Tuesday, June 21, 2011

A look at where Focus Metals appears to be headed in the future with graphite and graphene

Many people, if not everybody, are all wishing they knew the answer to the ultimate question, "Where is Focus Metals really headed". For shareholders it is a very valid question, and one that all too many times in history, has not ended in the answer that people had hoped for. Personally, I opine that this is definitely not the case with Focus Metals (TSXV:FMS). The management has stood by every statement they have made, providing it is of course within their control. In the matter of the NI 43-101, which is anticipated by many, management had originally made a statement of when they expected to release this  document. Although this was accurate at that specific time there are issues that can arise that are beyond expectation or control of the company. It is my understanding that this is the case in this regard. Ultimately the NI 43-101 issue has already been dealt with for all intents and purposes since the company has already reported that there is little to no changes to be made from the historical data that has been presented in the past. With this particular property scheduled for production not once but twice in the past leaves one with the understanding that this 43-101 is more of a formality as opposed to something unknown.

In answer to the original question of where is Focus Metals headed, let's take a look at who they may be looking at for possible companies that will help to bring the most value to the company.
There are obviously many companies to look at but I will cover the ones that I feel would have the highest potential in my opinion.

One of the first companies that stands out prominently in my mind is a company called Superior Graphite. Superior Graphite is a private company but are considered to be a leader globally in a large number of graphite applications and uses. The "fit" between these two companies is probably most closely resembled by a hand in a good fitting glove. The scope of what Superior Graphite has to offer in terms of what products and services they currently provide is impressive at the least.

Superior Graphite has a wide range of markets they serve in a variety of ways. Some of these markets include agriculture, battery / fuel cells, ceramic armor, carbon parts, ferrous / nonferrous metallurgy,
friction management, hot metal forming, polymer / composites, powder metals, lubricity, and performance drilling additives. They specialize in thermal purification, advanced sizing, blending, and coating technologies. As you can see, this is not only a business that provides value added graphite and carbon-based solutions globally, but if Focus Metals were to begin a relationship with this company, the tremendous upside potential would be huge.

While some of my previous posts have explored the possibilities of graphene, which I firmly believe will become a market of extreme importance to Focus Metals, this post will deal more with the current uses of graphite and how this can help to raise the value of  Focus Metals.

Superior Graphite produces everything from a product they call Protect Tiles *, to HSC Silicon Carbide Powder*, and FormulaBT*, and a list that is overly impressive. The company is developing a system for the in-situ recovery of oil from oil sands deposits. This technology is based on the elctro-thermal heating of carbon electrodes. The heat induced to the electrodes is then transferred to the oil deposits allowing the oil to flow towards the recovery systems. If anyone has flown lately during the winter season you may well appreciate the fact that there is a product called Snowfree*. This is a product that is a proprietary asphalt-based paving system developed to maintain the surface of an asphalt pavement free of snow. This system has been developed for installations that are plagued by snowfall disruptions and where safe winter operations are required. http://www.superiorgraphite.com/brands-snowfree.php
Not only is Superior Graphite one of the leading companies globally in graphite use for the products they manufacture, but they also have some of the most state-of-the-art facilities for research and development. http://www.superiorgraphite.com/about-research.php

 I will give you the link to their website here, http://www.superiorgraphite.com/index.php. I would suggest to look through their whole site and I'm sure you will quickly see why I find this to be a company that I would not be surprised to hear more of in the future in connection to Focus Metals. I might add that you should especially explore the tab for solutions, this will show you a complete listing of what Superior Graphite produces. I will venture to say that if I am correct in my assumptions, this could potentially be a company that Focus Metals has engaged in negotiations, and if so Focus Metals value will not only rise significantly, but will be measured in terms of rising by a factor of much higher than double or triple. In my opinion this would position Focus Metals to become a giant in the sector if not the leader of the graphite producers. The fact that Superior Graphite has over 90 years experience in the field of working with graphite is just one more plus in my view.

Now let me move on to what could conceivably be another potential candidate for a possible business relationship with Focus Metals. This company is called Graf Tech International. Headquartered in Parma, Ohio, GrafTech is one of the world’s largest manufacturers of synthetic and natural graphite used primarily in the manufacture of graphite electrodes, which are essential to the production of electric arc furnace steel. The 125-year old company also manufactures graphite for use in high-growth markets such as consumer electronics, solar energy, and oil and gas exploration.

With the experience and the locations of their manufacturing facilities they would obviously fit well into the plan that Focus Metals has both now and looking forward. Their  products, which include graphite electrodes, advanced carbon and graphite materials, and flexible graphite, are manufactured on four continents and sold to customers in over 65 countries.Graf Tech is therefore capable, as a potential company with whom Focus Metals reaches an agreement, of assisting Focus Metals bring their business plan to fruition.

These are two of the more prominent choices that I believe have everything to offer that Focus metals would look for in a company. There are of course any number of other companies that also have many of the qualities that would attract attention from Focus Metals. Showa Denko Carbon Inc. (SDKC) is another company that potentially might be suited to Focus Metals. Here is a link to their site. http://www.sdk.co.jp/english/news/2011/12424.html
Another company that stands out somewhat would be Olmec Advanced Materials. This company prefers to work with the highest grades of flake graphite they can obtain. They specialize in some very unique products that require flake graphite that has the capabilities to be purified to 99.5% to 99.9%. Although graphite itself is not that uncommon, to find flake graphite of the grade that Focus Metals possesses in their Lac Knife deposit is not common. This is even touched upon in SDKC's website, and although the only mention of graphite in Canada is of British Columbia, I would expect they would give Focus Metals their undivided attention upon learning of the grades available and the quantity available. Here is a link to their website. http://www.olmec.co.uk/graphite_and_carbon.htm

All of these companies have potential to be possible candidates for companies that Focus Metals may be in negotiations with, but if they announce publicly that my assumptions are true, I am sure I need not explain how this will change the value of Focus Metals upward in a significant way.

Overall I am completely satisfied with everything that I see management doing in their effort to live up to their promise to shareholders in that they said they planned to unlock as much value as possible from this company. To-date I view them doing exactly that, and as we progress forward with the business model they first delivered, I foresee some very exciting things to come from this company. The company has already said that the 43-101 is delayed, and as I stated earlier, it is my belief that this is not something that is within the managements control. Focus Metals has also hired Roscoe Postle Associates (RPA) to commence work on the mine design and engineering for Focus Metals' Lac Knife, Quebec flake graphite property, as released in this news release, http://www.focusmetals.ca/news-focus-metals/may6-mine-design-lac-knife-graphite.html
These points, along with the on-going negotiations for off-take agreements will undoubtedly bring lots of news over the coming months.

Please Note: Any names of products or companies that are identified with an "*" denotes that these names are trademarks or registered insignia of the companies which use and own these trademarks.

For disclosure purposes I have received no compensation of any kind for this post. I do own shares in Focus Metals and I may add to this position within the near future.

1 comment:

  1. An informative post about where Focus is going and who they many take the journey with