Sunday, February 26, 2012

Focus Metals prepares to gain momentum as we start into a new year

Focus Metals (TSXV:FMS)(OTCQX:FCSMF) has been a very busy company over the last year and a bit. They have remained strong through all the criticism of not having a NI43-101 compliant resource estimate and not being able to provide any proof of interest by outside entities. http://www.focusmetals.ca/english/news/press-releases/2011-2/dec12011

http://www.focusmetals.ca/english/news/press-releases/2011-2/dec52011

In hindsight the management of Focus Metals has put to rest all of these issues, and as they progress forward from here, I believe we will see them continue to provide the "proof" that this is truly going to become the go-to company of the entire graphite and graphene sector globally. Management has stated several times that they have every intent of pursuing this position. They have claimed they were in the market to buy any claims that they believe hold value to further this drive of acquiring the goal they have set for the company. To date I think it is very difficult to argue that management has done anything but a superb job. They have managed to expand the company portfolio of graphite claims by a whopping 265 claims, all of which are reported to contain favorable indications that high quality graphite is present. http://www.focusmetals.ca/english/news/press-releases/2011-2/sept92011
http://www.focusmetals.ca/english/news/press-releases/2012-2/jan122012

Focus Metals started a joint venture for the research of graphene, a company known as Grafoid Inc. The purpose of Grafoid is to research graphene from a number of fronts. First, Grafoid has been researching to try and find a process that will allow the company to produce graphene at the lowest cost available, and it seems with overwhelming success. Although not much is being communicated on this issue, it seems the secrecy is more rooted in the fact that patents are being currently applied for. Another approach to the research is to attempt to discover processes and products that can be patented and licensed. With graphene being arguably the hottest product to grace virtually any research lab at the present time, it goes without saying just how much value Grafoid can potentially bring to the table. To bring this into terms that show the true impact both Focus Metals and Grafoid are having on the graphite and graphene space, I find the signing of the MOU between Grafoid and Rutgers University to hold tremendous weight. Rutgers University enjoys a reputation that states they are considered one of the most highly regarded institutions involved in the research of material science, specifically in the field of polymer and non-polymer research. http://www.focusmetals.ca/english/news/press-releases/2011-2/feb232011
http://www.focusmetals.ca/english/news/press-releases/2011-2/dec12011
It is reported that this research is being quite positive, however, the management is not releasing any details just yet. I have been told that these details will be forthcoming in the near future.

The actual demand for graphite will continue to rise I believe, and a major driving force of this demand will undoubtedly be the advent of the lithium-ion battery to be used in the upcoming shift towards the all-electric vehicles of the future. I would venture to say that the future on this front is no longer to be called the future, but rather the present. The number of companies that are building lithium-ion battery plants in North America, or are currently considering doing so, speaks to this end. http://www.mlive.com/business/west-michigan/index.ssf/2010/03/lg_chem_to_build_1st_north_ame.html

http://www.nissanusa.com/leaf-electric-car/news/press-releases/nissan_progresses_construction_of_electric_vehicle_battery_plant_in_tennessee#/leaf-electric-car/news/press-releases/nissan_progresses_construction_of_electric_vehicle_battery_plant_in_tennessee

http://www.xconomy.com/detroit/2010/09/13/a123-opens-lithium-ion-battery-plant-in-michigan-wants-to-create-global-hub-for-electric-vehicles/

We also need to consider the fact that the worlds largest lithium-ion battery plant,which has started production of high-capacity lithium-ion batteries, will be another source that will require huge amounts of graphite. Although this plant is situated in Russia, it is reported that they expect to export into both the European and North American markets. http://english.ruvr.ru/2011/12/08/61812285.html

http://www.energytrend.com/node/2908
It is already a well known fact that the lithium-ion battery possesses a much higher quantity of graphite as opposed to lithium, thereby it is clear that graphite demand will only continue to grow.

While not just any graphite will suffice in the manufacturing of these batteries, Focus Metals has an abundant supply of the type of large flake graphite that will be required for this type of application. I fully expect that Focus Metals and Grafoid will both benefit immensely from the intense growth demand that will, with near certainty, develop as these battery plants begin production.

Many graphite companies are starting to emerge as of late. While it is true that their will be ample room in this sector for multiple companies to produce graphite, it should also be noted which companies are best positioned to withstand the rigors that face all industries at one point or another. In reality, there are times when prices and short-term demand trends can cause significant changes to a companies bottom line for profitability. Lac Knife is the flagship project of Focus Metals. What Lac Knife contains, in terms of the amount of graphite and the grade of this graphite, help us to see the tremendous advantage that Focus Metals has over competitors. As if that was not enough, it should be noted that, unlike many graphite deposits, the host rock is extremely soft. This all points to a cost of production figure that allows Focus Metals to truly take a comfortable lead ahead of virtually all competitors. Many of these points are discussed in the NI43-101 resource estimate which is effective as of December 5, 2011, and which was filed officially on January 18, 2012. http://www.focusmetals.ca/english/wp-content/uploads/2012/01/43-101Report_Lac-Knife.pdf

The Lac Knife deposit is open in all directions, and management has stated they want to drill deeper to help further delineate the potential depth of the deposit. All drilling thus far on Lac Knife has ended in mineralization. Focus Metals decided last year to do an expanded drill program to embrace this issue. Permits were applied for but some delays were experienced which held up the progress of drilling to such a degree that drilling had to be cancelled for last year. In talking with management, I have been told we can expect drilling to begin approximately the end of April to the beginning of May. Obviously this will be conditional on the local weather. It was also brought to my attention that there are 9 additional drill targets have been identified. These are over and above the previously planned expanded drilling program. The potential of all of these additional drill targets are great, based on the outcrop samples taken. According to management, the potential is such that if these newest drill targets do in fact intersect the expected mineralization, each hole could in fact become another pit, similar to the existing pit design. Here is a map showing the locations of the newest drill targets.
http://www.focusmetals.ca/english/wp-content/uploads/2011/06/LacKnifeGeology_Map11x17_f1.jpg
From my experience when I toured the Lac Knife property and saw the size of some of the large outcrops at surface, I have little difficulty expecting much less than the potential for a huge addition to the resources. I can not even begin to tell everyone what the potential is for this drilling program, but to describe it in terms of monumental would be a gross understatement in my opinion.
In some of the most recent news from the company, we find that they have announced a bought deal private placement of flow-through shares. http://www.focusmetals.ca/english/news/press-releases/2012-2/feb232012
The funds are intended to be used to explore and advance Focus Metals’ Lac Knife Graphite Project located in Québec.

An important issue that shareholders are waiting for word on currently, is word on an off-take agreement. While there has been no official news regarding an anouncement, it is just a matter of time before this announcement is undoubtedly made. Focus Metals CEO, Gary Economo has previously stated that the company has been actively pursuing this type of agreement, and that several companies are in possession of graphite samples that they can do testing on to ensure that the graphite will meet the necessary requirements for their specific use. I may be only speculating as to which companies may be involved in the testing of graphite from Lac Knife, but I fully expect that when this announcement is made it will not be surprising to find some of the largest consumers of graphite. I believe this since management has made no secret that they plan to move into a position of dominance in the graphite sector globally. This would indicate to me that we can expect some of the largest consumers of graphite to be numbered into our potential off-take partners.
As I mentioned previously there are a number of graphite companies cropping up recently. While I see the potential for some of these companies to progress towards production, it should be noted as to the importance of this testing process by the end-user of the graphite. Graphite is not like most other mined products, such as silver or gold etc., it is in fact very necessary for each company to test the graphite to ensure its suitability for a specific use. Focus Metals is ahead of most, if not all, competitors on this front. This will help Focus Metals to solidify their pursuit of becoming a leader in the graphite space.

Another topic that has been mentioned by management is the desire to change the company name from Focus Metals to Focus Graphite. This would help to bring attention to the core holding and value of the company. It is my understanding that this change should take place after the upcoming AGM. Considering all of the above it would seem there should be no shortage of news as Focus Metals progresses.

As we move on to take a look at what is new on the graphene research front, I believe there are a number of potentially important findings. For instance, in an article found in Science Daily, dated Feb.22, 2012, testing has found graphene to produce an anti-corrosion coating that would appear to be superior in nature. http://www.sciencedaily.com/releases/2012/02/120222133125.htm

One university in particular has come to the attention of those looking at highly regarded facilities or institutions that rank high in a global standing for graphene research. This would be the National University of Singapore, which ranked 2nd in the world for graphene research.
http://www.graphenecenter.org/content/glance-over-nus-research-landscape

http://www.graphenecenter.org/content/research

http://www.graphenecenter.org/content/graphene

For those who may have read every possible article regarding graphene and the myriad of potential uses, and have become dishearted with the decision that many years of research are needed to overcome one fault or another which researchers seem to continue to run into, I bring you this article. This article is from Manchester University. It contains the results from a project undertaken by a team lead by Nobel laureates Professor Andre Geim and Professor Konstantin Novoselov. I believe that this is the type and caliber of research we can expect to see on a more consistent basis, not only from this University, but from a host of other research labs around the globe. http://www.eurekalert.org/pub_releases/2012-02/uom-gem013112.php

As we can see from these many links which confirm or explore the potential ahead for both graphite and graphene as research projects progress, there is beyond all doubt some very exciting times coming. I believe Focus Metals has positioned themselves superbly to gain maximum benefit from this, and I expect that as management continues to work diligently in this regard, we will continue to experience an ever-building growth that will catapult Focus Metals to the forefront of this entire graphite/graphene sector globally. I also believe we will see a growth of similar porportions, or greater for Grafoid. It has been less than 2 years since Focus Metals has started trading on the TSX Venture exchange, and the growth has been absolutely stunning to-date.

If what is presented here appeals to you as a worthwhile investment choice, I would urge you to do your own due diligence. If necessary seek the advice of a professional advisor. A great place to start in my opinion is at the company website which can be found at www.focusmetals.ca. All publicly filed reports and documentations can be found by visiting www.sedar.com and looking under Focus Metals.

For the purpose of disclosure, I wish to make known that I have received no compensation of any kind for this post or my opinions. All opinions stated herein are strictly my own. I own shares of Focus Metals.