This year’s Prospectors and Developers Association
of Canada (PDAC) Convention in Toronto, Canada, was better
attended than in 2015 and the general mood was more optimistic,
despite the lack of investor confidence in higher risk mining
Simply ticking off the necessary components of an early
stage mining business – acquiring valuable assets,
using funds to advance exploration and delivering positive
feasibility studies, have left many companies strapped for cash
and unable to proceed further.
"Today the market doesn’t want to see a
preliminary economic assessment (PEA), that’s not
what’s important now," Kiril Mugerman, CEO of
TSX-V-listed rare earths developer, GeoMega Resources Inc.,
The company has opted to develop its separation technology,
before building its own rare earths mine.
Proof of concept is reassuring for mining investors, but
arguably the most compelling way of getting financiers to put
their hands in their pockets is evidence of downstream demand
growth. Applications for minerals that failed to deliver on
promises of being the next big thing have spooked many
potential backers of new projects.
Graphene, the two dimensional carbon layer that can be
derived from natural graphite, has been a rather painful
example of this. The palpable excitement surrounding the
material four years ago has since died down, as developers have
so far failed to make the anticipated commercial
Many companies however insist that graphene is a good iron
to have in the fire of a graphite project, as long as there are
other business propositions to run alongside it.
Although the chances of turning it into a significant
revenue spinner may be slim, most with the capacity to produce
graphene from natural graphite do not want to be left behind,
if and when the material does take off commercially.
But for most in the junior graphite sector, the buzzword
continues to be batteries and millions of precious dollars are
being ploughed into demonstrating that ore from projects all
over the world can be processed into battery grade material at
costs competitive with the dominant producers in China and
Kevin Watson, of processing company, KPM, which has
developed a way of producing the battery material, spherical
graphite, told IM that many juniors
underestimate the complexity of upgrading graphite for the
The company works with juniors and existing producers to
streamline production, improving production processes and
cutting costs and is now looking to provide a package
technology to the mining industry, focusing on graphite.
"A lot of juniors have a long hard process to carry out
requiring them to develop large production capacity and
projects and they need a lot of funding," he said.
A higher turnout at this year’s PDAC
in Toronto than in 2014 gave junior miners
some encouragement, although competition for funding is
still fierce. (IM)
DNI Metals Inc., another Canada-based exploration company,
is tackling the graphite market in a different way. DNI is
buying graphite from Brazil and processing it, before selling
the resulting material to end users in small quantities to
build up a customer base for its own graphite project in
Importing graphite from Brazil allows DNI to build
relationships with customers and other market heavyweights,
which according to its CEO, Dan Weir, is an important part of
making it in the business.
"It’s not about producing large quantities,
it’s the sales and it’s the marketing
that counts. Also being able to supply a lot of different specs
and products to a lot of different people," he told
DNI plans to start output at 12,000 tpa, which Weir says
will enable the company to be extremely competitive in the
current graphite market owing to its lower capex and opex costs
as the ore can go straight into the flotation process following
With only part of the graphite needed to be upgraded to
battery grade, DNI decided it was more economical to build a
facility in North America for processing to higher grade
graphite. The facility will also enable DNI to conduct all of
its own testing.
Batteries still driving demand
As demand for batteries continues to grow around the world,
so will demand for lithium, but according to Stormcrow Capital
Ltd president Jon Hykawy other applications will also drive
He outlined that rechargeable battery demand is pegged at
29% but other markets also remain important, such as ceramics,
fritz, glazes, greases, thermal glass and metallurgical
"All of these markets are growing – or shrinking in
the case of aluminium – at various rates. But the
battery side of this equation is growing at the largest rate,"
Hykawy estimated that total battery demand increased 11%
between 2014 and 2015, with a dramatic rise in consumption
expected for battery materials such as graphite, lithium and
cobalt out to 2025.
Current demand for lithium remains in the region of 200,000
tpa with global nameplate capacity calculated at around 231,000
tonnes. By 2025, Hykawy expects lithium demand to be in excess
of 400,000 tpa and supply to reach around 425,000 tpa, with new
projects coming online.
Hykawy cautioned that the 25,000 tonne overlap is not a
large margin of error, however. "Some of these [new lithium]
projects aren’t completely financed and there
should be some concern about supply, but not all lithium goes
into batteries. Some of it is lower value and used for things
like greases and there is some elasticity in market segments,"