BlackEarth Minerals makes a ‘very strong entry’ into the graphite space
Lithium Australia NL’s (ASX: LIT) (“Lithium Australia”) aggressive expansion into the battery sector has continued to create value for shareholders as its spin-off company BlackEarth Minerals NL (ASX: BEM) (“BlackEarth”) was successfully listed on the ASX in January, with all shareholders given exposure through their existing holdings (Lithium Australia holds 18%), as well as having the opportunity to directly participate in BlackEarth. Lithium Australia has gathered considerable momentum of late, bagging a killer maiden lithium resource in 4Q17, and BlackEarth’s graphite portfolio spread over Western Australia and Madagascar looks just as impressive.
The four Australian sites are exploration stage and were sold into the BlackEarth IPO by Lithium Australia, but the two Madagascan projects (Maniry and Ianapera) were acquired after the company’s ASX listing was confirmed. Preliminary exploration work has been undertaken at Maniry and Ianapera and both appear highly prospective as well as enjoying proximity to the renowned, high-quality Molo project, a particularly large graphite deposit.
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The nearby Molo deposit has a potential resource of 80-120 million tonnes at a grade range between 5 and 8% total graphitic carbon (TGC) and is thought to be the world’s largest known single source deposit of high-grade graphite. Ianapera’s proximity to Molo may be compelling enough on its own, but past drilling intersections at Maniry have included 10 metres at 10.2% TGC, 12 metres at 11.6% TGC and 14 metres at 11.3% TGC.
Previous systematic exploration at Maniry revealed a large-scale graphite system, putting it at an advanced stage of exploration since recent drilling and trenching have confirmed that mapping and sampling carried out to date can be considered a very good guide to the extent and quality of the mineralisation. BlackEarth is confident that the prospects can be upgraded to JORC-compliant resources in an efficient manner, made even easier by the fact that the variability of the mineralisation seems highly predictable based on the data so far.
Ianapera lies within 10 km of the Molo graphite project and 60 km north of Maniry. It consists of a series of high-grade graphitic outcrops, within a broader graphite trend, with the collective potential to meet a resource target. These outcrops lie atop a large conductive body defined by VTEM™ that could indicate the presence of a large graphitic mineralised system. Like the Maniry project, it has already been the focus of quality exploration that will allow a quick transition to resource evaluation, and while metallurgical test work will be required to determine the quality of the graphite mineralisation, the preliminary petrographic work has been encouraging.
While all battery materials are currently experiencing increasing prices on the back of expected high demand in the very near future, graphite has so far been less dramatically affected. However, as lithium-ion batteries require 20 to 30 times more graphite than lithium, high-purity graphite will also increase in value. Additionally, the established market around graphite means that its price is not so easily perturbed, making it more likely to maintain a sustainable growth pattern (price surges quickly send manufacturer’s looking for alternative materials).
BlackEarth Minerals is a very strong entry into the graphite space. The company successfully raised A$5.45 million for its IPO through the issue of shares priced at $0.20, and will now conduct a 10,800 meter drill program with the hope of producing a maiden JORC resource by mid-2018. This could be a fast mover.