Special Report: Lomiko’s strategy begins to take shape
Lomiko Metals (TSX-V: LMR, OTCQX: LMRMF) spent the autumn and winter of 2014-2015 advancing its graphite projects and moving forward with graphene technologies. It also stepped out into the growing electronics space. If you haven’t followed Lomiko, it may seem odd to be talking about mining and technology projects in one company. We spoke to CEO Paul Gill and started with how he saw the overall junior market and how it shaped Lomiko’s strategy.
“I’ve been in the juniors for 11 years, though sometimes it feels like 30 years. We saw ‘peak gold’ and the market crash in 2008, and we saw the junior market crash that same year. Now, despite large cap recovery, the junior markets haven’t come back. It was similar to 1929 and now we’re in the mid-30s. Also, there is huge change in the economy coming due to technological change. People are being laid off, and many of them don’t have the skills which are in demand. There is a lot of change out there and a lot of turmoil,” said Gill.
“This means the old models are no longer working. We recognise that. Right now Lomiko is at about 7.5 out of ten on our management performance, but its market is, at best, 3.5 due to the junior market meltdown. So we’ve adapted to the times and pushed to accomplish our goals.”
Part of that adaptation is to recognise that the graphite equation has changed significantly. “There are big graphite properties out there, but the market corrected in 2012. We’re looking for easy access, near surface deposits of high purity, large flake graphite and creating our own relationships with new customers,” explained Gill. “Smaller pods of graphite which are easy to extract will be easier to sell. At the La Loutre graphite property located near the Imerys Graphite and Carbon Mine in Québec, which we optioned in 2014, we’re looking for a minimum of 20 million tonnes of 5% large flake graphite with high carbon purity, even if it’s located in multiple pods. The large flake is what is required for batteries; the smaller, amorphous graphite can be used in graphene applications as well as other lines of business.”
“The size of any given pod doesn’t matter as much as the purity, accessibility and flake content. At Loutre we’ve had six top-notch holes, one of which ran 128 metres of 4.72% pure graphite. There is so much graphite there that you can easily cobble together the 20 million tonnes we are looking for.”
On 9 February 2015 Lomiko announced it was extending its option on the Loutre property with Canada Strategic Metals to an 80% interest and acquiring an 80% interest in another graphite property which shows similar promise. In that release Gill stated: “Each of these drill holes merit further investigation. Overall, the property has met our criteria and further exploration is warranted.”
Gill’s graphite strategy also reflects the reality of raising capital for mining in today’s markets: “You need deposits which can make money right away. The worst scenario is where you have a lot of overburden. With La Loutre we have pods of accessible, high purity graphite within ten metres of the surface. That’s what we are looking for.”
Turning to graphene, Gill is understandably pleased with Lomiko’s investment in Graphene 3D Labs. “It was an incredible IPO,” said Gill. “But the reality check makes it a 35 million Canadian dollar (~€24.5m) company, not an $80m company.”
Graphene 3D Labs is very close to shipping its graphene 3D printing filament. “3D Lab has a huge advantage because it will be marketing to 7,000 customers of a trusted supplier – Graphene Labs. Graphene Labs has been operating in the graphene space since 2009. Graphene 3D Labs is also looking at 3D printing-finished products like graphene batteries,” said Gill.
There has been a good deal of buzz about Lomiko’s other graphene venture – supercapacitors. Originally Lomiko was looking to use the Graphene 3D Labs model to take its supercapacitor entity, Graphene Energy Storage, public. However, this has changed: “Stony Brook University has become a funding participant,” explained Gill, “which means we’ll delay the public launch as the IP is being developed. There is a huge synergy with Graphene Labs here.
“With the university and its material scientists involved, we are looking at creating solutions on a broad scale – solutions for things like electric vehicles and medical devices. People are looking for complete solutions, and that is what we are in the business of creating,” said Gill.
“We’re riding on the second wave of graphene. There was a surge of interest in 2007-2008, but that petered off in 2008 when the markets melted down. We avoided the initial destruction. We’re taking a path which leads directly to commercial revenue.”
An even more direct path to revenue is Lomiko’s foray into the power converter business with partner Megahertz Power Systems Ltd. On the one side this involves providing power to LED lighting devices and will take Gill to Las Vegas for a lighting show rather than Toronto for PDAC.
However, the device Gill is particularly excited about is an ‘in wall’ outlet replacement which creates a USB charging station. “USB is a very efficient way to deliver charge,” explained Gill. “With all of the devices people have which need charging, having a power unit which provides six USB ports plus two regular power outlets will make a lot of sense in many homes.”
Lomiko itself is in the midst of a $750,000 private placement and has closed $590,000 in a first tranche. The capital markets are a bit wary of graphite/graphene, but they have firmed somewhat. Lomiko’s success in both the graphite and graphene arenas, as well as its access to capital, has meant that it is being approached with deals on a regular basis. “We’re actively looking at other companies, deposits and technologies,” said Gill.
A Paul Gill
CEO
Lomiko Metals/Lomiko Technologies Inc
tel: +1 604-729-5312