Charged for new graphite supply

By Emma Hughes
Published: Thursday, 24 April 2014

As graphite exploration company Energizer Resources gears up to deliver a feasibility study for its Molo project in Madagascar, IM travelled 5,600 miles overseas to find out more about the company’s developments in the flake graphite race.

Flake graphite has been considered a critical material for some time now, as its importance in certain end markets, such as batteries, has been well publicised. More recently, however, graphite has become a buzz word in both industry and mainstream circles after a potential game-changing announcement came at the end of February.

 
The announcement in question is, of course, Tesla Motors’ decision to build a new $5bn lithium-ion (Li-ion) battery ‘Gigafactory,’ which could increase flake graphite demand by up to 34% by 2020.

According to calculations by analysts at IM Data, Tesla’s plant could consume at least 28,000 tpa spherical graphite if operating at capacity. This equates to 93,000 tpa flake graphite if produced to today’s standards, which sees raw material wastage of up to 70%.

This, as you can imagine, was music to flake graphite producers’ ears – especially those who were already targeting the battery market with high grade flake material.

One company that could stand to benefit from developments like Tesla’s Gigafactory is Canada-based Energizer Resources Inc., which is looking to supply flake graphite from its Green Giant project in Madagascar.

IM travelled 5,600 miles from London to meet with the company in March to see the project first-hand and the potential it holds.

A Green Giant

Energizer’s flagship Molo deposit is the second largest confirmed flake graphite resource in the world and the biggest under Canadian NI 43-101 regulations.

Located in Fotodrevo, southern Madagascar, it sits as part of the company’s Green Giant project, which also includes a sizable vanadium deposit. Both resources are NI 43-101 compliant, yet Molo remains the main focus for Energizer at present.

From a geological perspective, the Molo deposit lies in a flat and semi-arid environment and has flake graphite at surface to an unknown depth, extending deeper than 300 metres vertically, and a strike extent of over 100km

Owing to this formation, Molo is one of the world’s largest deposits hosting an indicated mineral resource of 84.04m tonnes grading 6.36% carbon (C) and an inferred resource grading 6.29% C of crystalline flake graphite.

The company released a Preliminary Economic Assessment (PEA) study for Molo in February 2013, which outlined in net present value at a 10% discount of $421m, a 48% pre-tax IRR and a three-year payback period.

Despite already being a large resource, Energizer believes Molo is also scalable. Mapping has shown graphite mineralisation surrounding the project, providing the company with an opportunity to increase graphite output.

The company will first focus on an area which is 2km strike length within the shear zone, at 50-60 metres wide to the north, expanding outwards to more than 500 metres in width and back down to a width of approximately 250 to 350 metres.

Based on drill and trench data received to date, as well as mapping, prospecting, and geophysical surveying, graphite mineralisation is confirmed at surface and over an area of at least 250,000m2 and drilling has confirmed that the mineralisation is open at depth in excess of 300 metres.

In February this year, the company released results from a pilot plant operation at Molo, where results of 15 size fraction analyses showed large and extra-large (or jumbo) flake graphite at a mass of 43.5%.

Energizer’s Molo graphite project is the second largest confirmed flake graphite resource in the world.

The average grade of the extra-large flake (+48 mesh) was 97.7% C, while the large flake samples (+80 mesh) graded 97.4% C.

Medium flake graphite samples, greater than 200 mesh, were 96.7% C. The average total carbon content of 12 pilot plant surveys was 93.7% C at an average carbon recovery of 90.3%.

Owing to the high grade material at Molo, Energizer is targeting Li-ion battery market.

Mapping Molo with drones

The graphite content at Molo is at surface, making extraction easier than at some other deposits, which require the removal of overburden or even underground mine construction.

This surface material is evident as soon as you enter the Molo area, as termite hills that are most often orange/red in colour across southern Madagascar, turn to grey/black as you drive into Green Giant.

Once inside the Molo boundaries, loose graphite material is everywhere. On the outskirts, by simply hitting the rocks with a hammer you are able to uncover medium flake material, while doing this further into the deposit uncovers much larger flakes.

Having so much of the material at surface also makes it easier for the company to map the size of the deposit. What was interesting to see was the fact that Energizer is using ‘drones’ (or unmanned aeronautical vehicles) to conduct this mapping. The drones, which use photogrammetric survey technology, were quite something to watch in action.

Wirelessly linked up to a laptop in the back of the truck, two drones, loaded with a specified flight plan, were sent up into the air to begin mapping the area, sending photos at a resolution of 5cm back to base.

This data can then be incorporated into mine design planning, and to assess social and environmental impacts in the area.

To see this kind of modern geological mapping in action was some sight. Not just in the way that the company’s president and COO, Craig Scherba, was able to activate them by simply shaking them three times and then throwing them up in the air, but also in the fact that once up and running, they are all but invisible.

This is an important factor in somewhere like Madagascar, where the locals, who are unfamiliar with most technology, need to be considered.

In terms of processing, Energizer has found that graphite flakes are relatively easy to extract from the ore. Testing has confirmed that the more desirable extra-large flake graphite (averaging 93% purity) can easily be extracted by crushing the ore, while a simple crushing and processing circuit would enable production of a +50 mesh flake grading 93% C.

Logistics & workforce

While Energizer has what is an unmistakably valuable resource at Molo, the Green Giant project has not been without its challenges. One of the main considerations for any mining project is of course modern infrastructure – something that has to be created in the outback of southern Madagascar for such a major operation.

The high grade graphite in Molo is located around five hours’ drive from the closest port – the Port of Tulear - and the majority of roads in that area are rather bumpy.

The original transportation corridor the company was intending to use lies to the west of Energizer’s camp and reaches either the Port of Tulear or a future deep water port called Soalara.

However, while IM was out in Madagascar, Energizer was informed that the government of Madagascar has awarded a contract to pave the RN13 road to a Malagasy construction company.

RN13 is a north-south road extending from the Port of Fort Dauphin to the paved road that connects Tulear to the country’s capital, Antananarivo. This road passes within 30km of the Molo project and work is scheduled for completion by the end of 2014.

This is big news for Energizer, as the new road will provide the company with an alternative that is potentially more viable that travelling to Tulear. It will not only reduce transportation time, and consequently operating costs, the new road will also provide direct access to the Fort Dauphin Port (formerly Port d’Ehola), which is a modernised facility constructed by the World Bank and QMM in 2009.

It also shows how central new mining projects are to the Madagascan economy.

While IM was on the ground in Madagascar it learned not only about the work at Energizer’s Molo, but also the workforce. The company has several expats working in the office in camp and on site but also employs a local labour force.

Until recently, Malagasy locals were largely unskilled in relation to the mining industry, which was why Energizer brought in expats, mainly from South Africa, to work on the Green Giant project. However, with the development of Sherritt’s Ambatovy, and Rio Tinto’s QMM mineral sand mines, Madagascar has developed a skilled mining-related labour force.

Additionally, the development of these projects has provided much needed foreign investment to Madagascar. As such, the government of Madagascar is very supportive of the growing mining industry.

Looking ahead

During 2014, Energizer plans to deliver its feasibility study, outlining a practical plan to support the next phase of targets in mine construction, by the final quarter of 2014.

IM was also told to keep its ear to the ground as Energizer gears up to announcing potential strategic partners and off-take arrangements.

Several parties have received bulk samples from the pilot plant already, and results are expected in the near future.

Over the last 18 months, exploration work in graphite has been minimal as funding became hard to come by. Energizer used this downtime to progress Molo to the level it is at today. From IM’s visit to Madagascar, it looks like this momentum will continue throughout this year.



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