Energizer Fast-tracks Vanadium and Graphite in Madagascar
By Greg Klein
According to Brent Nykoliation, Energizer Resources TSX:EGZ faces a question of identity. “Are we a vanadium company with a graphite credit or a graphite company with a vanadium credit?” the VP of Business Development asks. “The answer is, we don’t know yet.”
A January 2011 resource estimate had already established Energizer’s Green Giant Property in Madagascar as one of the world’s largest known vanadium deposits. On that note, a PEA was initiated. Then the discovery of graphite put a whole new perspective on the project. Further exploration identified five graphitic trends apart from the vanadium zones. Those findings prompted the company to negotiate a joint venture with Malagasy Minerals MGY, in which Energizer holds a 75% interest and acts as project operator on a property that surrounds Green Giant on three sides.
“The JV Property is significant for two reasons,” Nykoliation says. “First, we knew the vanadium was going to travel south of our border, so we made the deal to secure the extension of the vanadium. But second, we also found that graphite was in our vanadium trend. So in our 100%-owned property we have about 3.8% graphitic carbon with the vanadium. At that point, we understood that we had graphite on the property and much higher grades in areas that were exclusively graphite and no vanadium.
“Our property went from 21 kilometres to 120 kilometres long, and we have tied up about 75% to 80% of a very significant zone in southern Madagascar which is known for very rich graphite and vanadium. There’s no other company and no other place we know of that has a graphite discovery of this magnitude—a cumulative 320 kilometres. As our VP of Exploration Craig Scherba says, it’s very rare to find those two together. So we have two strategic minerals in one source.”
Traditionally associated with the steel industry, both vanadium and graphite are considered crucial to a cleaner, greener future. A 2009 report from investment banker Piper Jaffray predicts energy storage to be a $600-billion industry by 2020, with 51% of that devoted to battery technologies. Among the contenders are lithium vanadium phosphate batteries for electric vehicles and vanadium flow batteries for power grid storage. VFBs require vanadium over 98.4%, an especially costly grade. Energizer says its deposit, “one of the largest and purest in the world,” is especially well-suited to make the grade.
Graphite’s share of the green economy inspires even headier projections. Predicted demand from lithium-ion batteries, pebble-bed nuclear reactors, fuel cells, solar panels and other new technologies has triggered an exploration boom. Graphene, an ultra-thin, flexible derivative 200 times stronger than steel, inspires a whole new world of technological marvels. These new uses call for high-purity flake graphite. While metallurgical analysis continues on Energizer’s graphite, the company states that it is “comfortable in identifying the graphite as flake, based on visual observation and cursory testing.”
Green Giant has a January 2011 vanadium resource estimate of 49.5 million tonnes grading 0.69% for 756.3 million pounds vanadium pentoxide indicated and 9.7 million tonnes grading 0.63% for 134.5 million pounds vanadium pentoxide inferred.
The resource, Nykoliation explains, “was in our original property of 21 kilometres and that vanadium represents only about 20% of our 21-kilometre trend. Then on top of that we increased our vanadium trend by about 50 kilometres.”
Energizer released Green Giant drill and trench graphite carbon assays. Results from the Fondrana Zone include
- 7.01% carbon over 41.5 metres
- 5.63% over 24 metres
- 5.18% over 18 metres
- 4.73% over 12 metres
- 5.88% over 5.9 metres
Fotsy Zone results include
- 5% carbon over 15 metres
- 4.39% over 11 metres
- 4.64% over 8 metres
- 5.18% over 5 metres
With the JV Property included, Energizer has identified 17 distinct graphitic zones, supporting its belief that the property constitutes a graphite camp. “We’ve drilled seven of those zones, and the assays will be coming back over the next few weeks,” Nykoliation adds.
In 18 to 24 months, assuming we hit all our timelines, we could have a mine —Brent Nykoliation
“We’re moving very quickly to delineate a 43-101 resource on the graphite,” he says. “We need to determine where in the 17 zones we’ll delineate that resource…. We expect to have a 43-101 resource by July or August of this year. We expect to have a PEA completed probably by September or October, and then we’ll be in a position to have a bankable feasibility, along with a pilot plant project that would start earlier, by December of this year.”
Nykoliation explains, “The reason we can fast track this is our partnership with DRA Mineral Projects, Africa’s leading mine development firm. DRA runs 29 mines around the world. They run mines for Xstrata XSRAF, Rio Tinto RIO, Vale VALE, and now they’re partnering with us. They’re the ones who’ll do our PEA and our bankable. In 18 to 24 months, assuming we hit all our timelines, we could have a mine open up. DRA could be our total engineering, construction, procurement and management solution for mines.”
Getting back to the question of identity, it’s a matter of economics. “The capex on a graphite mine is much lower than on a vanadium mine. So graphite might be the springboard to get the mine open. Then the revenue from that would help fund our vanadium operation,” Nykoliation says.
Offtake discussions are already underway, and the suitors could come from a number of countries. “We’re close to the Chinese market,” he says. “We’re perfectly situated for South Africa, one of the largest vanadium consumers in the world. We are ideally situated for Europe. Madagascar is an extremely mining-friendly jurisdiction. But it also has location, location, location.”
It’s well-positioned in other ways as well. Nykoliation concludes, “We have a dual offering—two strategic minerals, one source. We have a very large project, and we’re fast-tracking it. We have a great partner in DRA and a great location in Madagascar. We’re uniquely situated.”
At press time, Energizer had 153.7 million shares outstanding at $0.29 a share for a market cap of $44.6 million.