Focus Graphite Announces Project Development Update

Focus Graphite Inc. (TSXV:FMS,OTCQX:FCSMF,FWB:FKC) announced an update including achievements in battery testing, run of mine process testing, customer analyses of high purity graphite, offtake discussions and mine and plant financing discussions.
As quoted in the press release:

On November 17, 2015, the Government of Quebec revealed that overall mining investment in the province in 2014 declined 35% to $3 billion with an anticipated further decline of 8.2% in 2015.
Quebec, considered to be one of the world’s best mining jurisdictions, exemplifies current global market conditions and stands as an economic barometer as commodity producers tread water in anticipation of demand recovery.
Against that unflattering investment backdrop, Focus’ management continues to advance efforts on a number of key development activities necessary to bring our Lac Knife graphite project to production.
Advancing Offtake Discussions
With three offtake agreements in hand to date, we are engaged in ongoing materials testing discussions with some 30 potential customers as we continue our own internal tests of Lac Knife Run of Mine concentrates to meet specific customer needs.
Different grades of concentrate recovered during pilot plant tests conducted at SGS Labs in 2013 are being upgraded so that we can continue to supply potential customers with larger samples of graphite for application in a variety of markets including thermal management, energy, automotive and other sectors.
And, we have increased our capabilities to produce large samples of thermally purified Lac Knife graphite samples while we continue to improve our spheronization and carbon coating techniques.
Excellent Results from Battery Testing
On November 25, 2015, we published initial testing results from our long-term battery cycling performance testing. They showed there was zero capacity loss after more than 100 cycles of a lithium-ion battery coin cell – the standard for laboratory testing.
To the best of our knowledge, we are unaware of any competitor or graphite processor achieving similar results.
Highlights of the tests included:

• Coin cell tests run on purified uncoated and coated standard grades of Lac Knife spherical graphite (SPG) showed that both grades exhibited essentially no loss in capacity up to the limit of the tests of 110 cycles
• Coin cell tests run under the same formulation and conditions showed that the two commercial grades of coated flake graphite exhibited capacity losses of 4.35% and 6.43% up to the limit of the tests of 110 cycles.

According to Dr. Joseph Doninger, our Director of Manufacturing and Technology, who supervised the testing, himself, a global expert in graphite processing and product development, said the data suggests the excellent long-term stability achieved using Lac Knife graphite in Lithium-Ion batteries should ultimately result in an increase in the range of electric vehicles before they have to be re-charged.
A more robust longer-term testing program is being planned for 2016.
The news release is available on our website at www.focusgraphite.com
Meanwhile, we continue to meet our scientific obligations that require us to provide potential customers with detailed technical analyses of materials produced from pilot plant samples and from our purified battery grade graphites for their evaluation.
Focus Graphite-Grafoid Offtakes
On September 25, 2015, Focus was pleased to announce the signing of definitive agreements with Grafoid Inc. for two significant Lac Knife graphite offtakes.
The “Graphene Offtake” is intended to supply Grafoid’s needs for a range of next-generation graphene-based automotive batteries, batteries for consumer electronics, and energy storage applications.
Focus estimates that the Company could record approximately US$17.2 million in revenue under the first 10-year term of the agreement, if fully exercised.
The second and larger “Polymer Offtake” agreement is intended to supply Grafoid’s needs for a range of graphite-based polymer applications for the automotive and aerospace industries.
This particular area of commercial application development holds considerable promise for Focus and Grafoid, as OEMs are looking for lighter and stronger composite materials to replace expensive carbon fiber that ultimately reduce cost, increase fuel savings and build longer life into those components used in transportation industries.
A patented graphite-polymer process was developed by Grafoid’s wholly owned subsidiary, Graflow Inc., in partnership with Rutgers University’s AMIPP Advanced Polymer Center.

We estimate the Company could record approximately US$385.4 million in revenue under the first 10-year term of the agreement, if fully exercised.
Carbon Reinforced Plastics
The timing of the Polymer Offtake is supported by market research provided by Lux Research, an independent and reputable market research group.
Their report, entitled, Scaling Up Carbon Fiber: Roadmap to Automotive Adoption, claims carbon fibre-reinforced plastics (CFRPs) are on the verge of garnering widespread adoption for automotive “lightweighting” over the next decade, driven largely by faster-than-expected technology development.
“Current trends strongly indicate significant mainstream automotive adoption of CFRPs in the mid-2020s, and companies throughout the value chain must position themselves to take advantage of the coming shifts,” report author Anthony Vicari said.
“However, long-term mega-trends towards urbanization, connectivity and automation suggest that there could be a limited time window beyond that for penetrating the automotive space.”
The information contained in the report bodes well for both companies. The trickle down benefit for Focus resides with Grafoid’s unique, value-added graphite-polymer process.
Grafoid has assumed an early position with various automotive manufacturers for the development of next generation graphite-polymer components.
That process liberates small quantities of graphene that both strengthen and lighten the weight of the polymer applications. The estimated total value of the carbon polymer market in 2014 was approximately $15 billion.
Financing & Project Permitting
Those offtake agreements underscore Lac Knife Project’s development mission, in particular, our immediate goal of meeting our mine and concentrator financing needs of some $165 million.
While we have identified or committed a significant portion of our debt requirement we continue with our discussions on finalizing funding for the equity portion.
Those discussions include the potential sale of Grafoid shares currently held by Focus. Focus remains the largest single shareholder in Grafoid Inc. holding 7,800,000 Grafoid common shares valued at US$39 million.
Under the terms of the two above mentioned offtake agreements, Focus is committed to divest between 1,000,000 and 2,000,000 common shares, the proceeds from which will be applied to ongoing development costs of the Lac Knife Project.
Our administrative mine development efforts also remain on track. We are currently at the analysis phase of the permitting process for the mine site and concentrator facilities with provincial authorities.
Essentially, this is when the government asks for details regarding the project that is presented within the Environmental and Social Impact Assessment.
The project is ready to start the detailed engineering phase, and follows the filing of both the Lac Knife Mineral Project Feasibility Study and the Environmental and Social Impact Assessment in 2014.
Our Strategy
Our immediate goals are to bridge the gap between preparedness and future market needs, and; to be as ready-as-possible to meet the return of market-driven demand.
Focus Graphite continues to advance it’s regulatory mine development, line-up its financial partners, and engage its potential customers.
An active strategy of waiting is what is required now.  Market moves by major green economy players will propel the critical material producers.  The key is to be patient and ready.