Elcora Resources’ to produce high quality graphite at lowest cost
Last August Elcora Resources Corp (‘Elcora’, TSXV: ERA) completed the first tranche a non-brokered private placement for a total amount of up to CAD$ 1.5 million at a price of $ 0.35 per unit. Elcora will use the proceeds from the private placement as general working capital to continue developing its Sakura graphite project in Sri Lanka. Unlike many of its competitors, Elcora has the advantage of being able to exploit a resource that is already in production ready phase. It needs a processing plant to ensure the highest grades possible, restoring Sri Lanka’s role as a world leading supplier of flake graphite.
Elcora can already count on production levels of between one to three tons a day and plans to expand to 2,500 tons in the first year with an eventual goal of 12,500 tons per year. Sri Lanka has traditionally produced a lot of graphite and there are at least 3,000 abandoned pits. The problem has been a lack of development at the processing level because of a limited power supply, which has only permitted basic crushing, grinding and quick floatation because. Therefore, Elcora has studied different solutions than adopted in the past. One of the ones being studied sees the processing plant will have to be different and it may develop near a port. Elcora’s main advantage is that Sri Lankan graphite, when it comes out of the ground, prior to any processing, comes out as two products, lumps and chips with grades in the range of 93-99% graphitic carbon. Elcora wanted a project that was in production and that could go directly to the processing phase and the Sakura mine provides just that.
The importance of graphite for a modern economy cannot be overstated, especially as it is the base material marking the beginning of a new technological revolution in the form of graphene. To understand the value of the graphite being developed by Elcora, it is important to distinguish natural from artificial graphite. The cheapest graphite is produced from lignite or hard coal or oil by coking, synthetic (Acheson process) graphite. By heating to about 3,000 ° C, amorphous carbon transforms into polycrystalline graphite. But the production process takes place in many stages and is thus expensive. Natural graphite occurs as amorphous graphite, flake graphite or graphite core. Amorphous graphite is similar to the artificial graphite, which means it consists of small size crystals. This graphite is used for low-value items and the main producers are China, Mexico and the United States. Flake or crystalline graphite is less common and it consists of many superimposed layers of graphene (graphene = a layer of graphite). This flake graphite occurs in metamorphic rocks and it is found in Australia, Brazil, Canada, China, Germany and Madagascar. Flake graphite can cost up to four times higher than amorphous graphite.
Vein or lump graphite is the rarest and most valuable so far kind of graphite. It occurs in veins along intrusive contact zones and has typically been found only in Sri Lanka. It is ideally suited for high-technology applications. Six countries account for 96% of global graphite production: China, India, Brazil, North Korea, Canada and Russia. However, graphite is of outmost importance for the industrialized countries of the West – as well as Japan and South Korea. New sources are always welcome. Sri Lanka’s vein graphite is reputed to be the highest quality natural graphite in the world. It contains more than 90% carbon content prior to processing, as Elcora has already verified. In May 2014, Elcora signed a definitive agreement with the Sri Lankan company Sakura Pvt. Ltd. In 2012, Sakura started to resume work at the Agedara graphite mine on the same project in the northwest of the country again, which has demonstrated the capability of delivering high-purity graphite with 90-99% graphitic carbon content. Elcora will take over 40% of Sakura’s shares, receiving 20% of net profit of the mine for the mined graphite as well as 30% of the profits from the processing and for management. The Sakura mine was in operation from 1972 to 1985 and delivered an average of 18,000 tons of high purity graphite. Elcora will bring the capital and expertise to revamp commercial production with its own processing plant. Elcora plans to increase production at the Sakura mine as well as serving as a processing base for other graphite mines in the area. The graphite is, as previously mentioned, very high quality. The carbon content is 92-99% and 80% of the crystals have a size of more than 300 microns. Moreover, the impurity is very small with less than 6%. This graphite is suitable for batteries and for producing graphene. Considering that costs of extraction and processing do not exceed USD 350 / ton and that a ton of highly refined battery grade graphite can fetch up to $ 8,000 U.S, the potential margins are considerable. And because of the purity of the material mined at Sakura mine, the cost of processing is low. The plant is to be built in the next 12 months, then in the summer of 2015 begin operations. As for the political risk, so the situation in Sri Lanka has improved considerably after the end of the civil war in 2009.
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