The flurry of excitement caused by rumours reported on Thursday
10 July that commodities major Glencore had made an informal
approach to buy graphite and vanadium junior Syrah Resources
had begun to settle by the following Monday, after a number of
analysts poured cold water on the reports.
Articles in Australian media
claimed that the Swiss trading group may have offered Syrah
Australian dollar (A) $2bn ($1.89bn*) for the company and its
These include the Balama
graphite-vanadium project in Mozambique, with a resource of
1.1bn tonnes graphite grading at 10% C and 0.23% vanadium
Glencore rubbished the rumours when
contacted by IM, while Syrah said in a
statement to the ASX only that it was involved in
non-binding takeover discussions with various
parties from time to time.
Analysts cast doubts on
Mining and business analysts were
quick to cast doubt on the reports that Glencore would be
interested in taking over an exploration stage vanadium
The move would be
inconsistent with its strategy, Marc Elliott, mining
analyst at Investec, told IM.
Glencore has categorically
stated that they do not like greenfield mine developments, due
to risk of cost creep (...) I think you can be fairly confident
[a takeover] wont happen, he added.
One New York based analyst, who
preferred not to be named, said that A$2bn price tag discussed
in media speculation was not credible.
The price is ridiculous - it
puts Syrah a $12/share price, the source told
IM. Glencore already has a vanadium
offtake with Largo Resources in Brazil, where they expect their
first shipments [before the end of July]. Largo has a market
cap of $250m, so Glencore could buy it for 15% of the price it
has reputedly offered for Syrah, they added.
Canada-headquartered Largo, which
in 2008 agreed to supply all 11,400 tpa
V2O5 production from its Maracas mine in
Brazil to Glencore for six years from start-up, had provided a
fan for the flames of speculation a day before the rumours
appeared, by reporting that minor technical
adjustments had required intermittent interruptions
Analysts said that Syrah had
probably had discussions with Glencore, which had
sparked the takeover conjectures, but that these were more
likely to have related to offtake deals rather than a
They also also had reservations
about whether a mine could be operated to produce both vanadium
and graphite commercially and suggested that the geology of
Balama, which is composed principally of roscoelite, could
cause problems for vanadium production.
Most commercially-produced vanadium
is extracted from magnetite, which is typically treated in a
process flow different from roscoelite, one analyst told
Roscoelite was [exploited for
vanadium] back when there was uranium and vanadium mining in
Colorado [which peaked around the middle of the 20th
Century], but Im not sure its done anymore,
Shares in Syrah shot up by almost
30% to peak at A$5.99/share on the Friday following the
reports, before falling back to A$5.31/share the following
Monday. This was still well above the A$4.29/share level they
had been trading at prior to media reports on the Glencore
*Conversion made July
Graphite news review
Triton Minerals rides high on
ASX-traded junior Triton Minerals
Ltd, which is developing the Balama North graphite-vanadium
project in Mozambique adjacent to Syrah Resources Balama
deposit, saw its shares leap 30% to A$0.69/share from
A$0.49/share following reports that Glencore was in takeover
talks with Syrah.
Tritons managing director
Brad Boyle acknowledged that the price spike was unquestionably
linked to the rumours, but pointed out that Tritons share
price has been steadily rising since early June.
There was a perfect storm of
factors that led to a rerating of our shares, Boyle told
IM. Pollution controls hitting Chinese
production; the news about Teslas battery factory;
Syrahs offtakes [with Chalieco and Asmet] and the fact
that there looks like there could be a dramatic shortfall in
graphite production in the next few years has helped our
valuation, he said.
Like Syrah, Tritons primary
focus at Balama North is graphite, rather than vanadium - a
mineral that Glencore trades as part of its ferroalloy business
- but Boyle said it may consider giving its vanadium by-product
plans greater exposure, now that the Glencore news has thrown
the mineral back into the spotlight.
Resources Ltd said in mid-July that it was on track to restart
production from its Woxna graphite mine in Sweden before the
end of the month.
The mine, which has been on
care and maintenance since 2001, will have the capacity to
produce up to 155,000 tpa ore grading at 10% C, delivering
around 16,600 tpa graphite concentrate, according to
CEO Blair Way said that wet
commissioning of the processing plant is proceeding on schedule
and that the company is set to become one of the first to offer
European graphite consumers an alternative to Chinese raw
Focus Graphite relinquish
Canada-based Focus Graphite
Inc. has relinquished its option to earn up to a 60% interest
in Lara Explorations Caninde graphite project in Ceara
State, Brazil, the company announced at the beginning of
Focus invested heavily in
its fellow TSX-V junior in 2012, paying for a programme of
mapping, surface sampling and trenching, but has decided to
focus its efforts on its own projects in Quebec.
Our decision to
withdraw from the Caninde project was a value
decision, Focus chief operating officer, Don
Baxter, told IM.
In short, we saw greater
value in devoting our budgets and our focus at home, and on
mine development at our Lac Knife property, he added.
Uranex signs offtake with
Australian junior Uranex
Ltd has signed a memorandum of understanding with Chinas
state-owned National Materials Industry Import and Export Corp.
(SINOMA) for 100,000 tpa graphite production for five years
from start-up of Uranexs Nachu project in
The company aims to enter
production in 2016.