Alabama Graphite and Zenyatta Ventures move north on metallurgical results
Graphite Market Review — The Graphite & Graphene market continued along a now predictable bearish path alongside the resource sector overall, even though the share price average for the week ending on November 21 improved somewhat given that the sector dropped by barely a point (-1.13%).
Alabama Graphite Corp. (‘AGC’, TSXV: ALP | OTCQX: ABGPF) continued its successful run from the previous week rising an additional 5.56% in Toronto and 7.06% at the OTCQX. Alabama Graphite presented additional results from metallurgical testing of three new composite samples from the upper 50 feet of the pit walls at its past-producing Bama mine project. The tests showed that “using only simple floatation (without optimization, chemical or thermal treatment)’ the samples featured a high percentage of large and jumbo flakes with graphitic carbon purities ranging from a low of 93.8% to a high of 97.9% – including the smaller flakes. The results suggest that high purity levels can be maintained consistently using relatively inexpensive and very environmentally friendly and chemical-free processing. The higher the purity of the graphite and the low costs of production indicated by the low cost beneficiation process will allow Alabama Graphite to maximize profits from advantageous project economics and a higher average price for its graphite. Alabama Graphite intends to step up exploration in order to ensure that it become “the first low-cost producer and just- in-time supplier of high purity flake graphite in the United States of America.”
Zenyatta Ventures (‘Zenyatta’, TSX: ZEN | OTCQX: ZENYF), which has been one of the fastest growing mineral graphite companies, moved 8.79% in Toronto and 13.39% at the OTCQX respectively. Zenyatta recently ran pilot plant and beneficiation testing of graphite extracted from its Albany graphite project showing a mineral producing a high purity, highly crystalline graphite product featuring less than 0.05% elemental impurities, meaning that Zenyatta has successfully produced a highly crystalline graphitic carbon (Cg) product featuring 99.95% purity. Twenty potential end users have already started to evaluate Zenyatta’s graphite and Zenyatta will be further testing the materials to achieve even higher purity levels ahead of the preliminary economic assessment (PEA) that is expected to be published toward the end of 2014.
Mason Graphite (‘Mason’, TSXV: LLG | OTCQX: MGPHF), in particular, gained 37.63% in Toronto trading and 31.71% respectively. Mason announced the preliminary results of a study of hub location options for its Lake Gueret project in Quebec. The market rewarded Mason’s opportunity to optimize its feasibility study through unexpected opportunities to reduce capital and operating costs and improve operational efficiency as revealed in a study was conducted during the 2014 third quarter by the engineering consulting firm Hatch. The mining project located near Baie-Comeau should present operational and financial benefits due to revised and lower costs of hydroelectricity, easier access to labor and a more efficient operational framework, which should jointly contribute to reducing both capital costs (CAPEX) and operating costs (OPEX) for the project. It is anticipated that the additional costs of transporting the ore from the mine to Baie-Comeau concentrator would be more than offset by the savings made. A reduction in the emission of greenhouse gases is also anticipated based on the preliminary estimates as defined in the Preliminary Economic Assessment (PEA) published in April 2013.
Meanwhile, the Australian Syrah Resources (ASX: SYR) rose 7.65% announcing that it has succeeded in producing uncoated battery grade spherical graphite, using flake graphite from its own Balama Graphite and Vanadium Project in Mozambique. Even though batteries account for just under a quarter of global flake graphite output, the rapidly growing interest and demand in lithium ion (Li-ion) batteries make it the most important application for this emerging mineral. Among industrial raw materials, graphite is one of those substances which, although only required in small amounts, are expensive due to high demand.
Graphite is expected to experience strong demand growth in the coming years. Just like rare earths, China has been the market leader in the market for mineral graphite; its purity level has not been very high because it has been overwhelmingly used for steel production. However, China’s production will drop because of new and stricter environmental and labor policies – as noted also by its recent commitment to reduce greenhouse gases emissions by at least 20% over the next decades at the G20 meeting. New technological applications from Li-ion batteries in the short term and graphene – in the near future – require over 99% purity and just a handful of producers will be able to deliver such a product.
Graphite Market Review is a special weekly feature on InvestorIntel sponsored by Alabama Graphite Corp. (TSXV: ALP | OTCQX: ABGPF).