Northern Graphite Corporation · TSXV:NGC
Northern Graphite — Investor Presentation (January 2012)
31 slides from Northern Graphite's investor presentation, January 2012
Slide 1: Northern Graphite Corporation: The New Strategic Mineral
Northern Graphite Corporation (NGC:TSXV, NGPHF:OTCQX) The New Strategic Mineral
Slide 2: Forward Looking Statements
Forward Looking Statements This Presentation may contain “forward-looking information” which may include, but is not limited to, statements with respect to: timing of the receipt of governmental approvals and/or acceptances; targets, estimates and assumptions in respect of production and prices; amo
Slide 3: Cautionary Statement Regarding Mineral Resources
CAUTIONARY STATEMENT REGARDING MINERAL RESOURCES This presentation and other information released by the Company uses the terms “resources”, “measured resources”, “indicated resources” and “inferred resources”. United States investors are advised that, while such terms are recognized and required by
Slide 4: The Newest Strategic Mineral
The Newest Strategic Mineral • Growing industrial demand from emerging economies • Prices have tripled • Demand growth from many new applications - Li ion batteries, fuel cells, VRBs, nuclear power • Chinese supply concerns (70% of world production) • EU and USA have named graphite a supply critical
Slide 5: Graphite 101
Graphite 101 • One of two natural carbon polymers (diamonds) • Highest natural strength/stiffness of any material • Corrosion and heat resistant • Excellent conductor of heat and electricity • High lubricity • Lightest weight of all reinforcements 1
Slide 6: What is Graphite Used For?
What is Graphite Used For? • 5% annual growth rate this decade – Driven by Asian steel and auto markets • Major end uses – Steel & refractories (41%) – Carbon brushes and batteries (21%) – Automotive parts (14%) – Lubricants (14%) – Other (10%) 1
Slide 7: Large and Growing Industrial Market
Large and Growing Industrial Market (tpy) Nickel 1,276,000 Graphite 1,006,000 (40% flake, 60% amorphous) Molybdenum 190,000 REE (oxides) 124,000 Cobalt 68,000 Tungsten 55,000 Lithium 23,000 1
Slide 8: Green Energy Technologies
Green Energy Technologies • Four emerging technologies with potential to use multiples of current annual production • All have operating versions now – Lithium ion batteries – Fuel cells – Pebble bed nuclear reactors – Vanadium redox batteries 1
Slide 9: Lithium Ion Batteries
Lithium Ion Batteries • Graphite is the anode material - no substitutes • It takes 20-30 times more graphite than Li (by weight) to make Li ion batteries • Current Li ion battery demand 30,000 tpy and growing 20-30% annually - Replacement of traditional battery technologies • Li ion batteries in car
Slide 10: Incremental Li Carbonate Demand in 2020
Incremental Li Carbonate Demand in 2020 (000 tonnes) EV Market Penetration 1% 5% 10% 15% 20% 5% 49 109 185 260 336 HEV 10% 82 143 218 294 370 Market Penetration 15% 116 176 252 328 403 20% 150 210 286 361 437 25% 183 244 319 395 470 (Canaccord Research) 1
Slide 11: Required Annual Flake Graphite Production
Required Annual Flake Graphite Production (000 tonnes) 2020 EV Market Penetration 1% 5% 10% 15% 20% 5% 286 637 1,082 1,520 1,965 10% 479 836 1,274 1,719 2,163 2020 HEV Market 15% 678 1,029 1,473 1,918 2,356 Penetration 20% 877 1,228 1,672 2,111 2,555 25% 1,070 1,310 1,865 2,310 2,748 Current annual
Slide 12: Fuel Cell Demand
Fuel Cell Demand • All major car companies are working on fuel cell vehicles (which contain 80kg of graphite) • “Toyota sees a clear path to commercial introduction of fuel cell vehicles by 2015” • Fuel cells vehicles, along with EVs, are part of the solution to reducing dependence on non-renewable
Slide 13: Vanadium Redox Batteries
Vanadium Redox Batteries • leading energy storage system for renewable energy sources such as wind/solar • virtually unlimited storage capacity, long battery life, low maintenance requirements, nominal environmental footprint. • 300 tonnes of graphite per 1,000MW VRB 1
Slide 14: Pebble Bed Nuclear Reactors
Pebble Bed Nuclear Reactors • Smaller, safer, less costly to permit, build and operate • Fuel is uranium embedded in graphite balls -3,000t of graphite to start, 600-1,000 tpy per 1,000MW • China has operating prototype, and state-owned Huaneg Group is building two pebble-bed reactors of 200MW each
Slide 15: Chinese Supply Concerns
Chinese Supply Concerns • 70% of global production from China • Mainly low carbon, low value powder or small flake • Declining production and increasing costs forecast – decreasing quality and deeper operations – increasing labor & environmental standards – modernization and consolidation of industr
Slide 16: A Compelling Supply/Demand Story
A compelling Supply/Demand Story • Growing demand from traditional uses • Growing demand from new industrial applications • Growing demand from green energy technologies • Market dependence on Chinese • Chinese supply issues • Lack of exploration, investment and new projects 1
Slide 17: Graphite Prices on the Rise
Graphite Prices on the Rise Demand growth combined with supply concerns have led to 78% price increase over the past 4 years Source: Industrial Minerals Magazine 1
Slide 18: Premium Price for Size/Purity (US$/tonne)
Premium Price for Size/Purity (US$/tonne) Concentrate Purity 80-85% C 90% C 94-97% C Extra Large (+48) - - +$3,000 Large (-48 +80) - $2,000-2,500 $2,500-3,000 Flake Size Medium (-80 +100) $1,500-1,900 $1,500-2,000 $2,200-2,500 Fine (-100) - $1,400-1,800 $2,000-2,400 Amorphous powder $600-800 - - Bis
Slide 19: Bissett Creek Project
Bissett Creek Project • 100km east of North Bay, Ontario • Easily accessible, 17km from Trans-Canada hwy, close to infrastructure • Close proximity to major North American steel and automotive markets • Freight cost advantage 100 km 1
Slide 20: Large Scalable Graphite Resource
Large Scalable Graphite Resource •Full feasibility study in 1989 (including P&P reserve*) •2010 NI 43-101 Preliminary Assessment Report 2011 Updated Mineral Resources (Diluted) Indicated Inferred %Cg Tonnage* Cg(%) by In Situ Graphite** Tonnage* Cg(%) by In Situ Graphite** Cut-‐off (metric tons) LEC
Slide 21: Expansion Potential
Expansion Potential 5,112,500 mN Pit 2 Outline 5112,250mN or 2010 PEA Pit 4 Outline 5,114,750 mN lometers ‘Scale: 17,502
Slide 22: Simple Mining
Simple Mining • Deposit at surface, no overburden • Continuously mineralized throughout • Low waste-to-ore ratio • Conventional open pit mining Typical cross-section of Bissett Creek orebody 1
Slide 23: Simple Metallurgy
Simple Metallurgy • Bulk sampling, pilot plant testing, and extensive lab work previously completed by Cominco/Kilborn/BD • Conventional flotation processing (92-95% recoveries) • Confirmed by independent tests in 2007 and 2011 • Additional pilot plant completed 1Q 2012 1
Slide 24: Large Flake, High Purity Deposit
Large Flake, High Purity Deposit • 50% +48 mesh jumbo flake 98%C • 30% +80 mesh large flake 94%C • 7% +100 mesh medium flake 94%C • 13% +200 mesh small flake 94%C • Even if some mines increase their production, this will not solve the persisting supply problem for large flake crystalline graphite .
Slide 25: Project Parameters
Project Parameters • C$70-80 MM capital cost • 2,500 tpd processing rate • 19,000 tonnes of graphite produced per year • <0.50 waste-to-ore ratio • Cash cost of $1,000 per tonne • 40 year life-of-mine with expansion potential The 43-101 Preliminary Assessment includes inferred mineral resources whic
Slide 26: Timeline to Production
Timeline to Production 2010 2011 2012 2013 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Exploration & expansion drilling Confirm metallurgy Pilot plant Bankable feasibility Permitting Construction 1
Slide 27: High Price Leverage
High Price Leverage Conservative 43-101* Current ($CDN/tonne) Average price $1,300 $1,700 $2,500 Costs 1,000 1,000 1,000 Margin $300 $700 $1,500 ($CDN) Net cash flow ($M) $108.3 $371.5 $937.0 NPV ($M @10%) $3.9 $75.6 $180.4 IRR (%) 10.6 24.0 42.0 Annual cash flow $3.9 $9.3 $28.7 *The 43-101 Prelimin
Slide 28: Northern Graphite Share Structure
Northern Graphite Share Structure Shares Outstanding Mindesta Inc. (OTC-BB) 9,750,000 Other shareholders 27,398,340 Total 37,148,340 Warrants 5,504,156 Options 2,950,000 Fully-Diluted 45,602,496 1
Slide 29: Experienced Management & Board
Experienced Management & Board Gregory Bowes B.Sc (geology), MBA CEO and Director Formerly Senior VP, Orezone Gold Corporation Don Baxter P. Eng President Formerly President, Ontario Graphite Corporation Stephen Thompson CA CPA (Illinois) Chief Financial Officer Formerly Vice President Finance, Otta
Slide 30: Summary
Summary Large, growing industrial market Demand growth from a number of new applications Supply concerns with China Large flake, high purity, advanced graphite deposit Good infrastructure and close to markets Experienced management team and board 1
Slide 31: Next Steps
Next Steps • Test production of spherical graphite - 1 month • Complete bankable feasibility study - 2 months • Negotiate financing/offtake with strategic partner • Initiate detailed engineering, site preparation, order long lead time equipment (subject to FS results) • Major permits in 2Q 2012 • Co
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