Skip Navigation Links


Bookmark and Share
Graphite One Resources Announces Preliminary Economic Assessment for its $1 billion NPV Alaska-Based Graphite Creek Deposit

on 2/11/2017
Graphite One Resources (GPH: TSX-V; OTCQX: GPHOF) is a junior mining company focused on its Graphite Creek project, host of America’s highest grade and largest known, large flake graphite deposit, located near Nome, Alaska. We learned from Mr. Doug Smith, Executive Chairman of the Board of Directors of Graphite One that their objective is to build a fully integrated company, eventually moving from producing graphite concentrate right through to finished advanced materials end-products. Graphite One CEO and President Anthony Huston says of the company’s strategy, “This vertical integration will help reduce costs and make a seamless system from our mine to the high-tech graphite market.”

In a major milestone on the road to production, the Company has just published its (PEA) and is in the midst of the metallurgy studies that show that their graphite is already partially spherical in the ground. The initial testing shows that this is a very high quality resource right at the surface. According to Mr. Smith, the company's focus is on the high-end battery market. He believes being a US based manufacturer of spherical graphite will give Graphite One Resources a competitive advantage in the US market, which – with no graphite production since 1991 – is 100% import-dependent, with the bulk of foreign-sourced graphite coming from China. Concern regarding that dependency has led the European Union and the U.S. Government to deem graphite a “supply critical mineral.”

With graphite demand growing due to a range of high-tech applications – from laptops and LEDs, smartphone and solar cells, to Electric Vehicle (EV) batteries, drones and satellites, and energy storage devices -- Graphite One is moving rapidly to advance its project from PEA to feasibility, demonstrating an economically viable project.



Dr. Allen Alper, Editor-in-chief of Metals News interviewed Mr. Doug Smith, Executive Chairman of the Board of Directors of Graphite One Resources and Chair of the Audit Committee. Mr. Smith updated Metals News on the status of the company now that the PEA has been completed. Mr. Smith said, “We are currently moving into an evaluation phase and intend to develop our Graphite Creek Deposit located on the Seward Peninsula near Nome, Alaska. Graphite Creek Deposit is America’s highest grade and largest known, large flake graphite deposit. Based on the results from our resource estimate released in March of 2015 after 4.8km of drilling on the deposit’s 18km strike length, Graphite Creek has a NI 43-101 indicated resource of 17.95 million tons at 6.3% graphitic carbon with 154.3 million tons inferred at 5.7% Cg using a 3% cut-off grade.” The PEA reports a projected mine-life of 40 years, based on exploration that has been limited to less than 20% of the overall deposit.

The new PEA indicates the strength of the project. Using a conservative average selling price of $6,200 per ton for Coated Spherical Graphite – a form that is favored in many tech applications from EV batteries to energy storage systems -- the PEA projects Net Present Value (NPV) at $1,037 million at a 10% discount rate, with a mine life of 40 years. The Internal Rate of Return (IRR) is 27%, with payback in Year 4 from the start-up of production.



The company’s conservative estimates allow room for a good deal of upside. Sensitivity Analysis shows that a price assumption for coated spherical graphite of $8,060 per ton rather than the conservative $6,200 base case adopted for the Graphite One project would result in an IRR of 35% compared to the projected 27%, and an NPV of exceeding $1.6 billion.

As for the path forward from the PEA to a feasibility study, Mr. Smith and his team have completed an extensive amount of drilling on the property in order to get where they are today. Mr. Smith said, “We have completed three resource definition diamond drill programs since 2012 that include 7,494.35m of drilling in 48 holes. When we finished that, we added two additional core holes in 2014 for use in metallurgical testing and geotechnical studies.”

The results of this drilling program have helped the company delineate and define the project. Mr. Smith said, “The indicated resource is now much better defined within a drilled block of approximately 730m along the northeast striking trends of the graphitic schist. It goes about 185m across the strike to the southeast and 200m below surface. The good news is that the deposit remains open along strike to both the east and west, and down dip.”



The results from this additional drilling increased the overall size of the project. Mr. Smith said, “What we saw after the drilling was that the grade of the indicated resource block increased 14% with the 2014 infill drilling program compared to the grade of the previously inferred resource (6.30% vs. 5.54%). The 2014 drilling also confirmed continuity of the strike, near surface, graphite zones and moved 11% of the previous inferred resource to the indicated resource category.”

All this information establishes Graphite One as the largest reported graphite deposit in America. Mr. Smith said, “With the amount of graphite that we are seeing in the deposit, we know that we can support many years of large scale production, doing more than 50,000 tons per year. This is critical as we see there is a significant market demand forecast for natural flake graphite that will be growing over the next five years. And given the pace of technological change, there is every reason to expect the dynamic demand growth to continue.”

The Graphite Creek Deposit offers a type of graphite that can be hard to find. Mr. Smith said, “This deposit has a significant portion of large flake graphite that is considered to be spheroidal, with thin flakes, aggregate flakes and expanded flakes. This is an important distinction in that the spheroidal shapes are the type of graphite that is used for lithium ion batteries. The thin flakes that we find at the deposit are used for premium alkaline batteries and graphene. The aggregate flakes that the deposit has are used for lithium ion batteries as well and the expanded flakes can be sold for flame retardant materials. “What this means to us, as a company, is that we have a lot of high-demand resources sought after in multiple markets that we can easily sell once we move into production.” The result is a trademarked acronym – STAX – short for graphite that is Spheroidal, Thin, Aggregate and eXpanded. The importance of STAX was identified during exploratory product development test work, which achieved high conversion yield to spherical graphite which demonstrated high performance during electrochemical testing. STAX graphite is projected as being uniquely amenable for use in several applications ranging from lithium-ion and alkaline batteries, greases and lubricants, to friction motor brushes, and crucibles.



Once the company does move the project into production, Mr. Smith believes it will be a low cost producer. He said, “With the way the graphite is positioned, we believe there will be a low ore-to-waste strip ratio. Being in Alaska means we have easy access to infrastructure, to trained workers, and we are strategically located with direct access to a port that can easily ship to the Pacific and get the graphite into Asian markets.”

Testing completed on the graphite samples shows promise. Mr. Smith said, “We completed flotation beneficiation test work in 2014 on the deposit. It showed that we will have the ability to produce high grade graphite concentrates above 90% Cg content. We had one result that was even higher, with a concentrate grade of 93.6% Cg for the largest flake size concentrate. This was done by an independent lab so we are confident of the results.”



During 2015, the company had additional testing done on core samples taken from the deposit. Mr. Smith said, “Hazen Laboratories completed additional metallurgical test work in 2015 on five of our core composites from the upper two graphite bearing horizons where we have been working. We had complete gravity separation testing of the garnet fraction and had them evaluate the graphite recoveries of the lower grade graphite-biotite schist material. The tests showed that a gravity circuit at the start of the flotation would remove up to 18% of the mass while preserving the large flake fraction of the graphite. The good news is that we can use a gravity circuit and we will add some more grinding and optimization over time.”

Dr. Allen Alper notes that Graphite One Resources is led by experienced management and a very competent team with expertise in moving projects from exploration to production and experience in the tech sector that is demonstrating a growing need for high-performance graphite. Mr. Smith himself has more than 35 years of experience in the coal industry and is the President, CEO and Director of First Coal in addition to his role at Graphite One. Dr. Alper’s conclusion is that the Graphite One project is of high quality, in an accessible location of a mining-friendly state, serving a technology market that is experiencing rapid demand growth. Graphite One’s strategy to move from mining to market – and earn its place as America’s emerging producer of lithium ion battery-grade Coated Spherical Graphite – shows real promise.

http://www.graphiteoneresources.com

#600 – 777 Hornby Street
Vancouver, British Columbia V6Z 1S4

Anthony Huston, CEO, President & Director
AnthonyH@GraphiteOneResources.com




Disclaimer | Terms Of Use And Privacy Statement


© Metals News. All rights reserved.