Sliding metal prices and investors piling into big board plays that have generally been yielding strong returns in the last several years has weighed heavily on stocks listed on the Toronto Venture Exchange. The exchange is full of smaller, upstart companies, with a large portion in the mineral and energy exploration space, so volatility should be expected, but the Composite Index for the Venture has been
beaten mercilessly since September with little reprise from selling pressure. Gold prices edging up since November lows have provided almost no relief and the attack on oil prices certainly haven’t helped either.
The bearishness towards juniors has been indiscriminate, but some plays have managed a modest recovery since the start of December, including junior Canada
Strategic Metals Inc. (TSX-Venture:CJC) and its partner Lomiko Metals Inc. (TSX-Venture:LMR). Shares of CJC have risen from a low of 4.5 cents last month to a high of eight cents before settling on Wednesday at 6.5 cents each. Similarly, Lomiko shares have climbed from a bottom at 5.5 cents to a high of nine cents and closed Wednesday at 7.5 cents each. For technical traders, shares of Lomiko actually have a bit of a large double-bottom look going on over the past half a year.
Canada Strategic Metals has a diversified portfolio, with two graphite projects, a gold play and a natural gas project. In November 2014, the company completed the sale of an undivided interest of 40% in the La Loutre graphite property located in Quebec to Lomiko. The La Loutre property consists of contiguous claim blocks totaling approximately 2,500 hectares situated approximately 53 kilometres east of Imerys carbon and graphite mine (formerly known as the Timcal Graphite Mine), which is North America's only operating graphite mine.
La Loutre is still in the early exploration stage and in order to be economically viable must be able to produce one million tonnes of at least 94% purity graphite. The companies are hoping that the close proximity to Imerys’ mine will deliver the goods and help the company standout in the market, aiming to define material greater than 99.99% pure for testing the conversion of graphite to ultra-pure carbon and grapheme for use in 3D printing and supercapacitors, two applications expected to see strong demand going forward.
On Wednesday, the companies announced that the first 25-hole drilling campaign on the property has been successful; identifying a graphite mineralized zone of 800 metres in length, up to 100 metres wide and over 100 metres in depth. 3,137 metres were drilled in total. The results released today from the latest five holes all showed wide graphite intersections. Highlights included 8.01% Gp over 20.3 metres, 11.23% Gp over 10.7 metres and 10.3% Gp Over seven metres. The results are similar to results from earlier drilling that showed wide, near-surface graphite mineralization.
"This is significant milestone in achieving our objective of rapidly establish mineral resources at La Loutre," said Jean-Sebastien Lavallée, Chief Executive Officer of Canada Strategic Metals, in the announcement yesterday.
Bay Street didn’t take great notice to the report, but then again, the project is still early and the TSX-Venture shed another 1.63% in its fourth straight down day.
There is still a lot of optimism swirling around the graphite space, namely as it relates to technology, but investors are remaining somewhat risk averse as products that will increase demand start to become more prominent. To that end, whether it is Canada Strategic Metals, Lomiko, Zenyatta Ventures Ltd. (TSX-Venture:ZEN) or some of the other handful of plays making headway in the graphite business, brighter days likely lie ahead.
