“This may potentially be one of the best closology plays in recent memory” — Triton Minerals Advancing Key Mozambique Graphite Projects
More than any other resource sector, the consensus regarding the graphite industry is unanimous — the future global demand for high-grade flake graphite is predicted to be strong. Very strong. Driven primarily by increased clean technology and lithium-ion battery demand; high-tech, fuel-cell technology, pebble-bed nuclear reactors, expandable graphite, and graphene are all ‘hot’ markets for graphite — and are anticipated to further increase the demand for the critical industrial mineral. One of the more exciting junior graphite explorers is Triton Minerals Limited (ASX: TON), an Australian-based mineral exploration company, focusing on developing its Mozambique graphite projects in Southeast Africa. Triton is positioning itself to capitalize on the increased market demand for graphite. Led by Managing Director Brad Boyle, Triton Minerals transitioned its primary focus from gold to graphite in 2012 by strategically partnering with Australia’s Grafex Ltd. Triton entered into the joint-venture partnership to advance flake graphite projects in Mozambique.
On November 22nd, Triton announced that it had increased its position and acquired a majority 60% interest in the Mozambique graphite projects. The change is significant as a shareholding below 50% would have rendered future development decisions (and funding) for its graphite projects more difficult to complete. The strategic move is expected to significantly assist with advancing timelines for exploration and development. Upon the commencement of a definitive Feasibility Study, Triton will assume a 75% equity interest in Grafex (unlisted Grafex Ltd. owns 100% of all the Mozambique licenses, is debt free and has no outstanding obligations), which will increase to an 80% equity interest should a project move into graphite production. “Triton has taken steps to ensure it has a majority controlling interest of the Mozambique graphite projects,” explains Mr. Boyle. “It’s a win/win for us. This position will allow Triton to effectively advance the graphite projects in a more timely fashion. We took this [logical] step in light of the strong drilling and exploration results that have demonstrated various zones of large flake high-grade graphite and vanadium mineralization. It’s a stronger position for Triton; we now physically control Grafex moving forward. We’re advancing the project quickly.”
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Triton’s seven mining licenses in Mozambique encompasses 1,150 square kilometers (715 square miles), which is more than 10 times the lands position of Syrah Resources’ world-class Balama Graphite Project — one of the world’s most significant (and attractive) graphite powerhouses (and like Triton, Syrah is an Australian-based graphite company focused in Mozambique). Triton’s graphite projects are, quite literally, right next door to Syrah. This may potentially be one of the best closology plays in recent memory, as Syrah has identified and proven up the world’s largest graphite deposit (with a global inferred resource of 1.15 billion tonnes, achieving high-grade graphitic carbon concentrates of 96% to 98%, with exceptional project economics).
Triton has three graphite properties — Balama North Graphite Project (directly north of Syrah’s Balama Deposit), Ancuabe Graphite Project (completely surrounding the past-producing high-grade flake Ancuabe Mine) and the Balama South Graphite Project. The Balama North and South project areas are along strike to both sides of the massive Syrah Balama graphite deposit. Presently Balama North (with extensive graphite mineralization outcropping over a strike length of 3.75 kilometers) and Ancuabe (with numerous graphite exposures over a strike length of approximately 4 kilometers) are Triton’s more advanced projects.
The recent initial results from Balama North are encouraging. “The Balama North Project just keeps on performing and we’re pretty damn happy with that as well,” commented Mr. Boyle. “Our initial focus at our Balama North Project was flake graphite showing similar characteristics to the Syrah Resources graphite deposits. The most recent results are significant, showing high grades of graphitic mineralization of up to 17.6% total graphitic carbon and large graphite flake sizes up to 1 millimeter in length, confirmed by petrographic analyses. This was our first pass. We were able access the property for the very first time just last month, so we immediately collected grab samples to expedite to the labs. The laboratory was able to process our samples quickly because we submitted a relatively small volume. If we had submitted more volume, we would still be waiting for the analysis to be completed.” The diamond-drilling program at the Cobra Plains Prospect (of the Balama North Project) has now been completed, with drill samples for all intersected graphite zones sent to Triton’s South African laboratory for analysis. The initial results are expected in mid-December. The company hopes to commence a comprehensive exploration program of Balama North in 2014.Triton’s highly prospective licenses adjoin known graphite mineralization (Syrah’s Balama) and a past-producing high-grade flake graphite mine (Ancuabe Mine, 1994-1999, held by AMG Mining). Located in an established and supportive mining jurisdiction (strong local and federal government support), with easy access to the project sites; Mr. Boyle feels there are potential synergies with Syrah. Critically important, Triton’s projects are close to existing infrastructure sufficient for future project development needs, including a natural deep-water port (Port of Pemba) in the Indian Ocean, and are located within the hub of top purchasing and processing markets for flake graphite (primarily, the EU, India, China, South Korea, and Japan). Through extensive sophisticated geophysical exploration, aeromagnetic and radiomagnetic data has identified multiple significant target areas for Triton. The latest results give Triton further confidence in the graphite prospectivity of Balama North and continues to increase the overall potential of the project to host multiple, scalable high-grade large-flake graphite deposits.
Personally, I like both Syrah Resources and Triton Minerals, in particular from graphite and geographical perspectives. I do not feel the graphite sector is responding to commodity fundamentals. Furthermore, the blue-sky potential for Triton with high-grade vanadium is extremely encouraging (a strategy shared by Syrah as well). Subject to positive exploration results, I believe there is significant upside potential for Triton. Obviously Syrah is a far more advanced-stage graphite company and Triton is still in its early stages. That said, at its current trading range of less than 6 cents per share, I believe Triton is undervalued. With a market cap of over $400 million, Syrah closed last Friday at $2.75 per share. Triton was trading at $0.059 at market close last Friday. Only time will tell; however, at its current share price, investors may be well advised to seriously look into Triton Minerals.
Disclaimer: Ty Dinwoodie is not a licensed investment advisor.
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