Torch-Plumbago merger targets producing Sri Lankan vein graphite mines
Torch River Resources Ltd. (“Torch”, TSXV: TCR) has announced its intention to merge with Plumbago Refining Corporation (“PRC”) in order to jointly develop past producing vein graphite mines in Sri Lanka. Plumbago, which is registered in the Dutch Caribbean territory of Curacao, is not yet listed in any public exchange. Torch River holds a number of mining claims, but most significantly, where the proposed merger is concerned, is its agreement to acquire the past producing Walker lump graphite mine in Quebec (the “Walker Acquisition”), which has the potential to show much more lump graphite mineralization in the area of the past-producing mine.
The intended merger, which is expected to be negotiated over the next few weeks, proposes to benefit from lower operating costs (OPEX) than the many junior graphite companies that have been emerging in Canada. Torch’s cost benefits would derive from the higher consistency of higher grade deposits, known to exist in Sri Lanka. Because of the naturally occurring high grades, Torch and Plumbago would be able to sell a higher grade graphite product with lower processing costs than its competitors. In addition, the new high technology material of graphene, which can only be derived from natural graphite, requires the highest possible grades. Future graphene manufacturers will be looking for consistent purity levels, such as those that can be expected from Sri Lankan type graphite. As for Plumbago, the Company has a longstanding Sri Lankan legacy that has recently been revived as Plumbago Refining Corp. B.V. after it acquired full ownership of its Sri Lankan subsidiary, Sarcon Development Ltd. (‘Sarcon’). Sarcon has developed various graphite mines throughout Sri Lanka.
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Prior to Plumbago’s acquisition, Sarcon has already obtained exclusive exploration rights for 106.1 km2 grids in Western and Southwestern Sri Lanka, which are said to include “all known graphite resources on public land in Sri Lanka other than the two producing mines…that were successful until they discontinued operations in the early 1900’s”. Plumbago is targeting a production of 3,000 tons of graphite a month, processing it in Sri Lanka itself and export finished value-added goods (possibly lubricants) with an initial investment of USD$ 15.2 million. The graphite being targeted is exclusively of the ‘vein’ variety, characterized by grades of 90% C/+80 mesh quality or higher and the proposed Torch River-Plumbago merger would then be in a better position to bring this project to production.
Graphite’s high technology applications can sometimes obscure the fact that graphite has other and more ‘pedestrian’ applications that are also very important, especially in the emerging industrial sectors of south Asian economies. Current graphite producers in Sri Lanka, such as Bogala Graphite, for instance, has experienced increasing demand for its graphite based lubricants. Bogala belongs to the German outfit Graphit Kropfmuhl AG (DE: GKR – 90% controlled by the Dutch group AMG, AS: AMG). Graphit Kropfmühl specializes in the production and extraction of natural crystalline graphite with raw supply sources in Asia, Africa and Europe.
Sri Lankan Graphite is better known as vein graphite and it is very rare. Outside of Sri Lanka, Canada’s Zenyatta (TSX: ZEN) – one of the fastest rising companies in the TSX Ventures exchange – is one of the very few to have identified it. Vein graphite is reputed to show the best crystalline properties of all graphite varieties and it is can be adapted to various applications from electric motor brushes to automotive brake pads and clutches in purities reaching 99%. As for Sri Lanka, the Sri Lankan government is very interested in promoting foreign private sector investment and it is taking steps to ease the bureaucratic process in order to attract more foreign companies.
Most natural graphite, until recently, has largely been mined in China; however, one of the finest types of graphite has been produced in Sri Lanka for centuries. Indeed, Sri Lanka was one of the main suppliers of graphite to the British Empire during its Victorian heyday, when known graphite sources in Great Britain itself (Cumberland) became exhausted. In London, graphite, or ‘plumbago’ (as graphite was called), was used to make crucibles and melting pots thanks to its high non-combustible properties. The Sri Lankan government is very interested in promoting foreign private sector investment and it is taking steps to ease the bureaucratic process in order to attract more foreign investment. Graphite is one of Sri Lanka’s most important mineral products.