IM Graphite News in Brief 26 June – 2 July

By Laura Syrett
Published: Thursday, 02 July 2015

Flinders clarifies Woxna production status; StratMin shifts all of its sub-94% C inventory.

TSX-V-listed Flinders Resources Ltd has issued a statement clarifying that, under international financial reporting standards, the company is yet to achieve "commercial production" at its Woxna graphite mine and plant in Sweden.

Last week, the company announced it was pausing operations at the project and would maintain the facility on a "production ready" basis until graphite prices and demand improve.

In its latest statement, Flinders explained that commercial production entails a situation where production costs are no longer capitalised and are instead reported as operating costs, following the commissioning of the mine and plant.

The company decided to restart the past-producing Woxna mine to establish sales and market presence without incurring the costs of a feasibility study, and had been producing saleable grades of material since mid-2014.

However, the weakness in graphite prices, which Flinders judges to have fallen to four-year lows, forced the company to shutter the mine and plant in order to conserve its cash position.

StratMin Global Resources Plc has sold all of its graphite finished product inventory grading under 94% C.

The material was stockpiled as the company worked to establish consistent production of flake graphite at a purity 94% C and above – the benchmark grade required by StratMin’s undisclosed offtake partner – which the company achieved in May this year.

StratMin said that the sale was realised in cooperation with its offtaker and its new joint venture partner, privately held Indian miner Tirupati Carbons and Chemicals Ltd. "Tirupati has collaborated with StratMin’s offtake partner and found buyers for the balance of this sub-94% C [carbon in graphite] material," StratMin said.

Brett Boynton, the company’s CEO, said that selling off the material helped to free up working capital and proved the existence of demand for all types of graphite, but did not disclose the name of the buyer or the price paid for the material.

"There is a market for every grade of graphite (…) The proven ability to efficiently move other grades of product (…) gives us increased commercial confidence as we prepare to expand operations," he said.

ASX-listed Talga Resources Ltd has begun site works as part of its trial mining programme at its Vittangi graphite project in Northern Sweden.

Since receiving the trial mining permit from the Swedish Environmental Review Commission at the beginning of April, the company has secured all the necessary clearances to begin work on the property.

Talga anticipates that the graphite ore extraction programme will commence in mid-July. Sawn blocks of raw graphite ore will be transported from Vittangi, which forms part of the company’s 7.6m tonne Nunasvaara graphite resource, to its Rudolstadt storage and processing facility for liberation into graphite and graphene products for end user sampling.

Australia-based Archer Exploration Ltd has reported "significant progress" in research conducted by the University of Adelaide into potential large scale uses for carbon derived from ore at its Sugarloaf graphite deposit on South Australia’s Eyre Peninsula.

Archer claims that the material has unique physical and chemical characteristics that could allow it to sell run-of-mine graphite as a soil conditioner, owing to its naturally elevated levels of macro and micro nutrients.

The company intends to conduct further leaching and soil tests over the next few months before commencing plant growth trials.

The Sugarloaf deposit is located on Archer’s Carappee Hill tenement, 10km west of the Campoona graphite project, for which the company lodged a draft mining lease proposal in May this year.

Triton Minerals Ltd has engaged Rubicon Resources Ltd to assist in the development and operational phases of its three graphite projects in Mozambique.

Rubicon will provide ASX-listed Triton with a range of services through its Mozambique subsidiary, PacMoz Lda, including permitting, licencing, business administration, human resources and legal support.

Triton is developing the Nicanda Hill and Ancuabe exploration projects in Mozambique, as well as a graphite processing plant in the port city of Pemba.

In synthetic graphite, GrafTech International Ltd has said that its EBITDA* and operating cash flow for the first half of 2015 is likely to be at the low end of, or even below, its previous guidance range of $30-40m.

The Parma, Ohio-based manufacturer of graphite electrodes said that market conditions remain challenging for both its industrial materials and engineered solutions segment, citing lower volumes and pricing pressure.

GrafTech reported a loss for the first quarter of this year of $55.6m, or $0.10/share on an adjusted basis, for the three months to the end of March.

In financial news, ASX-listed Valence Industries Ltd is to draw down Australian dollar (A$) 3m ($2.29m**) as part of an $20m bridge financing deal agreed with Singapore-based Chimaera Capital Markets Pte Ltd to fund its production and expansion plans at Valence’s Uley graphite property in South Australia.

A further A$500,000 is available under the bridge, which will provide interim funding while the remaining conditions for an initial $20m facility are satisfied. These relate to independent technical verifications, including of Valence’s operating production, geological resources and customer sales contracts for Uley.

Valence’s debt finance strategy is structured as standalone funding to be supported by production revenues from its project, which recommenced graphite processing operations in 2014.

Massachusetts, US-based F2 Capital has agreed to provide Canada-based Great Lakes Graphite Inc. with $750,000 debt financing to recommission Great Lakes’ Matheson graphite micronisation facility in Ontario.

Paul Gorman, CEO of Great Lakes, said that the funding would address the immediate capital requirements of the Matheson plant, allowing the company to complete commissioning without an onerous debt load and with minimal dilution.

Under the terms of the financing deal, F2 Capital will receive an interest rate of 8.5% per annum plus a 4% gross overriding royalty on the first 30,000 tonnes produced from the micronisation facility. F2 also has the option to convert the principal amount under the debt note to common shares in Great Lakes at a conversion price of $0.10.

F2 has also been issued with 1.875m warrants, each of which is exercisable into a common share in Great Lakes at a price of $0.10/share for a period of four years.

Alabama Graphite Corp. has closed a private placement for gross proceeds of $2.875m, following the issue of 14.375m units in the company at a price of $0.20/unit.

The placement was led by First Republic Capital Corp. and the final amount raised includes First Republic’s option to sell 15% of the units.

Net proceeds from the raising will be put towards drilling programmes at the company’s Coosa and Bama graphite projects in Alabama, US; the preparation of an updated mineral resource estimate and preliminary economic assessment for Coosa; metallurgical testing at both properties; value-added graphite initiatives; and general working capital.

The company has also begun using material from both Coosa and Bama to produce coated spherical graphite for use in lithium-ion battery anodes.

Finally, in graphene news, Graphene 3D Lab Inc. has entered a distribution and manufacturing partnership with China-based filaments manufacturer, Polymaker.

The agreement will see Shanghai-headquartered Polymaker, which has a global network of sales offices, distribute all Graphene 3D Lab’s speciality and functional filaments and provide filament manufacturing services as required.

Graphene 3D Lab, which is based in Calverton, New York, US, will list Polymaker’s products on its online store.

IM’s 5th Graphite & Graphene Conference will be held on 8-9 December at the Waldorf Hilton in London. For more information, contact Peter Gilfillan

*Earnings before interest, taxes, depreciation and amortisation

**Conversion made July 2015