The Gold Report - Wed, Apr 11, 2018

Canadian Graphite Company Strikes Big Plans for Africa, South America and Asia

A Toronto-based graphite company makes headway in Madagascar, Brazil, India and Korea, potentially impacting the graphite industry in a major way.

DNI Project Map

Lithium-ion batteries contain much more graphite than lithium, so much so that Tesla's Elon Musk has joked that they should be called nickel-graphite batteries. With a renewed focus on graphite, one company with a low-cost source of graphite has come into focus.

DNI Metals Inc. (DNI:CSE; DMNKF:OTC.MKT: DG7:FSE), a Canadian graphite company, has two projects in Madagascar, Vohitsara and Marofody, which are located only 50 km from a port, making shipping the graphite convenient. DNI just purchased its Marofody property in October 2017.

The deposits are hosted in saprolite, a soft rock, which provides a cost advantage because unlike hard-rock deposits, saprolite does not require drilling, blasting and only minimal primary grinding. The material is scooped up and floated for processing.

DNI Metals announced in March assays for 17 drill holes and 1 trench at the company's Vohitsara graphite project in Madagascar. Results included 14.65 meters grading 9.92 graphic carbon from surface and 24 meters grading 7.71 graphic carbon from trenching.

The company noted that "drilling continues to confirm that saprolitic weathered material amenable to free-dig extraction has been developed to depths in excess of 30 metres below natural surface; averaging 28m." DNI has now received the results of all the drill holes in its 2017 program.

"DNI's graphite is some of the highest grade and quality that I am familiar." - Bob Moriarty, 321 Gold

DNI's CEO Dan Weir stated, "We continue to be encouraged by the tenor of the graphite mineralisation at our 100%-owned Vohitsara project. Nearly 15 metres grading just under 10% graphitic carbon right in the central portion of our main mineralised target area is an excellent result."

As for extension possibilities, Weir noted, "The 24-meter intercept in trenching at the extreme southeastern margin of our Main Zone delineates a new and previously untested area of mineralisation and potential extension to the current strike length of the Main Zone."

Weir stated that the company is now ready "to move forward calculating the mineral resource at Vohitsara and with building the pilot plant/small-scale production at our 100%-owned Vohitsara project, in 2018."

Earlier this year, DNI announced bulk delivery to India from its Madagascar graphite project.

According to the press release, DNI has "delivered a 28 tonne bulk sample to India. This sample comprises 14 tonnes from each of the Main Zone ('MZ') and Southwest Zone ('SWZ'), of DNI's 100% owned Vohitsara graphite project in Madagascar. The Indian group, a potential off-take customer, will process the material at its plant, and report the results back to DNI."

"It was our team's understanding of the high production and capital expenditure costs associated with so-called 'hard rock' graphite mining that inspired DNI to search for saprolite-hosted graphite deposits. Certain parts [of] Madagascar and Brazil, produce graphite from weathered material called saprolite."

As of now, the largest hard rock producer is China. So DNI says the low-cost saprolite deposits have a cost advantage over China.

DNI's large India delivery comes on the heels of DNI's binding agreement with Korea Graphite, a subsidiary of Peninsula Mines, to supply flake graphite for Korean end users.

The agreement includes a "commitment by DNI to supply up to 24,000 tonnes per year of flake graphite to Korea Graphite, subject to Korea Graphite finalising offtake agreements with Korean end users commencing Q4, 2018," according to the company.

Jon Dugdale, managing director of Peninsula Mines and director of Korea Graphite, said, "This binding supply agreement with DNI is a key pre-cursor to establishing binding offtake agreements with Korean flake-graphite end users. . . Madagascar has been producing high-purity, large-flake graphite for over 100 years and DNI's large-flake graphite deposits are saprolite hosted and close to port."

Korea is one of the largest producers for lithium ion batteries. With increase in demand for lithium ion batteries, DNI's CEO, Dan Weir, says that means a graphite demand increase. Given the breakdown of the batteries, Weir argues, "they should really be called nickel graphite batteries."

Weir says that DNI plans to build a pilot plant in Madagascar for small-scale production (Korea included). But come 2019, he expects DNI to escalate its Madagascar plant to full commercial production.

At the end of last year, Bob Moriarty of 321 Gold noted that "graphite, cobalt and lithium are going to be in big demand and short supply for years in the future. DNI is bringing in a small test plant so they can deliver actual representative samples to prospective customers. The graphite is some of the highest grade and quality that I am familiar. The properties were in production, are near a port and the graphite is at surface. DNI will continue drilling and one day soon the market will understand the potential. With a market cap of under $4 million, DNI has a bright future in graphite."

Blockchain Technology and Brazil Wholesale Business

With Madagascar and Brazil producing already weathered graphite, DNI has also placed a lot of attention on its wholesale business operating right out of Brazil.

DNI made the bold decision to incorporate blockchain technology into its graphite business. In January, DNI announced that it signed a deal with Blockmine Development Inc. (BMD).

BMD was specifically created to develop and incorporate blockchain technology into the mining industry, according to the press release.

BMD President Brent Rouble noted, "BMD recognizes the importance of DNI's graphite property for future high-tech industrial graphite applications."

"The BMD model is a clear concise pathway utilizing the blockchain model, including but not limited to, cryptocurrency in a strategic format that has the potential to revolutionize the way mine development and mineral exploration is accomplished. BMD anticipates they will add Government and First Nations to the program in the near future to further enhance all aspects of the program," according to the news release.

Currently, there's no cost to DNI. BMD says it will use DNI as a test case as it develops its platform.

DNI stock currently sits at CA$0.08. According to Weir, "There are currently 100 million DNI shares outstanding, 15% owned by insiders."

Disclosure:
1) Nikia Wade compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. Click below for important disclosures about sponsor fees. As of the date of this article/interview, an affiliate of Streetwise Reports has a consulting relationship with DNI Metals.
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5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of DNI Metals, a company mentioned in this article.

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