IM Graphite News in Brief 27 November – 3 December

By Laura Syrett
Published: Thursday, 03 December 2015

China discovers country’s largest graphite deposit in Inner Mongolia; Alabama releases positive PEA; Graphitecorp and Hazer float on ASX.

The largest graphite deposit ever discovered in China has been uncovered in the in the autonomous region of Inner Mongolia, Shanghai Daily has reported.

According to the paper, the deposit has proven reserves of 130m tonnes flake graphite. "With good mining conditions, the graphite will be easy to exploit and it will be possible to conduct strip mining there," Li Shirong, director of the Department of Land and Resources in Inner Mongolia, is quoted as saying.

With an average grade of 5.45% C, for around 7m tonnes contained graphite. "The product value is estimated to be worth [Chinese renminbi, Rmb) 700bn ($109bn*) and is planned to last for 28 years," Liu Kai, who is in charge of mining the deposit, told Shanghai Daily.

TSX-V-listed Alabama Graphite Corp. has released the results of its preliminary economic assessment (PEA) of its Coosa graphite project in the US state of Alabama, which gave the site a net present value (NPV) of $320m after tax, at an 8% discount, and an internal rate of return (IRR) of 45.7%, after tax.

Recommending that Coosa be advanced to feasibility stage, the PEA estimated that the project will require initial capital expenditure of $43.2m with a payback period of two years, after tax, from the commencement of production. Operating expenditure over the 27-year life of the mine is calculated at $533m.

Base case annual cash flow is pegged at $40.7m after tax, while life of mine gross revenue is expected to be $2.4bn.

The PEA is based on Alabama’s plan to produce and sell two speciality, high-purity graphite products: coated spherical graphite (CSPG), at a price of $9,000/tonne and purified micronised flake product (PMG) at a price of $2,000/tonne. The two products will account for 75% and 25%, respectively, of Coosa’s output, with initial plant capacity targeted at 5,000 tpa.

Australia-based Graphitecorp Ltd commenced trading on the ASX on 2 December, following the completion of an initial public offering (IPO), which closed on 13 November.

According to a report by Brisbane’s Courier Mail, the listing makes Graphitecorp the only resources company to launch a successful IPO on the Australian stock market this year.

The company, which is developing the Mount Dromedary graphite project in Queensland, said that it is progressing a phase two drilling programme at the site and expects the work to be finished in the next week.

It added that the aim of the drilling is to expand Mount Dromedary’s maiden resource which was defined in Graphitecorp’s September 2015 drilling programme. The project presently has a potential exploration target of between 14m tonnes and 21m tonnes contained graphite.

In another recent graphite-related listing, technology business Hazer Group Ltd has also floated on the ASX after completing an Australian dollar (A$) 5m ($3.66m) IPO. The company issued 26m shares to investors at a price of A$0.20/share.

Hazer has developed a process which it says can produce hydrogen gas and high purity synthetic graphite from a combination of natural gas and iron ore at low cost with negligible CO2 emissions.

The technique, known as the Hazer process, was developed by the University of Western Australia and is presently being commercialised with the aim of supplying its products for use in fuel cell technologies.

Fellow Australian business Valence Industries Ltd is to suspend graphite processing activities at its Uley plant on South Australia’s Eyre Peninsula, following a review of the company’s financial position.

Valence said that halting processing would save the company around Australian dollar A$290,000 per month in operating costs. It intends to continue using existing stockpiled material at Uley to prepare samples for sales and marketing.

"Production at the site has been ongoing at low levels for some months in order for us to achieve some inventory of on spec material to provide to customers for qualification purposes," Robert Mencel, Valence’s managing director, said. "To suspend processing at Uley is an extremely difficult decision, however the existing production rate was uneconomic and could not continue," he added.

In September, Valence slashed its workforce by 60% and cut the operating rate at the Uley plant to 50% of its nameplate capacity in an effort to reduce expenditure.

Nearby, Oakdale Resources Ltd has released a scoping study for its Oakdale graphite property on the Eyre Peninsula, which indicated that the project, if developed, would have a payback period of nine months, a production cost of $286/tonne and an NPV of $170.2m over a three year mine life.

The proposed operation at Oakdale envisages a mining rate of 2m tpa ore for an output of 94,500 tpa. The deposit has a resource of 13.5m tonnes at an average grade of 3.3% total graphitic carbon (TGC), with a high grade component of 6.3m tonnes grading at 4.7% TGC.

Also on the Eyre Peninsula, multi-commodity explorer Renascor Resources Ltd has acquired an option over the Arno graphite project.

Arno has been previously explored, with initial prospecting indicating that the property contains a large tonnage of high quality, coarse flake graphite, based on intersections from eight holes drilled to date. Data from an airborne magnetic survey suggest the project’s conductivity zones extend over a strike length of 5km.

Renascor, which is also developing the Munglinup project in Western Australia, has committed to spend Australian dollar A$400,000 on further exploration at the site within six months to acquire a 20% interest and can assume a 29% stake by issuing 38.66m shares. The remaining 51% can be secured through the issuance of A$2m-worth of shares and 15m options.

Elsewhere, ASX-listed Magnis Resources Ltd has achieved product grades of up to 99.6% TGC from milling and flotation test work on ore from its Nachu graphite project in Tanzania. Magnis said that the results were achieved without chemical or thermal purification.

The company said that flotation processing also yield flake sizes of +300 microns and +180 microns with purities of around 99.4% TGC, which demonstrate "excellent expansion performance", according to Magnis.

The processing techniques employed have been developed for the proposed processing plant at Nachu and the company is aiming to produce material that out-competes synthetic graphite on price for use in lithium-ion (Li-ion) batteries. Magnis said that qualification of its graphite products for use in Li-ion batteries is currently underway.

In Sri Lanka, Canada-headquartered Elcora Resources Corp. has completed construction of its Ragedara graphite processing plant and commenced processing of stockpiled graphite at the site.

The company said that its technology has been custom designed to target high grade Sri Lankan vein graphite with minimal use of chemicals and no environmentally damaging products, by-products or waste.

The Ragedara plant currently has a processing capacity of 2,500 tpa and can achieve a final product purity of over 99% C, according to Elcora.

In Canada, Saint Jean Carbon Inc. has filed a patent for a technique of carbon coating spherical graphite for use in lithium-ion batteries.

Accounting for less than 1% by weight, carbon coating is an essential process in the preparation of making spherical graphite as it prevents the graphite surface from making direct contact with the battery’s electrolyte.

Saint Jean’s technique is based on a continuous feed of graphite from a spherical shaping system through a drying chamber followed by a vacuum chamber and then into a magnet-lined high pressure vessel. Once suspended in the vessel, application of an electrical charge to the graphite allows carbon to be repelled by the magnets and attracted to the graphite particles.

The company is looking to enter supply agreements with North American battery manufacturers for spherical graphite produced using its proprietary method.

Visual analysis of the first hole drilled by TSX-V-listed Ashburton Ventures Inc. at the Buckingham graphite property in Quebec has identified several broad intervals of graphite mineralisation.

The company is now moving to drill other targets at the site, including the trench labelled as 22C, which previously yielded channel sample grades of up to 21.6% over 145 metres.

ASX-listed Sayona Mining Ltd is finalising a new agreement with Brasil Graphite SA to extend and restructure an option to acquire the Itabela graphite project in Brazil.

The option, which was agreed on 5 August 2015, expired on 2 December 2015. According to Sayona, the restructured deal will include a substantial reduction in committed cash. The new terms are expected to be announced within 10 days of the expiry date.

UK-AIM listed Alba Mineral Resources Plc has reported "highly encouraging" results from a preliminary study of its Amitsoq graphite project in Greenland.

The company said that the study was completed during a recent field visit to the project, which had been conducted with the objectives of determining access to the historic mine site, ascertain the suitability of locating drill rigs in the area, safely access any open workings, and collect representative samples to determine carbon content and flake size.

Alba added that 11 samples were independently analysed in Copenhagen, which yielded carbon contents ranging from 20.5% C to 35.4% C. The company intends to undertake additional metallurgical test work to determine the total recoverable graphitic carbon.

In financing news, TSX-V-listed Graphite One Resources Inc. intends to complete a non-brokered private placement offering of 6.66m units to raise gross proceeds of C$600,000.

Each unit will be priced at $0.09 and consist of one common share and one transferable common share purchase warrant, with the latter entitling the holder to purchase one additional common share in Graphite One for $0.012 for a period of three years from the placement closing date.

Net proceeds of the raising will be used to fund exploration and development work at the company’s Graphite Creek project in Alaska and for general working capital purposes.

Graphite One has also settled its outstanding debt of C$66,000 through the issuance of 733,334 shares to three separate creditors.

ASX-listed Mustang Resources Ltd has raised $5.75m to spend on developing its graphite, diamond and ruby assets in Mozambique.

The company issued just under 30m shares at a price of $0.20/share in order to bring in the cash, which it plans to spend on bulk sampling at its licences in northern Cabo Delgado province.

Also listed on the ASX, Black Rock Mining Ltd has divested two of its mineral assets to allow it to focus on its share of the Mahenge graphite property in Tanzania.

The projects Black Rock has decided to relinquish are the Ocean Hill hydrocarbon asset in Australia and a geothermal asset in Hungary. The sales brought the company in excess of A$500,000, according to its managing director, Steven Tambanis.

Finally, in graphene news, US-based Graphene 3D Lab Inc. and Graphene Laboratories Inc. have signed a research, development and royalty agreement with an unnamed Fortune 500 listed manufacturer for "the development of multi-phase deliverables" over the course of the next 12 months.

The companies said that, owing to confidentiality clauses contained in the agreement, neither the specific research objectives nor the name of the partner could be disclosed.

The deal provides for all R&D costs and royalty obligations to be paid by the partner, as well as a first right of refusal for supply of any graphene-related materials in future manufacturing pertaining to intellectual property (IP) developed under the agreement. All IP developed under the scope of the Agreement will be jointly held by both parties.

IM’s updated "Natural Graphite Re­port – Strategic Outlook to 2020" is now available to purchase. For more information or to request a sample of the report please email or call +44 (0) 20 7779 8141. The trends outlined in the report will also be discussed at  IM’s  5th Graphite & Graphene Conference on 8-9 December at the Waldorf Hilton in London.

*Conversion made December 2015