Smart Phones, Smart Cars and Smart Investing – The Miller Graphite Mine

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Canada Carbon's graphite mine is showing significant potential in boosting our domestic supply.

Approximately 56% of North Americans are now using Smartphones and Tablets. An enormous market has been created in the last 10 years unlike any we’ve seen in the tech space. The personal electronics sector is set to grow exponentially year over year creating a massive demand for these devices and the technology inside them.

Moving forward investors are left wondering when the right time and the best way to participate might be. Companies such as Samsung, Apple, LG and Blackberry have cornered the major portions of this massive market sector seeing their stocks rise alongside Smartphone and Tablet sales.

Meanwhile the automotive industry is undergoing a revolution. Hybrid and plug-in electric vehicles are becoming an increasingly important part of the overall automotive market. Government incentives, lower cost of operation and environmental factors are diving consumer demand for these vehicles, forecasted to reach over 3 million by 2020 representing 3% of the global light-duty vehicle market. Plug-in electric vehicles utilize lithium-ion battery technology instead of the traditional internal combustion engine, similar to that being used in new smart phones and tablet devices.

What is the commonality between these two major growth stories and how does an investor participate in both segments at the same time?

Most people may not be as familiar with Graphite as they are with Gold, Silver and Copper but recent advancements in technology has seen demand for this carbon based mineral increasing as sharply as the desire for faster, lighter and more energy efficient high tech devices. Besides its many established industrial uses, graphite is also a key component in lithium-ion batteries which are used in cell phones, laptops, tablets, power tools, hybrid and electric vehicles among other devices. Advancements in technology and the demand for faster devices and longer more powerful batteries is creating new uses and driving global demand for high quality graphite.

In 2010, China, which dominates the world’s supply of graphite, produced approximately 800,000 tonnes, overshadowing other key producers such as India, Brazil and Sri Lanka. But with domestic demand increasing, China has restricted exports through taxes and licensing. Export quotas are also a possibility, and since China produces about 75 per cent of the world’s exportable graphite these measures could substantially restrict current global supply and negatively impact graphite dependent industries and consumers alike, driving graphite prices higher.

In Quebec, however, a once-forgotten historic graphite mine is showing significant potential in boosting the domestic supply and may also position two little known companies to greatly benefit from this increasing demand coupled with the tighter Chinese export restrictions. These companies are Canada Carbon Inc. (“Canada Carbon”), and Caribou King Resources Ltd.

In July, Vancouver based Canada Carbon discovered very high grade graphite during sampling and trenching operations at the 100 per cent owned historic Miller Graphite Mine property near Grenville, Quebec, located around 80 kilometres west of Montreal. Basic testing of lump samples taken from a trench at the Miller property to extract and purify the graphite resulted in an outstanding 100 per cent graphitic carbon (Cg). The testing was carried out by SGS Canada (Lakefield, Ontario)

The history of the Miller Graphite Mine dates back over 150 years when, in the 1840s, pits were dug to extract lumps of graphite from visible veins. Larger trenches were later excavated to remove tonnage. During this period, the graphite was described as equal to the graphite from Ceylon (now Sri Lanka), which was considered to be the best natural graphite in the world. It is believed the Miller mine was Canada’s first graphite operation.

“There is a high demand for this rare, high quality graphite and therefore it commands a higher price,” says Bruce Duncan, CEO of Canada Carbon Inc. “And where other companies are drilling as much as one or two hundred metres down to get at grades of only a few per cent, we have a very much higher grade at the surface before we even begin processing it at a mill.”

Along with traditional uses, the highest quality graphite can be used to make graphene (which exhibits unique and valued properties which make it difficult to be substituted). The isolation of graphene (a one atom thick layer of carbon) and the building block of graphite, by a couple of researchers at the University of Manchester, resulted in the awarding of the Nobel Prize for Physics in 2010. Since the discovery and isolation of graphene, many academic, government, and industrial laboratories worldwide have been researching it for potential applications due to its exceptional strength, electrical and thermal conductivity. Graphene could potentially replace silicon in electronic devices enabling them to run hundreds of times faster and withstand higher temperatures.

Duncan says he is also delighted by the lack of barriers to extracting the graphite from the Miller property. “This is private property so we don’t need a permit for trenching, clearing or drilling. There is hydro and running water. We are off a main highway and linked directly to the deposit via one road. In addition, the trench is both shallow and open making the extraction process more economical to conduct.”

Duncan adds that while other companies with deposits of five or ten per cent purity require twenty to thirty million tonnes for production, his company only requires half to one million tonnes to go to production. “Since we have really only scratched the surface and only looked at two of our seventeen anomalies identified to date,” he says, “finding half a million tonnes is very realistic.”

The company is organizing a tour of the property sometime this fall, for a group of analysts and brokers. Duncan says the participants will be given hammers and chisels to conduct their own tests if they wish.

“We might be starting off small, and this is still at a very early stage but we will have low cost high grade material that can be sold. We have been very fortunate and I’m absolutely delighted. Caribou King also bought a basket of properties next door and I believe this bodes well for them too.”

Mike England, CEO of Caribou King Resources Inc. (“Caribou”) said that Caribou acquired the Calumet claims in March and is currently in the initial exploration phase. Historically, it appears to be an extension of the lump/vein formations found nearby at the old Miller property.

“We are very happy with Canada Carbon’s success and excited to possibly seeing similar success with our own property being next door,” says England.

The potential of this discovery in Quebec could position companies like Canada Carbon and Caribou King as, high quality lump-vein graphite suppliers in the global marketplace.

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