Industrial Minerals Canada, a junior graphite company, said on Wednesday it aims to list on the Toronto Venture Exchange via the takeover of capital pool company Rattlesnake Ventures, and rename itself Northern Graphite Corp.
The Ottawa-based company also announced a C$6 million ($5.6 million) private placement to help finance more drilling, feasibility studies, permitting and the construction of a pilot plant on its Bissett Creek project in Ontario.
We are going to build a pilot plant because we are going to produce product in sufficient quantity to allow customers to do meaningful production runs and tests on the product, Gregory Bowes, president and chief executive of the newly named company told Reuters in an interview.
I think it's the right time from the graphite market point of view, and I think its the right time from the Canada energy point of view, said Bowes, a geologist.
Northern Graphite wants to position itself to take advantage of graphite prices that have jumped in recent years amid booming economic growth in China, the biggest producer of the mineral, which is said to be suffering from falling supplies and dwindling quality.
Demand for graphite, especially best quality versions, is rising as new applications emerge for the mineral, which is a form of carbon and most familiar as pencil lead. Other uses include lithium ion batteries, fuel cells, nuclear and solar power, and semiconductors.
Bowes said the Northern Graphite placement will take from three to four weeks to close, while the listing, which involves a so-called business combination between Industrial Minerals and Rattlesnake, will take between eight and 12 weeks.
Northern Graphite wants to build a mine at Bissett Creek, in northeastern Ontario, by mid- to late 2012, but in the meantime it plans to build the pilot plant and start drawing in customers.
First we have to get the permit to construct the full mine, and then it will take probably a year and half to build it, Bowes said.
He said mine construction would cost about $60 million, and estimated production costs of a little over $700 a tonne, which would spell a four-year payback if the mine were built today.
Global graphite prices are between $1,000 and $1,500 a tonne these days, compared with levels that touched $600 per tonne a decade ago.
Preliminary assessments on Bissett Creek suggest it has a 40-year mine life at 2,500 tonnes per day processing.
(Reporting by Pav Jordan; editing by Rob Wilson)