Tuesday 25th October 2016

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Posts tagged ‘Energizer Resources Inc (EGZ)’

Tesla talk electrifies stocks

March 13th, 2014

Huge plans for EV expansion would require several new graphite mines

by Greg Klein

Giga what?

It’s a “Gigafactory” and its dramatic announcement has frontrunners to graphite production basking in the news—a potential 37% increase in natural graphite demand by 2020, requiring six to nine new graphite mines. Those estimates come from the authoritative journal Industrial Minerals in the wake of Tesla Motors’ plans for a $5-billion plant to manufacture lithium-ion batteries for electric vehicles. While several caveats have to be considered, graphite companies have once again come to market prominence.

The Gigafactory’s not yet a fact. Start-up is slated for 2017 but Tesla needs a location, not to mention partners. Tesla’s putting up only two-fifths of the $5-billion price tag. Writing in Morning Notes, Chris Berry states that Panasonic and Sanyo are “rumoured to be contributing as well.” IM writers Simon Moores and Andy Miller caution that “the plant is in the planning stage and capacities depend strongly on market demand.”

Huge plans for EV expansion would require several new graphite mines

Even without growth elsewhere, Tesla Motors
would dramatically increase demand for energy minerals.

Berry, who has previously called Tesla a “bellwether or benchmark for green technology and by extension energy metals,” emphasizes that the Gigafactory’s success depends “less on a secure supply of raw materials and more on the long-term price of a gallon of gas.” He also says EVs face competition from other technologies. And, although “a long shot,” current battery technology could become obsolete.

Nor has Tesla specified that its batteries will use natural graphite. Synthetic graphite might be an option but, as Berry points out, the natural stuff would help the company meet its goal of cutting manufacturing costs by half.

Moores and Miller note alternatives to graphite, such as the non-graphitic carbon anodes now in the R&D stage. But, the writers state, graphite anodes remain “the current material of choice for Li-ion battery producers.”

Should all go according to plan and assumptions, IM Data offers some intriguing estimates. Capacity operation at the Gigafactory would call for 93,000 tonnes of large flake graphite. Those grades, +80 mesh and larger, “made up just over 20% of total flake graphite output of 375,000 tonnes in 2013,” IM stated. By 2020, even with no growth in other areas, the Gigafactory could require six new mines.

That’s just the conservative estimate. “In a bullish case this could rise as high as 140,000 tonnes,” IM states, calling for nine new mines. A number of projects rank among the contenders.

Canada’s next new graphite operation would likely be Ontario Graphite’s Kearney mine, 250 kilometres north of Toronto. Having missed its 2013 target date, the privately owned company now says Kearney will re-open early this year. The large, low-grade resource would produce an annual “20,000 tonnes of natural, large flake, high carbon graphite concentrate,” the company states.

Next in line might be Flinders Resources TSXV:FDR, which plans to skip feasibility and even pre-feas to begin commercial production at Sweden’s Woxna mine by July. The company calls itself the only publicly traded company that’s completely funded for production. Its primary market would be European refractories and crucible manufacturers.

The only graphite company with full feasibility complete, not to mention an expansion case PEA and major permitting, Northern Graphite TSXV:NGC hopes to begin construction on the Bissett Creek mine in southeastern Ontario by Q4 this year, with commercial production following in Q4 2015. Negotiations are underway with potential strategic partners to take up part of the $101.6-million initial capex. One of the company’s claims to fame has even greater significance following the Tesla news. Northern is “the only junior that has successfully produced and tested spherical graphite for Li-ion batteries,” the company says.

This year has Focus Graphite TSXV:FMS focusing on feasibility and financing. In December the company signed what it terms the graphite industry’s first offtake deal, a 10-year contract with a Chinese conglomerate that will buy 20,000 to 40,000 tonnes a year. The 2013 preliminary economic assessment for the Lac Knife project in northeastern Quebec forecast total annual production at 44,000 tonnes. The PEA projected an initial capex of $126 million, which Focus hopes to raise through a combination of debt and equity.

Mason Graphite’s (TSXV:LLG) timeline has feasibility scheduled for completion in Q3 and construction beginning in Q1 2015. Last April’s PEA gave the company’s Lac Gueret project in northeastern Quebec direct costs, including contingency, totalling $107.92 million.

A company hoping to begin production in 2015, Energizer Resources TSX:EGZ has a February 2013 PEA projecting a $162.04-million capex for its Molo deposit in Madagascar. The current plan is to start small with 50,000 tonnes per year but build to a 150,000-tpa capacity as the market requires.

Not as advanced, but a prominent company nonetheless, Zenyatta Ventures TSXV:ZEN plans to finish a PEA in Q2 following last December’s maiden resource for its Albany project. The “very rare hydrothermal deposit” rejuvenated early-stage graphite activity by sparking an area play around the north-central Ontario property.

One junior that’s already selling product is Big North Graphite TSXV:NRT. The company has so far sold 760 tons produced by test-mining its 11-hectare, 50/50 Nuevo San Pedro joint venture in Mexico and by purchasing output from other small, nearby operations. The less-expensive amorphous product doesn’t serve the battery market but the company’s also pursuing flake graphite at its other properties in Mexico and Canada.

IM writers Moores and Miller compare Tesla’s plans to Henry Ford’s introduction of the assembly line to car manufacture, saying the Gigafactory “could prove just as pivotal in the emergence of the EV market, unlocking a lucrative new layer of demand for natural graphite producers.”

In his Morning Notes article, Berry points out that graphite is the largest component of the numerous materials used to make Li-ion batteries, but not the most expensive. Though Tesla’s announcement boosted graphite and lithium companies, he observes, cobalt and nickel stocks somehow missed out.

“There are a multitude of factors which will ultimately determine the success or failure of the Gigafactory,” Berry concludes. “But it is clear that reliable supply of various energy metals remains at the heart of this strategy.”

First place, second thoughts

November 8th, 2013

Some potential near-term graphite miners find time to revise their plans

by Greg Klein

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If the graphite game can be called a race to production, some companies seem to prefer the sure and steady progress of the tortoise. The hare’s dazzling example might have been discouraged by this year’s graphite price slump, down 20% according to Industrial Minerals. Even so, the authoritative journal anticipates a recovery next year, although not as strong as 2011. Those conditions might have inspired some front-running companies to revise their previous plans.

One of them is Focus Graphite TSXV:FMS. On November 7 the company released an updated preliminary economic assessment, replacing the previous PEA released in October 2012 for its Lac Knife project in northeastern Quebec. Thanks to streamlined metallurgy, the new study reports improved economics—the pre-tax internal rate of return increases to 36.4%, compared to 32% in 2012, and the pre-tax net present value to $317 million, compared to $246 million last time around.

Some potential near-term graphite miners find time to revise their plans

Flinders hopes to re-open Sweden’s Woxna graphite mine
and plant without undergoing feasibility studies.

Interestingly, the 2012 report omitted after-tax numbers. But the current figures show a post-tax IRR of 28.6% and NPV of $185 million, using an 8% discount rate. Using a 10% discount rate, as was done in 2012, the NPV shows $250.1 million pre-tax and $143.3 million post-tax.

Both studies relied on the January 2012 resource estimate to calculate a 20-year mine life for an open pit unearthing 300,000 tonnes per annum for a lifetime total of six million tonnes averaging 15.66% graphitic carbon (Cgr). But higher-grade concentrates shown by more recent pilot plant tests now cut operating costs.

No longer relying on a third party “and the associated $27.6 million in working capital requirements” to purify some of the concentrate, Focus says an optimized flotation and polishing circuit can produce concentrate of 98% total carbon for all flake sizes above 200 mesh. As a result, the company maintains, even the smaller flake product will see improved economics.

In a statement accompanying the announcement, Focus CEO Gary Economo said the company has started a feasibility study which “moves us closer to financing, securing off-take agreements, permitting and construction.”

Another potential near-term producer reconsidering its plans is Northern Graphite TSXV:NGC. The company first filed a feasibility study for its southeastern Ontario Bissett Creek project in August 2012. An update followed in September 2013. Then, on October 23, Northern announced a PEA that considers doubling mill throughput after three years of operation.

The plan would knock six years off the previous 28-year mine life but increase average annual production to 33,183 tonnes of concentrate, from 20,800 calculated in September. That would result in a 22% after-tax IRR (compared to 17.3% in September) and a $150-million after-tax NPV (compared to $89.3 million), using an 8% discount rate.

The new scenario would help meet expected growth in demand, the company stated. CEO Gregory Bowes sees an advantage for Bissett Creek in a graphite supply chain that he describes as “heavily dependent on China and … characterized by many inefficient producers with poor environmental and labour practices and inconsistent product quality, delivery and reliability.”

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Facing Ontario’s challenges

June 14th, 2013

More must be done for the Ring of Fire, says MacDonald Mines’ Kirk McKinnon

by Greg Klein

“The Ring of Fire truly has an array of mineralization unlike any other in the world, says Kirk McKinnon, president/CEO of MacDonald Mines Exploration TSXV:BMK. “Our scientists tell me the Bushveld in South Africa has many of these attributes but the James Bay lowlands has all of them.”

More must be done for the Ring of Fire, says MacDonald Mines’ Kirk McKinnon

There’s even talk of rock worth some $30 billion to $50 billion. But despite the region’s potential for a “suite of minerals” including chromite, vanadium, nickel, copper, zinc and titanium, exploration and development are stymied by a lack of infrastructure. McKinnon discussed these challenges with ResourceClips following news that Cliffs Natural Resources had suspended work on Black Thor, by far the area’s largest project. That June 12 announcement re-kindled debate on how best to build access to the Ring of Fire—from the south or southwest, by road or rail—and whether governments effectively address the region’s challenges.

About 35 kilometres west of Black Thor, MacDonald drills its Butler property, focusing on the Butler 3 volcanogenic massive sulphide target. McKinnon also heads Energizer Resources TSXV:EGZ, whose wholly owned and joint venture claims in Madagascar undergo feasibility for one of the world’s largest known flake graphite deposits. The property also hosts the world’s third-largest known vanadium resource. Yet he can’t speak highly enough about the Ring of Fire’s potential. Another discovery comparable to Cliffs’ could be the catalyst for stronger government commitment to develop infrastructure, he says. But lack of infrastructure makes those discoveries more difficult.

Ontario’s Ministry of Northern Development and Mines struck a Ring of Fire Secretariat specifically to work “with all levels of government, industry and aboriginal peoples to encourage responsible and sustainable economic development in the region.” Last February the federal government appointed Treasury Board president Tony Clement as the go-to guy who would untangle the web of various bureaucracies and stakeholders. But McKinnon says, “For all the conversations we’ve had with the federal and provincial governments focusing on the Ring of Fire, I haven’t seen [commitment] manifested in a vigorous way.”

Not that they’ve lost interest. “I don’t think the zeal for development is gone,” he points out. “The manufacturing sector, which used to drive the province, has significantly shrunk. Because of that they’re looking for secondary activity that will replace that historic engine. The only place it can come from is the development of resources.”

If you’re going to get government funding, a transportation corridor coming out of Pickle Lake would benefit communities like Webequie and something like five to seven different communities overall.—Kirk McKinnon, president/CEO of MacDonald Mines Exploration

Backing the region’s biggest player, the Ontario government supported Cliffs’ proposed road south to the CN TSX:CNR rail line at Nakina. McKinnon thinks a comparable discovery by another company might make the province consider other approaches. Certainly, the transportation debate continues. KWG Resources TSXV:KWG studies the feasibility of a southbound railway while Noront Resources TSXV:NOT promotes an east-west road. McKinnon also favours the east-west route, although he’d prefer rail.

“If you’re going to get government funding, a transportation corridor coming out of Pickle Lake [roughly 260 kilometres southwest of Butler] would benefit communities like Webequie and something like five to seven different communities overall,” he says. “The route that Cliffs is talking about interacts with one community called Marten Falls. Now Marten Falls has about 250 people living there. There are over 600 at Webequie alone.”

The native communities currently rely on light plane service and, during winter, ice roads.

Exploration would benefit too, he maintains. The east-west corridor “would spread along the breadth of a much bigger mineralization opportunity.”

As for electricity, he believes the province could do more to connect the region with the grid. But failing that “there has to be a deal with Manitoba or Quebec.”

“We’ve been up there 10 years and I think we know the people very well,” he adds. Governments could work harder to find “common ground with the natives for development so that after a discovery they can come in and get the appropriate partnership arrangements that they’re looking for. But to do that the government has to stimulate exploration through infrastructure and taking a much more pro-active approach to opening up the country to development.”

As it stands now, “it’s damn expensive to operate up there,” he says. “But there are very big prizes to be had.”

Read more about Ontario’s Ring of Fire.

Read about Kirk McKinnon’s remarks on the state of the juniors.

Carbon chronicles

April 3rd, 2013

A roundup of recent news from the ever-competitive graphite space

by Greg Klein

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While graphite frontrunners like Flinders Resources TSXV:FDR, Northern Graphite TSXV:NGC and Focus Graphite TSXV:FMS work through the pre-development or even pre-production stage, other companies vie for runner-up status. Among news announced April 3, Standard Graphite TSXV:SGH released assays from the final two holes of its 2012 drill campaign. These near-surface results come from the Oat Zone, east of the company’s Mousseau East Deposit in southwestern Quebec, showing 5.69% graphitic carbon over 6.8 metres and 5.73% over 20.1 metres.

True widths weren’t available. The top-most intercept started at a depth of 22 metres down hole while the deepest stopped at 64.6 metres.

A roundup of recent news from the ever-competitive graphite space

Additional assays and metallurgical results are pending
for Rock Tech Lithium’s Lochaber graphite project.

These assays conclude Standard’s 2012 campaign, which verified part of Mousseau East’s historic drilling as well as extending mineralization east and west. (Click here for some previous assays.) The company plans fieldwork and additional drilling this year to better define and expand the mineralization.

The same day Energizer Resources TSX:EGZ reported an analysis that it says further supports the February preliminary economic assessment for its Molo graphite deposit in Madagascar. In a statement accompanying the announcement, Energizer president/COO Craig Scherba said, “If the graphite price falls off by 25% and there is a 20% opex cost over-run, the project still has very positive IRR and NPV values.”

Going back a week, on March 27 Big North Graphite TSXV:NRT announced grab and channel sample assays for its Grand Lac du Nord property in eastern Quebec. The results “confirmed a multiple graphite-bearing structure covering an area approximately four kilometres by two kilometres, with results of up to 5.31% graphite,” the company stated. Its name notwithstanding, Big North also has a southern presence. That’s in Sonora state Mexico, where the company has three projects that include a 50% share in Nuevo San Pedro and 100% of Caraples and La Fortuna, all small-scale past-producing amorphous graphite mines. Last January Big North commissioned an NI 43-101 technical report for Nuevo San Pedro, which the company’s preparing to re-open.

On March 26 Canada Strategic Metals TSXV:CJC announced flake size distribution for grab samples from three parts of its 25-square-kilometre La Loutre property in southern Quebec. The company plans 15 to 20 holes of near-surface Phase I drilling this spring. One day earlier, Graphite One Resources TSXV:GPH announced it commissioned a PEA for its Graphite Creek property, 65 kilometres north of Nome, Alaska. Along with an updated resource, the study is slated for Q1 2014 release.

On March 21 Canada Carbon TSXV:CCB announced more surface sample assays that “confirmed the presence of a high-quality lump/vein graphite deposit” on the former Miller open pit mine about 80 kilometres west of Montreal. The company plans a busy spring with geophysics, channel sampling and drilling.

Speaking of drilling, on March 18 Rock Tech Lithium TSXV:RCK reported more assays from its Lochaber project, also in southwestern Quebec. One hole “intersected 84.56 metres of graphitic carbon at various depths with grades ranging from 1.11% to 4.42% Cg,” while another found 117.99 metres “at various depths with grades ranging from 1.3% to 3.63%.” Still to come are assays for 12 more holes, re-submitted assays from Phase I drilling and test results for flake size distribution and purity.

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Week in review

March 1st, 2013

A mining and exploration retrospect for February 23 to March 1, 2013

by Greg Klein

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Another spring fever for graphite?

As one of Chris Berry’s “energy minerals”, graphite had an energetic week with the biggest news coming from Energizer Resources TSX:EGZ. The company’s Molo graphite deposit in Madagascar reached another milestone Tuesday with its preliminary economic assessment.

But to start with Monday, Rock Tech Lithium TSXV:RCK released drill results from the Plumbago area of its Lochaber project in southern Quebec. The same day Nevado Resources TSXV:VDO did the same thing for its Fermont property in the province’s northeast.

A mining and exploration retrospect

Coinciding with Energizer’s Tuesday release, Pistol Bay Mining TSXV:PST announced an option on the Portland graphite property in southeastern Ontario. Also on Tuesday, Canada Strategic Metals TSXV:CJC released metallurgical tests from its La Loutre property back in southern Quebec.

More metallurgical news came the following day from Standard Graphite’s TSXV:SGH Mousseau East deposit, again in southern Quebec. Then on Thursday Mason Graphite TSXV:LLG weighed in with drill results from Lac Gueret in northeastern Quebec.

No graphite news on Friday, however. Presumably everyone was en route to PDAC 2013, where they’ll conspire to pump up a repeat of last spring’s graphite mania.

No wait, this is the hottest new commodity

“Rhodium, the scarcest precious metal used in making catalytic converters, is outperforming platinum and palladium for the first time in seven years as global car sales rise to a record,” stated a Thursday Bloomberg report.

“The metal, used with palladium and platinum in pollution-control devices, rose 16% this year, about three times the increase of the other two ingredients and 20 times more than the benchmark commodities index (MXWD). Output will trail demand for four more years after the first deficit since 2007 [took place] last year [and eroded] inventories, Standard Bank Plc’s SBG Securities … forecasts.”

It seems to be gaining safe haven status too. “Baird & Co., a UK precious metals dealer, sold about 10,700 one-ounce rhodium bars … more than 10 times the amount planned when production began in May 2012,” the news agency added. “The London-based company expanded with bars that weigh one-tenth an ounce to five ounces to meet increased demand.”

A Baird spokesperson told Bloomberg, “At the moment we can’t make them quick enough so we are stepping up production. The market is so thin that it just needs a car company to buy a year’s worth of production or a hedge fund to pull out a little bit of loose change. It doesn’t take a lot to create quite sharp price movements.”

De Beers blockade: Cops’ lack of resolve resolves nothing

At press time Friday, De Beers’ Victor diamond mine in northern Ontario had gone seven (7) days without an illegal native blockade. The most recent roadblock ended late February 22 when the five or six protestors simply left. Then, and only then, did police move in.

So far the company has lost nearly half of an approximately 45-day opportunity to haul a year’s worth of heavy supplies over a seasonal ice road. As a result, the mine might face a temporary shutdown, the Timmins Daily Press reported on Tuesday.

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Week in review

December 7th, 2012

A mining and exploration retrospect for December 1 to 7, 2012

by Greg Klein

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Lawyer wants to cross-examine Bre-X wives

A lawyer representing Alberta investors wants to know what happened to $95 million that two families received from the Bre-X fraud. The multi-billion-dollar mining scam hit the fan in 1997 and the company filed for bankruptcy in 2002. On Tuesday class-action lawyer Clint Docken told media he wants to cross-examine Ingrid Felderhof, ex-wife of Bre-X chief geologist John Felderhof, and Jeannette Walsh, widow of founder David Walsh, about affidavits the women made concerning their financial situation.

According to Tuesday’s Calgary Sun, Docken told court that the company founder received $25 million from investors while the chief geologist got $70 million. Ingrid Felderhof lives in the Cayman Islands. Jeannette Walsh lives in the Bahamas.

A mining and exploration retrospect

Docken told the Calgary Herald he also wants an appraisal of a Cayman Islands mansion the Felderhofs bought 15 years ago for $3 million.

“It’s important to know what it’s worth now,” the Herald quoted him. “That’s an asset that should be taken into consideration. If this claim is successful, she may have to sell it.”

Lawyers representing bankruptcy trustees Deloitte & Touche want the suit dismissed, saying there’s no money left. The Calgary Court of Queen’s Bench adjourned the case to May 30. The Herald also stated that Ontario has a parallel class-action suit underway.

Darryl Stretch’s downfall

Solid Gold Resources TSXV:SLD announced on Monday that it replaced outspoken CEO Darryl Stretch. According to a company statement, the BOD appointed director/chief financial officer Alan Myers interim CEO.

Stretch courted controversy several times after coming into conflict with the Wahgoshig native band and the Ontario government. He said the Wahgoshig wanted him to fund a $100,000 archeological study prior to drilling claims near Lake Abitibi in northeastern Ontario. Saying the company couldn’t afford it, he told the Globe and Mail last March, “It’s not my obligation to go find arrowheads for those people, period…. If they don’t like you, you don’t work.” That outburst followed a January court injunction ordering him to suspend drilling and consult with the Wahgoshig band. The company filed for leave to appeal, arguing that consultation wasn’t a legal obligation.

The Wahgoshig, in turn, filed a claim in February against the province and Solid Gold. According to a company statement, “the claim states that ‘the mining act does not establish any requirement on the Crown or the holder of a prospectors licence to consult or accommodate aboriginal communities’ therefore the act ‘is unconstitutional and of no force and effect.’”

According to an August Solid Gold statement, “While the company was restricted from operating in the area, the [Wahgoshig First Nation] used information obtained from Solid Gold during the consultation process to stake mineral claims over an area approximately six kilometres long and 500 metres wide, bordering the Solid Gold property.”

By September, a judge granted Solid Gold leave to appeal the court-imposed drilling suspension. The judge, according to a company statement, wrote that he saw “no basis in the facts of this case for an imposition of a duty to consult on Solid Gold. If the Crown wishes to delegate operational aspects of its duty it must establish a legislative or regulatory scheme. The mining act does not presently contain such a scheme.”

Such a scheme was already underway. Under new rules to take full effect April 1, the province will require companies to consult native bands prior to early-stage exploration drilling on Crown land. The bands will have 30 days to express concerns, which could then block a permit.

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Carbon quartet

December 3rd, 2012

Two maiden graphite resources, a trading announcement and a past-producer readying to re-open

by Greg Klein

December 3 brought a range of graphite news to market, including first-time resource estimates from Madagascar and Alaska, a trading announcement and plans to re-open a Mexican mine.

Energizer Resources TSX:EGZ released its anticipated resource for the Green Giant graphite project in Madagascar. The maiden estimate comes from the joint venture portion, which surrounds the company’s wholly-owned section on three sides. Energizer holds a 75% interest in the JV, with Malagasy Minerals Ltd holding the remainder.

Several cutoff grades were used for calculations. Using a 2% cutoff, the resource shows

  • an indicated category totalling 84.04 million tonnes averaging 6.36% carbon
  • an inferred category totalling 40.34 million tonnes averaging 6.29% C

The resource starts at surface and reaches a maximum depth of 385 metres. The zones remain open along strike and at depth, Energizer stated.

Maiden resources, a trading announcement and a past-producer readies for re-opening

A model represents a sheet of graphene,
a graphite byproduct with wondrous R&D potential.

The estimate identified two high-grade zones on the Molo deposit’s east and west ends, with a combined indicated resource of 60.17 million tonnes averaging 8.1% C, using a 4% cutoff. The eastern zone was capped at 13% and the western at 15%.

Green Giant’s PEA, originally due this month, has been postponed to Q1 2013 to incorporate a higher head grade into the plan.

Energizer shares opened December 3 at $0.36 but closed the day at $0.31.

Across the planet, Graphite One Resources TSXV:GPH also released a maiden resource. The estimate results from an 18-hole, 4,248-metre program at the Graphite Creek property 65 kilometres north of Nome, Alaska. Using a cutoff of 3% graphitic carbon, the resource shows an inferred category of 107.2 million tonnes averaging 5.78 Cg. The deposit remains open down dip and along strike to the east and west. Graphite One has an option to earn a 100% interest in the property.

Graphite One opened December 3 at $0.14 and closed at $0.12.

Further south, Big North Graphite TSXV:NRT announced progress with its preparations to re-open the past-producing Nuevo San Pedro mine in Sonora state, Mexico. Big North shares a 50/50 JV with a private company on the 11-hectare underground operation. Among other steps taken, the company stated that “site prep and clearing at the mine site along with enlargement of stockpiling areas will allow for immediate sorting and shipping of mined graphite. The underground workings have been cleared and stabilized for safety and will allow for mining to begin immediately…. The company has obtained approval and permits for the use of explosives and the first holes have been drilled and [are] ready to blast.”

The news boosted Big North’s share price considerably, from a December 3 open of $0.07 to a close of $0.09.

Also on December 3, Standard Graphite TSXV:SGH announced it had begun trading on the OTCQX International. According to a company statement, “[At] the highest tier of the U.S. OTC market, OTCQX companies are distinguished from the thousands of other companies trading on different tiers in the U.S. OTC market. Several of the world’s largest companies, by market capitalization, are currently trading on the OTCQX.”

Standard’s flagship Mousseau East Property in Quebec lies 50 kilometres from Timcal Graphite & Carbon’s Lac-des-Îles Mine, the largest of Canada’s two graphite producers.

Standard opened December 3 at $0.15 and closed at $0.135.

Week in review

November 2nd, 2012

A mining and exploration retrospect for October 27 to November 2, 2012

by Greg Klein

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No one ever said mining’s risk-free

A Chinese gang leader has been sentenced to death for illegal mining and a number of assaults. A story covered by China Daily and Industrial Minerals on Wednesday reported that Pan Guangjuan and his gang had been running a rare earths operation in Guangdong province from November 2011 to February 2012. On conviction he was also fined $24,000 and deprived of his political rights for life. The death sentence comes with a two-year reprieve.

Other countries have been cracking down too—not only on illegal mining, but illegal mining by Chinese. On Monday prosecutors in the Philippines dropped charges against two Chinese after police and military raided gold dredging operations. According to Reuters, small-scale gold mining, legal and illegal, is widespread in the Philippines but up to 90% of production is smuggled to China via Hong Kong.

A mining and exploration retrospect

In Ghana over 90 Chinese were arrested last month during a crackdown in which a teenage boy died, the Financial Times reported. A previous Ghanaian raid on illegal miners resulted in 38 Chinese being deported last September. Chinese are playing an increasing role in illegal mining in Ghana, partly because of their access to Chinese dredging equipment, the FT stated. The story quoted an official for the Ghana Chamber of Mines, who said, “There are environmental issues, poor working conditions and child labour problems because they use Ghanaian children. They pay them whatever they want, and there are no contracts or safety standards.”

Another government official quoted by the FT said, “Most of these Chinese illegal miners are heavily armed and shoot at anyone that gets near them.”

Are gold reserves lent out, sold short or stored safely?

Over 60 countries store gold in underground vaults at New York’s Federal Reserve Bank. Now a GATA-esque movement is growing in the country that is, theoretically, the world’s second-largest gold owner. On Tuesday Spiegel reported that a member of Germany’s governing coalition, Peter Gauweiler, has finally found limited success in his long campaign to repatriate his country’s gold. The Frankfurt-based central bank will bring home 150 tons of gold over three years for inspection. The Bundesbank also plans to count and weigh the gold bars stored in New York.

The move responds to a damning indictment from Germany’s Federal Audit Office, which criticized the Fed for refusing access to German auditors. Hardly reassured by the planned audit, politician Heinz-Peter Haustein told media that “all the gold has to be shipped back,” Spiegel reported.

Not surprisingly, the Gold Anti-Trust Action Committee was all over the story this week. An article by Lars Schall covered a Thursday speech given by Bundesbank executive Andreas Dombret. He told his New York audience that Germany’s “bizarre public discussion” will soon pass.

“We are confident that our gold is in safe hands with you,” Schall quoted him. “The days in which Hollywood Germans such as Gert Frobe, better known as Goldfinger, and East German terrorist Simon Gruber masterminded gold heists in U.S. vaults are long gone. Nobody can seriously imagine scenarios like these, which are reminiscent of a James Bond movie with Goldfinger playing the role of a U.S. Fed accounting clerk.”

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Graphite gains ground

November 1st, 2012

Major announcements show projects moving forward

by Greg Klein

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Last spring was a tempestuous time for graphite watchers. Enthusiasm had built the previous year and climbed sharply through the early months of 2012. Cynics must have rejoiced not only to see stocks fall as they did, but when they did—almost coinciding with April Fool’s Day. But for all that, companies persevered with both early-stage and more advanced projects. In the latter category, this week has seen a number of significant announcements.

First off were Focus Graphite TSXV:FMS with its PEA and Mason Graphite TSXV:LLG with its TSXV debut (both reported here). Following closely were Northern Graphite’s TSXV:NGC mine closure plan and Energizer Resources’ TSX:EGZ final drill results prior to an initial resource estimate.

Major announcements show projects moving forward

Drill and trench results from Energizer Resources’ Molo flake graphite
deposit are being compiled into the project’s first resource estimate.

With its October 31 MCP announcement, Northern Graphite hopes to begin production at its Bissett Creek Project in Q2 2014. Pending acceptance by Ontario’s Ministry of Northern Development and Mines, and assuming financing falls into place, plant construction would begin next spring.

“Production in Q2 2014 is an attainable goal and should coincide with improving economies, a recovery in the graphite market and higher graphite prices,” the company stated.

Northern describes the MCP as “an all-encompassing document that describes, in detail, the nature of the operations that will be carried out, the current baseline environmental conditions and the company’s plan for rehabilitating the site and returning it to its natural state at the end of mining operations.”

The company estimated its financial assurance at $1.6 million “which reflects the relatively benign nature of the operation, neutral tailings and the ability to practice progressive rehabilitation due to the shallow, flat-lying nature of the deposit.”

The southeastern Ontario project has probable reserves of 18.977 million tonnes, but with an unimpressive 1.89% grade. Last April, however, CEO Gregory Bowes told ResourceClips that the grade was offset by “the high percentage of large flakes, the high purity, very low strip ratio, good infrastructure and the fact that our project is very scalable.”

Bissett Creek’s July feasibility study projected annual production of 4.2 million tonnes averaging 2.22% carbon, for an average of 18,600 tonnes of concentrate grading 94.5% for the first five years. Total mine life is estimated at 23 years.

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New stock on the block

October 30th, 2012

Mason Graphite’s grade even surpasses Lac Knife

by Greg Klein

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Graphite’s back in the news with two major announcements, one of which shows a new contender fast approaching Canada’s vanguard of advanced projects. On October 30, the day after Focus Graphite TSXV:FMS released its much-anticipated PEA, Mason Graphite TSXV:LLG hit the world stage—or at least the TSX Venture exchange.

The result of a reverse takeover with a capital pool company, POCML 1 Inc, Mason’s trading debut opened October 30 at $0.90 and dropped to $0.68 before closing at $0.75. The newcomer’s Lac Guéret project in northern Quebec overtakes Focus flagship Lac Knife’s claim to have the highest-known graphite grade.

Mason Graphite’s grade even surpasses Lac Knife

Mason Graphite didn’t begin TSXV trading until October 30
but plans to fast-track its Lac Guéret Project towards production.

The 11,630-hectare Lac Guéret has measured and indicated resources of 7.6 million tonnes grading 20.4% carbon and an inferred resource of 2.76 million tonnes grading 17.29%. CEO Benoit Gascon tells ResourceClips, “I visited many graphite mines that operated or still operate during my 20 years. This one is unique for that level of grade.”

Gascon was president of Stratmin Graphite, former owner of Quebec’s Lac-des-Îles Mine, the largest of Canada’s two producing graphite mines. In 2002 Gascon negotiated Stratmin’s takeover to form Timcal Graphite & Carbon, which now operates the mine. Gascon stayed with Timcal in senior roles.

Mason picked up Lac Guéret earlier this year from Cliffs Natural Resources, which got the property as part of its 2011 acquisition of Consolidated Thompson. The price tag for Mason totals $1.5 million in warrants and $15 million cash, which includes $2.5 million on completing feasibility and another $5 million on beginning commercial production.

Lac Guéret’s resource was calculated last summer, based on 2006 drilling. Any day now an 18,000-metre drill program will wrap up, with one resource update planned for December and another for Q1 2013. December’s also slated for a PEA. Looking further ahead, feasibility is scheduled for Q3 2014 and commercial production in Q4 2015.

As for community relations, the company hopes to have an impact benefit agreement finalized with the Pessamit Innu band by Q3 2013.

Lac Guéret is a flake graphite deposit, says Mason’s corporate development officer Simon Marcotte. Early indications show that “large- and medium-sized flake together is north of 60% [of the resource], but we’re hoping it’ll be more than that. We’ll have a better idea by year-end,” he says.

Marcotte doesn’t understate his optimism about the resource updates. The project will boast “not only the highest grade of graphite in the world but also the biggest deposit by far—no two ways about that—by a very significant margin.”

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