IM Graphite News in Brief 17 – 23 July

By Laura Syrett
Published: Thursday, 23 July 2015

Valence secures $50m sales agreement; Energizer receives verification of Molo ore’s suitability for graphene inks.

ASX-listed Valence Industries Ltd has signed a binding three-year graphite sales deal with an undisclosed buyer, which the Australian miner said was worth in excess of $50m to the company.

The buyer was described as a new customer, based in the Asia-Pacific region, which supplies graphite-based materials for use in the aluminium, steel, chemical, ceramics, plastics and expandable graphite industries, among others.

Uley Graphite1_Valence Industries 
Valence's processing plant at Uley is ramping up to 20 tph to supply customers with the company's stockpiled and freshly mined graphite (source: Valence Industries). 

Valence said the prices agreed with the buyer exceed its weighted average price of $1,335/tonne FOB Adelaide, but declined to specify tonnages or prices agreed under the deal, but declined to give exact figures.

The company also told IM that sales volumes and product purities were subject to confidentiality obligations with the customer, but said in a press release that the new sales contract focused on the company’s coarser flake graphite produced from its Uley project in South Australia.

"The supply of graphite for this customer will come from existing stockpiles and then from new mining out of Uley Pit 2," Valence’s CEO, Christ Darby, told IM. "This (…) contract is another key step in supporting Valence’s existing operations and the programme for increasing production at the Uley site," he added.

Valence’s project at Uley comprises the past producing Uley graphite mine and a 14,000 tpa processing plant. The company expects to achieve a run rate of 20 tph, up from a present rate of 15 tph, at the plant by the end of September 2015.

Kibaran Resources Ltd has released the results of a bankable feasibility study on its Epanko graphite project in Tanzania, which established a net present value for the property of $197.4m.

The study also assessed a pre-tax internal rate of return of 41.2% for Epanko, with estimated capital expenditure of $77.5m. Operating costs are pegged at $570/tonne of graphite concentrate and the study assumed graphite prices of $1,446/tonne of concentrate, yielding an EBITDA* of $33.6m for 15 years.

Epanko has maiden proved and probable ore reserves of 10.9m tonnes at an average grade of 8.6% C, making for a mine life of 25 years, based on a production rate of 40,000 tpa.

Kibaran already has the necessary mining licence and environmental approvals as well as binding and provisional offtake agreements in place for the project’s output. The company said that debt financing discussions for funding the project are already in process.

Canada-based Caribou King Resources Ltd has agreed to acquire Micron Investments Pty Ltd, which holds an option to acquire 63% of the Aukam graphite mine, located in the Karas region of southern Namibia.

The Aukam mine covers an area of 125,000 acres (506km2) and is the only past-producer of graphite in Namibia, according to Caribou King’s president, Mike England. "We look forward to redeveloping the site using modern technology and knowledge," he said.

Under the terms of the deal to buy Micron, Caribou will issue 3.5m shares to arms-length vendors and incur up to $1.1m in expenditure over an 18-month timeframe, with a first year cash commitment of $125,000.

Caribou is planning to commence phase two work at its Buckingham graphite property in Quebec, Canada, in the coming weeks.

Also in Namibia, US-headquartered Next Graphite Inc. has entered a joint venture (JV) with Micron Investments Pty Ltd, a private Namibia-based company with expertise in geology, engineering, mining, as well as the funding and marketing of commodities.

Under the terms of the JV, Micron has agreed to fund a 2,500 tpa facility to process, test and commercialise Next Graphite’s 140,000 tonnes of on-site heaps at its Aukam graphite project, with the ability to scale the plant up to 100,000 tpa.

A date for constructing the project will be announced in the coming months. Micron will provide Next Graphite with working capital into the second half of 2016 until the processing plant is up and running and intends to recoup its investment through a farm-out agreement with the company.

The two companies will also explore other potential graphite-bearing areas of the Aukam property.

Elsewhere in Africa, DNI Metals Inc. has been granted a full commercial mining licence over its Vohitsara graphite project in Madagascar, replacing the original artisanal mining permit for the site.

The licence was granted by Madagascar’s Minister for Mines through the Bureau du Cadastre Minier de Madagascar. Receipt of the licence means that TSX-V-listed DNI can now move towards full commercial production at its option, subject to completion of environmental and social studies at the property.

In Canada, Lomiko Metals Inc. and Canada Strategic Metals have engaged Forage Val D’Or Inc. the contract for a drilling programme of up to 10,000 metres at the La Loutre graphite properties in Quebec.

Prospecting, mapping and sampling work is already underway at the property.

In the US, TSX-V-listed Alabama Graphite Corp. has expanded its summer 2015 diamond drilling programme at its Coosa graphite property in Alabama, after an initial programme at the site was completed under-budget.

The company plans to target the Roscoe Ridge portion of Coosa, which is located around 600 ft (183 metres) of the property’s established resource grid. Four 100 ft (30.5 metres) holes will be drilled at Roscoe Ridge and the results of the drilling will be added to the project’s updated NI 43-101 resource estimate, which is currently being prepared.

Big North Graphite Corp. has decided not to proceed with its option on the El Tejon graphite property in Mexico, citing falling graphite prices and weak market conditions.

"The company is unable to maintain property payments and move the El Tejon project forward," the company said in a statement, adding that it was in the process of returning the project to the vendors.

Big North also operates the Sonora graphite project in Mexico, from which it has produced and sold small volumes of amorphous graphite, in addition to a handful of graphite projects in Canada.

In February this year, Azure Metals Ltd acquired a strategic landholding adjacent to the El Tejon project.

In financial news, ASX-listed IMX Resources Ltd has secured an investment covering more than half an Australian dollar (A$) 3m ($2.2m*) share placement from Chen Yonglian, who the company described as a "prominent Chinese business leader", to fund the development of IMX’s Chilalo graphite project in Tanzania and other assets.

Chen agreed to subscribe for 1.33m shares for a total sum of A$1.6m. A total of 250m shares were issued in the placement at a price of A$0.012 per share.

IMX also plans to undertake a share purchase plan to enable eligible shareholders to participate in the capital raising at the same price as the placement.

Nouveau Monde Mining Enterprises Inc. has closed two non-brokered private placements to raise a total of Canadian dollar (C$) 350,300 ($269,000) for work on its Matawinie graphite project in Quebec.

The first placement consisted of 1.835m units at a price of $0.15/unit for aggregate gross proceeds of C$275,300 and the second consisted of 375,000 flow-through shares at a price of C$0.20/flow-through share.

Net proceeds from the raising will be used for working capital and exploration expenses leading to an NI 43-101 at Matawinie.

In graphene news, UK-based Haydale Graphene Industries Plc has confirmed that graphite from TSX-V-listed Energizer Resources Inc.’s Molo project in Madagascar is a viable source of graphene nanoplatelets for graphene inks, which can be used to make printed and flexible electronics.

Energizer said that Molo flake graphite concentrate was successfully functionalised into graphene nanoplatelets using Haydale’s patent-pending plasma treatment process. These nanoplatelets were then turned into a prototype ink.

"Initial test results were very positive, showing the Molo concentrate had improved bulk density and particle size distribution, surface area and enhanced sheet resistivity when compared to conventional carbon inks," said Ray Gibbs, Haydale’s CEO.

Energizer noted that the results were achieved using the smallest flake size (-200 mesh) from Molo, which is the least saleable type of flake graphite. The next stage of analysing the graphite’s suitability for graphene products will be performance testing of Molo-based material.

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

**Conversions made July 2015