In this episode, Dan Weir the Executive Chairman of DNI Metals, sits down with Maurice Jackson of Proven and Probable to discuss a number of catalyst’s for shareholders. First, Mr. Weir discusses the addition of a second drilling rid. Second, DNI Metals plans to build a modular pilot plant. Finally, Dan confirms the offtake MOU with Peninsula Mines. Speculators should note, that the value proposition for DNI Metals is becoming very exciting!
Welcome to Proven and Probable, where we focus on metals, mining and more. I’m your host Maurice Jackson. Our featured issuer is establishing itself to become one of the world’s leading graphite producers. I’m speaking of DNI Metals trading on the CSE symbol, DNI and on the OTC, symbol DMNKF.
Joining us for a conversation is the executive chairman of DNI Metals, Mr. Dan Weir. Thank you for joining us today, sir.
Good morning, Maurice.
Before we begin, allow me to convey to our listeners that DNI Metals is a sponsor of Proven Improbable, and that we are proud to shareholders of DNI Metals, for the virtues we will convey in today’s message.
And also, we want to thank Bob Moriarty, the founder of 321Gold that introduced us to this unique value proposition of DNI Metals, and I have to say that Bob has been spot on. DNI Metals has more than doubled since our first interview in May of this year, and I’m of the opinion that this trend is just beginning to go even further.
Dan, you and I are returning from Madagascar, where we visited your flagship project, Vohitsara, and we have a number of catalysts occurring simultaneously, that are demonstrating DNI’s commitment to increase shareholder value. Let’s get current and prospective shareholders up to date, beginning with the second drilling rig.
So Maurice, just to clarify, we went to both properties in Madagascar. The original project called the Vohitsara project and the second project, which is called the Marofody project. I think you probably enjoyed seeing both of those, but let’s start talking about the second drill rig that we brought in.
Initially, on the first project, Vohitsara, most of the drilling has all been done with an air core rig or an RC rig. RC stands for reverse circulation and what they do in that case, is they have a drill pipe that has basically two pipes within it. There is one hole like that and then there’s another hole or another pipe on the inside of that.
In between the two pipes, you pump down air at very high pressure, it can be up to 200 PSI. It hits the bottom where it’s hitting the surface that it’s drilling, and it breaks up the material and it comes back up at very high pressure, or back up the center tube, bringing all the material that it’s broking up with it, because all that compressed air isn’t going to sit down under the ground, it has to go somewhere.
So it comes flying up the tube, you catch it in a container at the surface, all the material and the high pressure air then is exhausted basically, up the top of the container, where you catch all the material. The new drill is what you call a Diamond Core Rig and it’s just like traditional drilling, where you go down underground with a pipe, push it down under the ground, it drills, it basically picks up, in this case, we pick up about a half a meter at a time, and then you bring it up to the surface in the shape of a core.
I think, Maurice, you have some pictures that you can add and show people of that core and how that comes up. The importance of having a Diamond Core Rig is that it does not break up the flake. It’s very important in a graphite deposit to show people the flake size distribution on your property. In previous interviews, we have shown a chart that shows all the different sizes that you can get from a property, and in this case, we’re very lucky that we have a high percentage of it being large and jumbo flake.
What I’m seeing through our wholesale business right now, is there’s a huge demand in the world for plus 80, plus 50, plus 20, plus 30 mesh sizes, because they are there’s not a lot of it in the world, and right now, China’s not exporting a lot of it, so there’s huge demand for the large flake. So as we complete our preliminary economic assessment, if we can show the higher percentage of the larger flake, we can also show that there’s greater value to our project.
And speaking of the value, will the second rig will it allow us to go from inferred to indicated?
Yeah, we’re not 100% sure on that. Remember that there is third-party groups that will be signing off on both the resource studies, and the PEA. At this point, they’ve indicated that if you just use the air core rig or RC rig, that you would only get inferred resources. Having the second rig here and being able to show the flake size distribution also get competent core out of the project, that we can get measured and indicated. Again, that will lead to greater value for our shareholders and give a higher value to the project.
And speaking of greater value to the shareholders, let’s talk about the second press release here. We have a pilot plant?
Yeah, our property … there’s a lot of graphite on the property, and people ask me, “Well, how big is your resource going to be on the property?” We have 63 square kilometers on the first property, another 40 square kilometers, so we have well over 100 square kilometers of land between the two properties. There’s graphite zones all through there. There’ll be multiple graphite zones that we haven’t even found yet throughout the property, properties, I should say that.
The resource, so the big question is and everybody asked me this, “What is going to be your resource size?” Well, my answer to that is, “How much drilling do you want me to do, compared to how big a resource?” There’s lots of graphite through all of these. Our initial goal is to get a decent size resource so that it makes it worthwhile to put it into production.
So the reason why we’re bringing in and doing a pilot plant now, is the fact that we have drilled 41 air core holes, and we drilled 3 or 4 diamond core holes already, and the point here is, we know there’s lots of graphite there. We know that the resource study, the resource report and the PEA … again, I have to be careful what I say, but at this point, it looks like they will be very, very positive.
So by bringing in a modular plant right now, where we can start doing a lot of the testing that will lead to full production, and remember, I want to be in production in 2018. That’s how fast that we can get there. The modular plant allows me to do that, allows me to get samples. Because the key to any one of these projects is being able to provide samples and get offtake.
I know that’s going to lead up to your next question here in a minute, is about offtake, because we’ve signed a MoU for an offtake agreement. We’ll get to that in a minute, but really the key is, you’ve got to be able to provide samples, and I’m not talking about a one kilogram sample, you’ve got to be able to provide a one ton sample. Then you’ve got to be able to provide 10 tons of samples.
By us building a modular pilot plant that can do potentially up to 6,000 tons a year of graphite production, it bolts us ahead of everybody. Remember, we’re fully permitted and only 50 kilometers to a port, so having all the permits in place where I can go and do all of this work now, is very strategic and very advantageous to us, over anybody else.
Now Dan, how much will the plant cost?
Cost is about a million dollars. It will be built in 4 containers, we will likely ship over 5 containers, we’ll have a workshop and some testing equipment in there to test the quality of the graphite in the fifth container. So it’s very … sorry, so it can be moved around to wherever we want it on the first property, and we can test different zones in the first property. As well, we’ll be able to move it over to the second property and do all sorts of testing over there as well.
So eventually, when we build a full commercial plant, we can either keep this plant as it is and continue working with it and doing testing in different areas, or put it into and use it for full production, or we could dismantle the pilot plant and use parts from it in the full-on production plant. But we’ll have to see at that point in time, but it gives us a lot of different opportunities that we can use this.
All right Dan, you alluded to offtake. Talk to us about the MoU.
So we’ve signed a MoU with a Australian and Korean groups. The Australian company is a public company, it’s called Peninsula Metals. Peninsula is focused on Korea. Again, it’s an Australian listed company, public company. All of their assets are in Korea. They have copper, zinc, all sorts of other assets, including three graphite assets.
They have contacts and work very closely with a number of different groups in Korea. In fact, on some of the base metal projects, they have KORES. KORES is the mining resource company, government-owned of Korea. What’s really interesting about Korea is is getting into Korea and being able to work with people in Korea is very advantageous.
Some of the biggest battery manufacturers in the world, you know, LG Chem, Samsung are in Korea. The demand for graphite in Korea is huge. Initially, Peninsula has a deal with a company called Graphene Korea. Graphene Korea is currently building an expandable graphite plant and they need 20,000 tons of material every single year, meaning to feed that plant, they need 20,000 tons of graphite, large flake graphite. Because they’re using it to produce expandable graphite, which would be used in foils and can be used in things like gaskets. It can also be used … every cell phone has a graphite foil in there, that is in between your battery and the electronic parts of your phone.
They have indicated that the initial plant that they built is 20,000 tons, and their game plan over the next number of years is to ramp that up to over 100,000 tons. So again, the demand is there and they need large flake graphite to supply that. The great thing is, is in Madagascar as we mentioned earlier, is we have a larger percentage of large flake graphite, being in the saprolite-hosted material. It has also a lot lower costs than most people in the world, and being permitted in 50 kilometers to a port is also very strategic and very advantageous for us.
You know Dan, I have to congratulate you on a job well done. I’m biased, but as a shareholder, this is the type of resolve and dedication that I applaud and gives me confidence to procure more shares. And for our listeners, we are actively doing that this week. We are out purchasing more shares of DNI Metals. Now Dan, we’ve covered the good. What keeps you up at night that we don’t know about?
Working in Africa always has its challenges. Well, I guess working anywhere in the world always has its challenges. When you’re working on a mining project in North America, you have a lot of environmentalists, you have First Nations groups to deal with.
And in Africa, when you’re working there, things tend to move at a lot slower pace and I like to see … you know, I started my career in the stock market working on an institutional trading desk, where things happen in microseconds. Decisions and the speed of everything else. It doesn’t happen that way in Africa, so that tends to bother me, in how slow things can move. So we’re working through that and making that happen.
Other than that, no, Maurice, we’ve worked our butts off to get this far and we will continue to work as hard as we can to make this very successful, and I think 2018, well I think 2017 has been very exciting and will continue to be exciting. I’m looking forward to 2018, where we can be potentially in full commercial production. So if everything works well and I think it will, we will get to that point.
Now Dan, before we close, what did I forget to ask?
Well Maurice, I don’t know. I think you’ve covered it very well and just for listeners, Maurice and I were in Madagascar last week with a bunch of other investors and potential investors. It is coming along … he saw the second drill rig turning away and pulling out the core. It’s very exciting there and Maurice, I think you’ve enjoyed going to Madagascar and hopefully you can come back again soon.
Well, it’s always a pleasure and things are moving, I should say, very expeditiously. You’re looking at the roads from May to August. It’s just everything’s moving fast, we have the drill, we have to do offtakes, Dan you’re doing a great job there. Dan, if investors want to get more information about DNI Metals, please share the contact information.
Yes, you can get a hold of me anytime on my cell phone. It’s 416-720-0754. The best way though is to send me an email and I can respond to you. It’s [email protected] That’s D-A-N-W-E-I-R @dnimetals.com, and you can also find my information on our website at www.dnimetals.com.
And last but not least, please visit our website, www.provenandprobable.com, where we interview the most respected names in the natural resource space. You may reach us at [email protected] Dan Weir of DNI Metals, thank you for joining us today on Proven and Probable.
Thank you Maurice.
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