IM Graphite News in Brief 24 – 30 April

By Laura Syrett
Published: Thursday, 30 April 2015

Flinders triples Woxna resource; SGL and GrafTech report losses for Q1.

Flinders Resources Ltd has nearly tripled the graphite mineral resource at its Woxna graphite mine in Sweden, which it successfully restarted last year.

Measured and indicated resources have increased to around 7.7m tonnes at an average grade of 9.3% C, up from 2.8m tonnes identified previously.

The expanded resource is entirely encompassed within the company’s fully granted mining lease, including the Gropabo and Mattsmyra deposits, and adds to the mineralisation previously identified at the Kringelruvan site, announced last September. All are within the vicinity of the operational Woxna mine.

"Expanding the resource base so close to our fully operational processing plant at Woxna will provide more flexibility and confidence when planning for future expansions for the current 13,000 [tpa] graphite production capacity," said Flinders CEO, Blair Way.

The company has been producing graphite products for the European market since July last year and the mine officially reopened in September 2014, but Flinders is yet to secure an offtake for its output.

In the synthetic graphite industry, Germany’s SGL Group reported a loss of €16.5m ($18.5m*) for Q1 2015, an improvement on the €24.4m loss it posted for the same quarter last year.

The company, which makes graphite electrodes for the steel industry as well as advanced carbon materials and carbon fibres, described the result as a "solid start" to the year. SGL attributed the narrower loss to its cost savings programme, implemented in order to combat "a continuing difficult environment" for its core electrodes business.

Recurring group EBIT** improved from €0.9m in Q1 2014 to €5.1m for the latest quarter. SGL said that its carbon fibres and materials segment was moving closer to break-even, which helped its quarterly figures, however this was partially offset by a decline in sales of performance products and a slow start to the year for graphite materials and systems.

SGL’s US-based rival, GrafTech International Ltd, also reported a loss for the first quarter of the year – recording negative earnings of $55.6m, or $0.10/share on an adjusted basis, for the three months to the end of March.

The figure was twice as bad as Wall Street estimates for the struggling graphite electrodes producer, which pointed to an expected average loss of $0.05/share, and four and half times lower than the $12m loss GrafTech posted in the prior-year period.

Revenues for Parma, Ohio-headquartered GrafTech came in at $207.3m, down 26% on Q1 2014, when it brought in $281m. Adjusted EBITDA*** for the quarter was $17m, compared to $33m a year ago.

"As we moved through the first quarter, graphite electrode demand continued to soften as global electric arc furnace (EAF) steel production weakened," said GrafTech’s CEO, Joe Hawthorn. He added that he expected the steel market to remain challenging for its electrode business throughout 2015.

Back on the exploration front, ASX-listed Triton Minerals Ltd has signed a letter of intent (LOI) with Shenzen Qianhai Zhongjin Group Co. Ltd to receive up to $200m in funding to build a 200,000 tpa graphite concentrate operation at its Nicanda Hill project in Mozambique.

Qianhai Zhongjin, a Chinese equity firm and resources trading house, has agreed to a proposed funding package on a 50:50 debt to equity basis and to an offtake agreement of 200,000 tpa graphite from Nicanda Hill for an initial term of 10 years.

Separately, Triton also announced this week that metallurgical tests on samples from its Ancuabe graphite licences, also in Mozambique, have confirmed that 92% of the discrete mass particles of the samples were larger than 100 mesh in size.

Total graphitic carbon recoveries of up to 96.1% were also recorded from flotation tests on the ore, while a graphite concentrate grade of 98.7% C was achieved following a single bead mill regrind and four cleaner stages of processing.

Canada-headquartered Next Graphite Inc. has released a preliminary economic analysis (PEA) of its above ground assets at the Aukam graphite property in Namibia.

Next said that the PEA indicated the mining and processing costs for the project will be around $487/tonne, with a 17-year life of mine based on a $2,500 tpa operation. This can be increased to 5,000 or 10,000 tpa by installing parallel processing lines.

Preliminary design of the processing circuit and equipment has been estimated to cost around $1m, plus annual operating costs.

In graphene news, TSX-V-listed Lomiko Metals Inc. investment partner Graphene 3D Labs Inc. has developed a water-soluble 3D filament.

Water-soluble filaments are primarily used to occupy negative space during the 3D printing process, filling gaps and allowing the print to be suspended over air, Lomiko explained in a press release. Once printing has been completed, the printed object can be placed in water, causing the filaments to dissolve and leaving empty space.

The company told IM that the filament is not based on graphene, but on an undisclosed polymer technology developed by 3D Labs.

Lomiko is invested in Graphene 3D Labs through its subsidiary, Lomiko Technologies Inc., which holds nearly 4.4m shares in the graphene inks developer.

Finally, Saint Jean Carbon Inc. has signed an LOI with Spanish graphene producer Graphenea SA which provides that Saint Jean Carbon will distribute graphene products to customers in the Canadian market.

Canada-based Saint Jean, which is developing a number of graphite properties in Quebec, said that the aim of the deal is to expand its presence in the emerging graphene marketplace.

*Conversion made April 2015

**Earnings before interest and taxes

***Earnings before interest, taxes, depreciation and amortisation