Over the past year, Northern Graphite Corporation (OTCMKTS:NGPHF) has only managed peak at $0.29 while trading more regularly below $0.2.
In the past few weeks, Northern Graphite’s price has risen to $0.3, meaning investors who bought just a week earlier were able to get over 100% returns within that time. Interestingly, after a slight decline, the stock’s price has continued to rise in the last few days.
In this piece, we will give you the highlights of Northern Graphite and events that triggered the price movement.
First, take a look at the price movement for yourself:
Reports that the price of large flake (+80 mesh) graphite increased by approximately 30 per cent over the last couple of months and is again selling for over $1000 per tonne, FOB China while European and North American prices were generally $50-100 higher per tonne. XL flake (+50 mesh) prices also rose significantly while smaller flake sizes experienced more moderate price increases.
It was also reported by Industrial Mineral Magazine that the supply of large and XL flake graphite is tight which increased its price, influencing the rise of Northern Graphite’s stock.
For our readers who may not be familiar with Northern Graphite Corp, here is a brief overview. Northern Graphite Corp. was founded on February 25, 2002 and is headquartered in Ottawa, Canada. It is a mineral exploration and development company, which is engaged in the exploration, and development of mineral properties.
The company’s principal asset is the Bissett Creek graphite project located in Eastern Ontario which is close to required infrastructure including roads, towns, natural gas supply and a port. Bissett Creek is a very advanced stage, development project as the Company has completed a bankable Feasibility Study and received its major environmental permit. The Company believes Bissett Creek is the best new graphite project as it has the highest margin, the lowest capital cost and the lowest marketing risk.
Graphite is the anode material used to make lithium ion batteries and this market is growing at over 20% per year due to continued strong demand for personal devices and electric vehicles and grid storage are two big, new emerging markets. New, non Chinese sources of supply are urgently needed and Northern Graphite is well positioned to benefit. The company also engages in the upgrading of mine concentrates into value added products, particularly the manufacture of anode material for lithium ion batteries.
Northern Graphite is a Canadian company has a 100% interest in the Bissett Creek graphite. Subject to the completion of operational and species at risk permitting, which are well advanced, Northern could commence construction in early 2018 subject to obtaining the required financing. Northern Graphite believes that Bissett Creek has the best flake size distribution, highest margin and lowest marketing risk of any new graphite project, and has the added advantages of a low capital cost and realistic production target relative to the size of the market.
In August 2017, the company announced the results of additional metallurgical test work carried out on ore from the Bissett Creek deposit by BGRIMM, a Chinese state owned metallurgical research and development company. BGRIMM confirmed the high recoveries and high purities used in the Feasibility Study (“FS”) and successfully increased the percentage of high value, +50 mesh XL flake in the final concentrate from 48 to 61%.
Gregory Bowes, CEO was quoted saying:
“We believe Bissett Creek has the best flake size distribution of any graphite project which will result in concentrate prices that are more than 60 per cent higher than for the “average” project, and we will not have the fines problem that characterizes almost every graphite deposit.”
He added that:
“XL flake markets are growing rapidly while Chinese production of XL flake is declining which creates an excellent opportunity for the Bissett Creek Project.”
Earlier in April 2017, Northern Graphite announced the results of another metallurgical test work designed to optimize the purity of concentrates that will be produced from the Bissett Creek deposit. Testing was carried out by SGS Lakefield (“SGS”) and evaluated new approaches to graphite processing that have been developed since the Company completed its Full Feasibility Study.
SGS evaluated the effect on the flake size distribution and carbon content of graphite concentrates from using a stirred media mill instead of, or as a compliment to, the polishing mill. The stirred media mill successfully increased the overall purity of an earlier pilot plant concentrate from 93.4 to 97.9% graphitic carbon (“Cg”). The increase was mainly attributable to the smaller size fractions which averaged over 97% Cg. High purity levels of 97 to 98 per cent had already been confirmed in the important +32 mesh (XXL) and +50 mesh (XL) size fractions through locked cycle tests. Graphite concentrates are typically sold with 80% meeting the required size standard. Smaller sizes can make up the balance as long as the purity level is maintained which will be the case with Northern’s concentrates.
In March 2017, the firm closed its previously announced non-brokered private placement where it issued 8.3 million units at a price of $0.30 per unit for gross proceeds of $2.5 million. Each unit consisted of one common share and one half of one common share purchase warrant, with each full warrant entitling the holder to purchase one common share at a price of $0.40 per share for a period of two years. The securities were subject to a four month hold period from the date of closing and final approval by the TSX Venture Exchange.
Despite not having any revenues in the past few years, the company has been able to keep non-current assets worth over $9.5 million in its balance sheet with total liabilities of just $0.3 million.
Through its robust capital structure, it has also has cash of over $0.5 million and very high current ratio of 1.9. This is a reflection of healthy management of the company’s balance sheet by management.
The steady rise in price and performance over time increases investor’s confidence that all the news on Northern Graphite is more than just hype. It is expected that the stock’s value will remain on the rise as the market becomes more aware of its potential.
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Disclosure: We have no position in NGPHF and have not been compensated for this article.