Saturday 22nd October 2016

Resource Clips

First place, second thoughts

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The company’s timeline calls for construction beginning this year and commercial production in Q2 2015.

Yet another graphite frontrunner, Flinders Resources TSXV:FDR wants to restart operations at a Swedish mine without undergoing feasibility or even pre-feas. But inquiries by the British Columbia Securities Commission led to an October 29 clarification loaded with cautionary language about its September PEA.

While acknowledging additional risk due to the PEA’s preliminary nature, Flinders attributes an after-tax IRR of 34% and NPV of $26.6 million, using an 8% discount rate, to a 13-year open pit mine on the Woxna project’s Kringel deposit. The company plans to begin commissioning in mid-2014 and commercial production at least six months after that. Since July Flinders has been processing and selling graphite from stockpiles left over from operations that ended in 2001.

Energizer Resources TSX:EGZ, a company that caught up to the frontrunners with a February PEA for its Molo deposit in Madagascar, now plans to buy out its joint venture partner. Under a memorandum of understanding announced October 24, the company would acquire the remaining 25% interest in Molo, adding the entire deposit to the rest of its 100% claims comprising the Green Giant project. The parties expect to close the deal by early December.

Energizer president/COO Craig Scherba said the acquisition would complement off-take discussions and “should also help facilitate project financing for the future Molo mine.”

Besides Molo, Green Giant hosts “at least six other zones that could be potential stand-alone graphite deposits,” the company states.

On November 6 Energizer stated it had concentrated its product to greater than 99.9% carbon according to glow discharge mass spectrometry, “one of the most advanced chemical analysis methods available.” The company plans to ship several tonnes of concentrate to potential off-take customers by month-end.

Mason Graphite TSXV:LLG joined the frontrunners in April with a PEA for its Lac Gueret project in Quebec. Using an 8% discount rate the after-tax NPV comes to $217.4 million with a 27% IRR. Lac Gueret’s distinction is its high grade, which Mason calculates would average 27.4% over the proposed mine’s 22-year lifespan. An estimated $89.9 million would cover the initial direct capex, the report states.

Should Ontario Graphite Ltd live up to its timeline, the privately held company will be the first to begin major graphite operation. Ontario Graphite has stated plans to re-open the Kearney mine, 250 kilometres north of Toronto, by year-end. But the graphite race’s biggest surprise might be Big North Graphite TSXV:NRT.

Last May the nano-cap company re-opened the Nuevo San Pedro underground mine in Sonora state, Mexico. Although it’s a 50/50 JV in a small, 11-hectare operation producing the less-expensive amorphous graphite, Big North has been selling product from its own mine and others that lack processing facilities or transport ability. Amorphous graphite, the company points out, comprises the largest segment by tonnage of the natural graphite market.

Big North also holds a 100% interest in the 145-hectare Aki Wiki concession, about 15 kilometres away, as well as flake graphite projects in Ontario and Quebec.

Early and mid-stage graphite activity abounds with several other companies, including the area play surrounding Zenyatta Ventures’ TSXV:ZEN Albany project in north-central Ontario. On October 23 the company announced it had completed drilling for a maiden resource. Scheduled for late November, the widely anticipated report will reveal more about what Zenyatta calls a “unique hydrothermal style of graphite mineralization.” Also slated for Q4 is initial work on Albany’s PEA.

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