Canadian mining and technology company Nippon Dragon Resources Inc. (NIP:CA) recently made headlines for their exclusive distribution agreement with SAFESCAPE for its patented fragmentation mining method.
Once the terms of the agreement are met, the distributorship agreement will include the granting of exclusive rights to SAFESCAPE for the usage, distribution, training and marketing of their cutting-edge thermal fragmentation method within the territory for a period of five years. What makes this deal so intriguing, though, is both the industry-disrupting potential of the thermal fragmentation method, and the ambitious expansion plans of Nippon Dragon.
“This agreement is the perfect example of how we intend to derive a constant flow of revenue for the Company while achieving global availability of our thermal fragmentation mining method,” says Andre Savard, President and CEO of Nippon Dragon.
Much-Needed Leadership in a Stunted Mining Industry
As any CEO within the mining industry will tell you, the gold rush is long since over – easy-to-reach gold has already been mined, and the remaining high-grade ore is situated within narrow-vein ore bodies that are difficult – and dangerous – to reach. The issue has forced many mines to shut down, causing a drag on Canada’s already sluggish economy. In fact, Reuters reported that Canada’s main stock index opened lower on April 29 due in large part to the struggling gold mining sector.
While many mining companies have understandably decided to shutter their doors in this environment, Nippon Dragon has elected to face the challenge by pushing the industry forward through their revolutionary and industry-disrupting “dragon” thermal fragmentation unit.
What is Thermal Fragmentation?
Thermal fragmentation is a mining method that uses heat to shatter/spall high grade veins (crevices in rock), allowing for minimal dilution and a substantial decrease in the use of explosives. SAFESCAPE intends to use the method to facilitate the installation of their laddertube escape way system, a fully-enclosed, durable polyethylene product that is designed to significantly increase safety in underground mines. Meanwhile, Nippon will further their reach by manufacturing and shipping two thermal fragmentation units (known as “mini-dragons”) to the SAFESCAPE premises in Western Australia.
A few key benefits of thermal fragmentation include:
- Approximately four times less dilution than traditional methods
- Little or no wall damage caused by blast vibrations, creating a much safer work environment
- Significant cost savings related to ore handling and treatment
- Two-person teams per machine
- Green Technology
- Cash-cost reduction
- Precise, selective mining
- Increased speed and efficiency
To get a sense of the increased efficiency and reduced costs provided by thermal fragmentation compared to traditional drilling and blasting, consider the difference between the amount of material that’s extracted through traditional mining methods (2,700 tons), and thermal fragmentation (783 tons). Both methods produce the same quantity of precious metal, yet thermal fragmentation clearly has a dramatically reduced environmental impact. Further still, since there’s far less material extracted, it requires far less transportation – 26 truck loads, compared to 90 truck loads with traditional mining. Simply put, thermal fragmentation could completely turn shrinking profit margins around for mining companies around the globe…and Nippon Dragon and SAFESCAPE are perfectly positioned to lead the way during this dramatic industry shift.
What’s Next for Nippon Dragon?
In 2014, Nippon Dragon entered its first exclusive Thermal Fragmentation distributorship agreement for South Africa with MaXem Holdings, a South Africa-based company offering equipment sales, mining services and contract mining, and a similar agreement in Japan with NDR Japan Co. Ltd. These deals are in addition to various contract proposals in Australia and South America.
In the coming years, investors will be pleased to know that they intend to continue deploying the revolutionary practice worldwide. In fact, Nippon Dragon’s long term goals include essentially revolutionizing the mining industry, and even introducing their efficient and eco-friendly technology into the construction industry. By broadening their reach into the construction industry, Nippon Dragon could utilize thermal fragmentation in the building of subways, tunnels, dams, pillars and many other substantial projects, leading to greater versatility and decreased expenses for construction projects across the globe.
Further still, despite their growing global presence, Nippon Dragon has not forgotten their Canadian roots, as their long-term plans include the reopening of “orphaned” mines in Quebec and Ontario – a project that is expected to provide a very high ROI for the company. Today, they are already actively investigating approximately 50 orphaned Canadian mines for potential reopening.
Savard and his management team at Nippon Dragon seem to understand what their contemporaries in the mining industry have missed – that old ways and old industries don’t ever really die, they simply adapt to new challenges. Through strategic moves like their mutually-beneficial deal with SAFESCAPE, and the development of their thermal fragmentation method, Nippon Dragon appears ready for exceptional growth in their leadership role within the global mining industry.
Disclosure: In the purview of Section 17(B) of the Securities Act of 1933 and in the interest of full disclosure, we call the reader's attention to the fact that Equities.com, Inc. may be compensated by the companies profiled in the Spotlight Companies section. The purpose of these profiles is to provide awareness of these companies to investors in the micro, small-cap and growth equity community and should not in any way come across as a recommendation to buy, sell or hold these securities. Equities.com is not a registered broker, broker dealer, investment advisor, analyst, investment banker or underwriter. All profiles are based on information that is available to the public. The information contained herein should not be considered to be all-inclusive and is not guaranteed by Equities.com to be free from misstatement or errors. Readers are reminded to do their own due diligence when researching any companies mentioned on this website.
DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer