by Greg Klein | December 2, 2013
Highly anticipated but hardly welcomed by the market, Zenyatta Ventures TSXV:ZEN released a low-grade, high-tonnage maiden resource on December 2 for the Albany graphite project in north-central Ontario. The company says its cutoff grade—only 0.6% graphitic carbon (Cg)—is justified by a “very rare hydrothermal” graphite that can be treated to compete with high-purity synthetic stuff, fetching far higher prices than the flake product.
Part of the project’s distinction is its two pipe deposits. The resource envisions an open pit comprising both pipes, which are about 250 metres apart. The east pipe measures about 300 metres laterally, 50 metres wide and 600 metres deep. Its western counterpart runs about 300 metres long, 175 metres wide and 500 metres deep. Both remain open at depth, the company stated.
The indicated category shows:
- East pipe: 10 million tonnes averaging 5.6% for 560,000 tonnes Cg
- West pipe: 15.1 million tonnes averaging 2.76% for 417,000 tonnes
- Total indicated: 25.1 million tonnes averaging 3.89% for 977,000 tonnes
Inferred resources show:
- East pipe: 7.6 million tonnes averaging 2.04% for 155,000 tonnes
- West pipe: 12.5 million tonnes averaging 2.29% for 286,000 tonnes
- Total inferred: 20.1 million tonnes averaging 2.2% for 441,000 tonnes
The numbers are based on 60 holes totalling 24,626 metres. Zenyatta’s next step is a preliminary economic assessment scheduled for Q2 2014 release.
The company maintains that the Albany deposit is unique, pointing to beneficiation tests that produced “99.99% carbon purity with very good crystallinity” using a caustic bake method, a relatively inexpensive process compared to the production of high-purity synthetic graphite. Results announced in April showed final purity values “above 99.97% C and up to 99.99% C in many cases, regardless of initial carbon grades.”
The high-purity product, Zenyatta says, could allow the company to break into a $13-billion synthetic graphite market which pays “in the range of $7,000 to $20,000 per tonne” for synthetic product over 99.9% Cg. By contrast, high-quality flake graphite hit a high in 2011 at $2,500 a tonne before dropping 20%, according to Industrial Minerals. Albany’s resource uses a long-term price estimate of $8,500 per tonne Cg.
Nevertheless investors spurned the debutante resource. Zenyatta’s stock initially rose from its December 2 open of $3.10 to $3.35 but then fell all the way to $1.93 before closing on $2.10. With 55.41 million shares outstanding, the market cap came to $116.36 million.
The project lies four or five kilometres from an all-weather road, 70 kilometres from rail and 30 klicks from the Trans-Canada Highway, a power line and a natural gas pipeline.