silicon have held back its development.

“Focus Graphite has developed a process that addresses this problem,” said Dr. Doninger.

Continuing Development

The Company intends to continue its long-term cycling testing to 1000 cycles, develop new grades of spherical graphite for use in high power applications; develop silicon modified graphite for high capacity applications, and; continue its development of Lac Knife expanded graphite for use in battery cathodes.

Related Development Plans

As part of the mine permitting process, the Government of Québec requires mining companies to submit a scoping and marketing study for processing product in Quebec.

The study examines the current status of the market, the global competition and the viability of the project in relation to the opportunity.  Its purpose is to validate the potential of the project’s economics in light of the markets and to ensure the intent of the company is to process ore concentrate in the province.

Given both provincial and federal commitments to the reduction of carbon emissions; the advantages a vertically integrated supply chain bring in terms of product quality, cost mitigation and IP protection, and; the longer-term potential benefits to shareholders, Focus plans to proceed with the scoping study with a view to establish a technology graphite processing facility in the Côte Nord region of Québec. This will be in addition to its graphite processing facility at Lac Knife.

Graphite is used in steel manufacturing, auto part fabrication, lubricants and batteries. Future demand drivers are likely to be green technologies such as lithium-ion batteries, fuel cells, construction materials and graphene-based industrial products.

Focus Graphite is also the largest shareholder in Grafoid Inc., an advanced graphene technologies and solutions company. Grafoid’s Mesograf™ aims to develop high standards for high energy density, high purity, economically scalable, and environmentally sustainable graphene.

Since its initial listing on the TSX-V in May 2010, Focus Graphite has worked hard to position itself as one of the world’s most advanced, innovative graphite mining development companies.

Advancing Lac Knife to Development

Focus Graphite is working to advance the construction of the Lac Knife mine and concentrator facilities. Permitting is well underway with an Environmental and Social Impact Assessment that was filed with the Québec Government in November 2014. Other upcoming catalysts for the Lac Knife mine project include project financing to continue with the front end detailed engineering required for mine permitting.

Discussions are underway with public and private sector funds, equipment vendors and institutions. Focus Graphite is also in discussions to secure additional offtake agreements.

Offtake Agreements in Place

In June 2015, Focus Graphite and Grafoid Inc. signed two offtake agreements. The “Graphene Offtake” agreement is for up to 1,000 tonnes annually for 10 years, of large flake (larger than +80 mesh) graphite concentrate that is high purity at 98.3 percent Ct. The 1,000 tonnes annually represents up to 6.8 percent of the 14,606 tonnes of projected annual production of high purity large flake graphite concentrate at Lac Knife (larger than +80 mesh).

The agreement will supply Grafoid with material for future graphene-based batteries and for green energy applications. The “Polymer Offtake” agreement is for up to 25,000 tonnes of 97.8 percent Ct graphite concentrate annually for 10 years, representing up to 56.4 percent of the projected total annual production of 44,300 tonnes of all flake sizes. The agreement will supply Grafoid with the material needed for a range of graphite-based polymer applications for the automotive and aerospace industries.

Lac Tétépisca Québec Graphite Project

Focus Graphite discovered a 1,968-foot graphitic corridor in 2012 on its wholly-owned Lac Tétépisca graphite project property, located in the southwest Manicouagan reservoir area, 145 miles north-northwest of Baie-Comeau in the Côte-Nord administrative region of Québec. The project,  accessible year-round by logging roads, consists of 87 contiguous map-designated claims covering about 11,596 acres.

The company has discovered significant measured drill core graphitic intercepts down to about 328 feet deep. Initial drilling results at Lac Tétépisca indicate there is potential for a new large volume, high grade graphite deposit in the South Manicouagan reservoir area. In particular, interest for this type of deposit could come from the future graphite-based plastic polymer industry.

Between 2014 and late 2017, Focus completed three drilling programs that investigated a 1.4 km segment of the Manicouagan-Ouest Graphitic Corridor (MOGC) with an anticipated total of 9,800 m of systematic large diameter core drilling.

The information gathered from those three drilling programs will be combined to generate an initial mineral resource estimate (MRE) on the highest-grade section of the MOCG by Q3 2018. The MRE will then form the basis for the preparation of a Preliminary Economic Estimate (PEA) on the Project to determine its future economic viability.

The fall 2017 exploration program at Lac Tétépisca was designed and operated by IOS Services Géoscientifiques (IOS) of Chicoutimi, Québec, under the supervision of the Table Jamésienne de Concertation Minière (TJCM) of Chibougamau, Québec. The core drilling contractor is Chibougamau Diamond Drilling Ltd. of Chibougamau, Québec. Focus has earmarked a budget of $1.35 million for the fall exploration program.

Kwyjibo Rare Earth Elements Project

On October 02, 2017 Focus Graphite Inc. and its development partner SOQUEM Inc. announced they had engaged Met-Chem of Montréal, a division of DRA Americas Inc. to undertake a Preliminary Economic Assessment  (PEA) of their Kwyjibo Polymetallic-Rare Earth Elements (REE) – Copper-Iron-Phosphate project located in the Côte-Nord administrative district of northeastern Québec.

Kwijibo was designated by the Quebec government in 2010 as a priority economic development target. It sits in one of the province’s historically rich iron ore, copper and gold mineralized zones.

The property, discovered in 1993 during a follow-up of regional geochemical lake sediment anomalies, totals 118 mining titles and covers 6,278 hectares. It is located about 10 kilometres north of Lac Manitou and 125 km northeast of the port city of Sept-Îles, in the Côte-Nord administrative district of northeastern Quebec.

Focus CEO Gary Economo said the decision to undertake the PEA study coincided with a number of encouraging market factors, chief among them, a significant rise in market prices during the first half of 2017 for neodymium and praseodymium.

He said the PEA Study undertaking with Met-Chem/DRA, when completed, and, if positive, could lead to further investigation of the Kwyjibo Project’s feasibility as a potentially new North American rare earths source.

The PEA will be based on promising hydrometallurgical test results from lab-scale work being conducted at Hazen Research Inc. of Golden, Colorado. On November 21, 2016, Focus and SOQUEM announced results from the 2014-2015 chemical leaching test work program conducted on two composite drill core samples from the Magnetite and Lower Breccia zones of the Josette horizon.

The tests and subsequent purification steps are supervised by Mr. Eric Larochelle, P. Eng., a metallurgical consultant part of Met-Chem/DRA’s team of experts.

Under the terms of the Aug. 3, 2010, agreement with SOQUEM, Focus Graphite could earn a 50 percent interest in the Kwyjibo property by spending up to $3 million in exploration work over a five-year period. Focus reached that milestone in 2012, thus earning its 50 percent interest.

Exploration work, including core drilling, carried out by Focus and SOQUEM on the property in 2011 and 2012 showed the dominant REE minerals are neodymium (Nd) and yttrium (Y) (Note: Strictly not a REE, yttrium is included in the suite of REE as its chemical properties and uses resemble those of heavy rare earths). Both of these minerals are included in the list of critical rare earth elements sought by industry as defined by the U.S. Geological Survey.

Green Energy Business Alliance

Known as the 2GL Platform, a new strategic Green Energy Business Alliance promises to reinvent a business approach for the green energy economy. Focus Graphite’s affiliate Grafoid Inc. formalized its Green Energy Business Alliance with Focus Graphite, Stria Lithium and Braille Battery in May 2016. The collaborative agreement integrates graphene, graphite, lithium and battery innovation, creating a shared vision and direction for the development of materials, technologies and processes critical for next-generation energy applications.

Research and development will be coordinated through Grafoid’s Global Technology Center in Kingston, Ontario, Canada.

Management

Gary Economo—President, Chief Executive Officer and Director

Mr. Economo has a distinguished business leadership career, serving as Chief Executive Officer for a number of public and private high technology companies during the last 20 years. Mr. Economo enjoys a long history of graphite marketing and sales for high-tech applications. Prior to joining Focus Graphite Inc., a company he founded with Jeffrey York, he served as Director, Corporate Communications and Investor Relations for Everton Resources Inc.

Over the span of his business career, Mr. Economo has provided strategic consulting and representation services to technology companies in North America and Asia. In particular, he has a track record of success and expertise in building shareholder value when tasked with bringing discovery companies to market. Born in Greece and raised in Montréal, Mr. Economo is trilingual and lives with his family in Ottawa. Mr. Economo is also acting CEO of Grafoid Inc.

Judith T. Mazvihwa-MacLean, CMA, MBA, MSc—Chief Financial Officer

Ms. Mazvihwa-MacLean has nearly two decades of experience in mineral exploration, mining, management, and corporate finance. Prior to joining Focus Graphite, Ms. Mazvihwa-MacLean was the Chief Financial Officer for Golden Harp Resources, Logan Resources and Acme Resources (formerly, International KRL Resources Corp.). She also served on the Board of Directors for both Logan Resources and Acme Resources.

Ms. Mazvihwa-MacLean has a significant academic background. She holds a B.Sc. (Geology) from the University of Zimbabwe, an M.Sc. from Brunel University in England, and earned her MBA at Simon Fraser University in British Columbia. She was accredited as a Certified Management Accountant by the Certified Management Accountants Society of British Columbia. Ms. Mazvihwa-MacLean is also Chief Financial Officer for Grafoid Inc.

Joseph E. Doninger, PhD —Director of Manufacturing and Technology

Dr. Doninger is the developer and co-developer of a number of U.S., European and Canadian patents related to carbon processing methodologies and processing equipment.

A chemical engineer, Dr. Doninger is the author and co-author of some two dozen technical papers and studies related to graphite composite anodes; carbon-based materials for electrochemical energy storage systems; advanced graphite for lithium-ion batteries and other related publications. He also is a co-editor of a NATO Science Series book titled New Carbon Based Materials for Electrochemical Energy Storage Systems.

Dr. Doninger’s academic background includes an Honorary Professorship at the Department of Chemistry, Kiev National University of Technologies and Design; a Doctorate of Philosophy in Chemical Engineering and Master of Science, Chemical Engineering, Northwestern University, and; a Bachelor of Science Degree in Chemical Engineering, University of Illinois. As a consulting engineer, Dr. Doninger served as President of Dontech Global, Inc. During his 17-year career with Superior Graphite Co., he held the posts of Senior Vice-President, Technology, Vice-President, Engineering and Product Commercialization, Vice-President, Manufacturing, and Vice-President, Technology. His corporate background also includes that of Vice-President, Sales and Marketing, Minerals Group, Applied Industrial Materials Corp, of Deerfield, IL; and General Sales and Marketing Manager, International Minerals and Chemical Corp., of Libertyville, IL.

Jeffrey York—Chairman of the Board

Mr. York is the Chief Executive Officer of Farm Boy Inc., named one of the best managed companies in Canada in 2011. A chartered accountant, Mr. York began his professional career with Ward Mallette, Chartered Accountants, before joining Giant Tiger Stores Limited — a regional retail chain which he grew into a national, billion-dollar company. During his 20 years with Giant Tiger, he served as President and Chief Executive Officer of the company for 10 years. Mr. York is an active member of the Young Presidents Organization and has been involved in that executive network since 2002.

As a co-founder and Chairman of the Board of Focus Graphite Inc., Mr. York is a director who has an active role in shaping the company’s business growth and development. He graduated from Princeton in 1986 with a degree in Economics and obtained his Chartered Accountant designation in 1989. Mr. York is also Chairman of the Board of Grafoid Inc

Chester Burtt—Director

Mr. Burtt is President of Chester Burtt & Associates Ltd. (CBAL), a corporate and public affairs advisory firm that specializes in connecting private and public companies with domestic and international opportunities. CBAL also arranges for the provision and supply of financial services in mergers, acquisitions and joint ventures.

Working through an international network and associate firms, CBAL has a 25-year history of offering a full range of services to assist companies with strategy development and decisions to best suit their investor and corporate relations. Mr. Burtt graduated with a BA from Waterloo Lutheran University and MA from Wilfrid Laurier University in Political Science. Mr. Burtt also serves as Director of Corporate Communications for Grafoid Inc.

Francis Pomerleau — Director

A Civil Engineer, Mr. Pomerleau was born and raised in St. Georges, Québec. He joined the Pomerleau Group of companies in 1991 as an assistant project manager. Currently, Mr. Pomerleau serves as a Director of the Pomerleau Group and is President of Ottawa-based Pomerleau Ontario. He also serves as Co-President of Ébénisterie Beaubois Ltée, an architectural millwork company.

In addition to his day-to-day management responsibilities, Mr. Pomerleau is actively involved with several industry-linked committees and is Chair of the General Contractor Council of the Canadian Construction Association. Mr. Pomerleau holds a civil engineering degree from École Polytechnique de Montréal, and an MBA from the International Institute for Management Development (IMD) in Lausanne, Switzerland.


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