EDITOR: | May 27th, 2013 | 14 Comments

Global graphite resource doubled, claims explorer; Potash sector waits for BHP decision

| May 27, 2013 | 14 Comments
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Well, it’s official (or as official as any resource estimate can be) but an Australian company claims to have more than doubled the world’s known graphite. Syrah Resources (ASX:SYR) says its Balama project in Mozambique contains 117 million tonnes of graphite, while the U.S. Geological Survey in 2012 calculated the world’s known reserves then at a contained 77 million tonnes.

Overall, Balama’s statistics are impressive. In all, the resource stands at 1.5 billion tonnes at a grade of 10.2% total graphitic carbon (along with 0.23% vanadium, or 2.7 million tonnes; to put that in perspective, the USGS shows world production of vanadium last year at just 63,000 tonnes, and total world reserves at 14 million tonnes. It is certainly a critical metal).

One zone, called Mepiche, contains 145 million tonnes at 15.1% total graphitic carbon. Moreover, for the project as a whole, the Balama East portion remains open in all directions, indicating the potential for the overall resource to be increased further. The company has begun further drilling at the Mepiche zone as well as new holes being sunk at the Ativa and Mualia zones.

Syrah’s ambitions are not immodest: it states its aim is for Balama “to be the lowest cost and largest producer of graphite in the world (including China) and to have a very high grade and quality project or the expanding graphite market”.

Meanwhile, on the Eyre Peninsula in the state of South Australia Monax Mining (ASX:MOX) said it will file its maiden JORC resource in late June after 77 drill holes were sunk at the Wilclo project. The company reports the presence of coarse flake graphite. In the same region, Archer Exploration (ASX:AXE) says 42 holes have produced high grade graphite results, the latest assays up to 17.4 total graphitic content.

Abroad, Lamboo Resources (ASX:LMB) says rock chip samples from its Taehwa project in South Korea have return graphite grades up to 27.1%. And in Sri Lanka, Bora Bora Resources (ASX:BBR) has been awarded exploration areas around three existing mines.

Sri Lanka, then Ceylon, was the world’s leading producer of graphite in various years through the early 1900s. There are two major mines in operation, the government-owned Kolongaha and the German-owned Bogala mine. In addition, two old mines have recently been re-commissioned, Sakura and Queens. Germany is thought to be a significant customer for their output.

POTASH: According to Reuters, Russia’s Uralkali OAO will rein in its expansion plans if BHP Billiton goes ahead with its Jansen project in Saskatchewan. The agency quoted chief executive Vladislav Baumgertner said “we will postpone the realization of Solikamsk-3 expansion and Polovodovsky by five to 10 years” if the British-Australian giants proceeds.

The $1 billion Solikamsk-3 mine expansion would add 2 million tonnes of annual capacity, and the new Polovodovsky mine would cost an estimated $2.4 billion to build and increase Uralkali’s capacity by a further 2.5 million tonnes. But here is the telling fact: Reuters adds that “Uralkali has not yet completed feasibility studies on the projects“. That probably means at least two years for those to be completed; in other words, these are not “shovel-ready” projects so one has to conclude this is not quite the immediate threat that the headline suggests.

What Urakali’s going public on thus does help to make clear is what an impact BHP will make whichever way it jumps. If it rules out proceeding with Jansen, then we are likely to see others leap in; Mosaic has already indicated it would reconsider a decision to shelve its Canadian potash expansion if BHP scuttles Jansen. If that were the case, then Uralkali will no doubt hit the green button for the above projects and, as Reuters reminds us, the Russian company added 1.5 million tonnes capacity last year at Berezniki-4. It also is planning a 2.8 million tonnes a year mine called Ust-Yayvinsky.

So it all hangs on BHP, it seems. It reminds you of that famous 1953 play Waiting for Godot in which two characters on stage get involved in all sorts of absurd activities while they wait for the eponymous character to appear, doing anything “to hold the terrible silence at bay”. Now we have “Waiting for BHP” and we have characters similarly filling the silence from Melbourne. Godot never does appear, but I think we will hear from BHP one way or the other.


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Comments

  • Dr. Copper

    So the real deal is not reported by this Company ? That is interesting.

    Why would anyone seek the ‘real’ information by an anonymous email address claiming to hold the ‘real deal’ ?

    The Swedish Embassy in Maputo also provide geophysical imagery over Balama South = BS as well as previous metallurgical results widely available so it is no big secret this ground is littered with uranium fissile isotopes of uneconomical background.

    hope it helps.

    May 28, 2013 - 8:36 AM

  • Gareth Hatch

    Mr Oliver: it is unfortunate that the US Geological Survey (USGS) continues to use terms such as “mineral reserve” in a manner that does not match contemporary definitions, which conform to guidelines such as NI 43-101, JORC and so on. The latter definitions (at the Probable and Proven levels) are based on actual extensive drill results and economic evaluations. The term as used by the USGS is nowhere near as accurate, and their numbers are typically based on guesstimates of potential, NOT based on real empirical data.

    Ironically, then, there is actually far more actual data in a code-compliant Inferred Resource, than in all of the USGS reserve estimates combined…

    May 28, 2013 - 9:02 AM

  • Dr. Copper

    Mr. Hatch – the NI-43 101 and JORC does not count for actual derived graphite
    concentrate and as the issue at hand is to prove actual deliverables it becomes
    an issue of showing your might by doing and not by talking.

    There is plenty of action in the Canadian Graphite space to blow the bubbles
    coming out of Australia.

    Its a proven and reliable product which count.

    One you can trust.

    May 28, 2013 - 10:34 AM

    • Gareth Hatch

      Dr. Copper: in terms of reliability, I’ll take NI 43-101- and JORC-compliant resource estimates over USGS or other reserve guesstimates, anytime, for the very reason to which you allude.

      With apologies to the late Dr. Richard Feynman – it doesn’t matter how beautiful your reserve guesstimate is, it doesn’t matter how smart you are. If it doesn’t agree with actual empirical test drilling results, it’s wrong.

      In this day and age, no junior mining company that hopes to get financing down the road, is going to publish reports on the progress of their natural resource projects that do not conform to one or more of the internationally recognized guidelines.

      May 28, 2013 - 11:54 AM

      • Dr. Copper

        I agree in making those two comparisons in resource announcements is a like child asking for candy.

        It just so happens that when we calculate in graphite terms
        that we are venturing strait into proven deliverable sub grades
        and sub sizes and therefore the whole reference to either NI 43-101 or JORC Code becomes irrelevant and invalid. In other words It becomes even more invalid from head grades because different samples and sections contain different recoveries from liberated impurities with total graphitic carbon content.

        No Junior explorer will ever obtain any project finance before they can prove a consistent saleable product which will satisfy a long term end user. That means in graphite terms more than
        boasting a big exploration jargon, you need to deliver.

        The graphite industry is very small afterall.

        May 28, 2013 - 1:48 PM

  • Francis Dube

    Graphite is about purity, but after that you have to ask what impurities are still there. Will they have a negative impact for the end user? For those looking for really pure graphite, look at Zenyatta.ca. Purity 99.99% with cheap process. Resource about 50M tons @ 5% and should double with summer drilling. Lots of info on Tradingchief.com.

    Glorieux

    May 28, 2013 - 11:55 PM

    • gmatrades

      I understand that the Zenyatta Albany deposit is is a hydrothermal deposit so grades and purity are fairly consistent throughout the deposit. The company states that the high purity and nature of the graphite means it can compete in the synthetic graphite market. Synthetic demands up to 20k per ton. What would it cost ZEN cost to produce a ton of 99.99% graphite?

      May 29, 2013 - 12:07 AM

      • Dr. Copper

        When synthetics was first referred to, many folks and so-called expert analysts believed it was amorphous graphite in-situ
        grading low 80 pct TGC.

        I personally like to thank Simon Moores for getting it completely wrong via his Cerwin Vega loudspeaker Sugar Daddy brokers who incestantly continue to HFT and spruik crap. Keep it coming, we love a free laugh.

        Would add one thing to yours and that is the smaller the particle, the larger a surface can be processed and therefore
        higher purity levels.

        ZEN is on the right track yet no one can claim supremacy
        unless you are very foolish.

        May 29, 2013 - 10:20 AM

  • Threshold

    Let’s not get high purity flake confused with high purity hydrothermal vein graphite from ZEN. The stock market seems to have it figured out quite well. Hydrothermal vein is isotropic and flake is not. That’s why flake hi purity seekers have to grind up their flake feedstock in an attempt to make it almost isotropic. So in doing so they lose over 2/3 of their volume, and face much higher costs to attain a purity level even close to ZEN’s. Let’s face it before ZEN came along, we saw no claims out of the flake players of their ability to enter the synthetic graphite space. Now the flake players are moving on to claim supremacy in the graphene market. That marketing move seems to have failed the test of the stock market. Meanwhile ZEN keeps on moving up. Maybe we should check with Mickey Fulp? LMAO.

    May 29, 2013 - 2:40 AM

  • James Wison

    According to the US Geologic Survey there is an estimated 800 million tonne of Inferred Resources of graphite. If Syrah’s estimate is accepted, it will be added to the 800 million tonne Inferred Resource.. The 800 million tonne is not a Proven and Probable Resource. The World Graphite Reserve is and consists of 77 million tonne of total graphite content of various sizes. See page 69 for US Geological Survey data on Graphite

    http://minerals.usgs.gov/minerals/pubs/mcs/2012/mcs2012.pdf

    Also see Simon Moores article “Flake Graphite Prices Have Bottomed: Simon Moores ” and his opinion on Zenyatta Ventures which is not fully positive.

    http://www.investorideas.com/news/2013/mining/05283.asp

    Zenyatta Ventures Ltd. (ZEN: TSX.V) has made a lot of headlines in recent months and enjoyed a high share price when everyone else has suffered. The company has a unique project with very high carbon purities. Zenyatta has been coy about allowing others to test this so far. The data it has released is very impressive on the carbon purities front, but because it’s so unique, the question is whether or not it can be used in the same markets as flake or synthetic graphite. Only time will tell.

    June 1, 2013 - 7:52 PM

    • Gareth Hatch

      Despite the explanation in Appendix C of their MCS, it is clear that what the USGS calls an Inferred Resource does not match those used under NI 43-101 / CIM, JORC or SAMREC guidelines. This goes double for their use of the term reserves.

      This comes into stark relief when you look at commodities such as the rare earths, where USGS numbers are nowhere near close to those derived from resource estimates that conform to the above codes.

      June 1, 2013 - 10:26 PM

    • Dr. Copper

      Simon Moores is a sponsored broker/analyst so be careful with what
      you read and see in front of your eyes.

      June 2, 2013 - 12:00 PM

  • Metal

    Hi carlo,
    This is the link that reveals the uranium in balama as Dr. Copper says.
    http://www.syrahresources.com.au/J2151_Jacana_Mozambique_Technical%20Report.pdf

    Regards

    September 7, 2013 - 8:51 AM

  • Barney

    I always used to study piece of writing in news papers but now as I am a user of net
    so from now I am using net for content, thanks to web.

    Here is my blog … CSS Love

    October 21, 2013 - 12:59 PM

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