Jennings Capital inc. ............................
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Energizer Resources Inc. (TSX-EGZ: C$0.325)
Recommendation: NA
12-Month Target: NA
Risk Rating: NA
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 Ken Chernin – Analyst – 416.304.3968 |
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Company Description:Energizer Resources is developing its 1,057 km2Green Giant flaked graphite project located in Madagascar. The project is strategically situated on the south coast of Madagascar ~160 km from a major port facility on the Indian Ocean in close proximity to the Asian markets. The Company is moving towards completing the project’s maiden 43-101 and PEA by year-end 2012.
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HIGHLIGHTS
·The Company Estimates that its Flagship Graphite Project, the Molo (75% WI), Contains 80 Million-to-120 Million Tonnes Grading between 5% and 8%: Energizer announced the graphite discovery in January 2012, after completion of 39 holes totaling 3,780 meters and a 161 km ground-based EM survey. Assays confirm wide intercepts of graphite mineralization grading between 7.3% and 11.2% graphitic carbon. If the Company’s expectations are realized, the Molo could be the largest flake graphite mine in the World.
·Appears to be a Predominantly Large and Jumbo Flake Graphite Project Located at Surface: Initial samplings indicate that between 25% and 35% of the Molo depositcould beplus +50 mesh (jumbo flake) and approximately 50%could be+80 mesh(large flake). Jumbo and large flake graphite fetches premium pricing relative to all other grades.
·Supported by Adequate Infrastructure and Excellent Logistics: Energizer met with a logistics specialist firm in Madagascar and Energizer was informed that the existing infrastructure surrounding the Molo project is suitable for the mining and processing of graphite. Madagascar is strategically positioned on tidal waters in relatively close proximity to the key Asian markets: China, South Korea, Japan, and India. These markets are where the majority of graphite is consumed.
·Metallurgy Work Suggests a Very Simple Crushing and Floatation Process: Crushing yields premium jumbo flake graphite without floatation. Based on this relatively simple and cost efficient processing coupled with the high grades and expected low labour cost, the Company estimates opexcould be~$300/tonne.
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POTENTIAL CATALYSTS
·November 2012 - Maiden 43-101 Resource Report for the Molo Project:Company is targeting 50 million to 100 million tonnes grading at 6%.
·December 2012 - Preliminary Economic Assessment:Company estimates opex of ~$300/tonne.
·Potential for a strategic agreement: The size and quality of the graphite flakes make them ideal for lithium ion batteries. Given the proximity to the Asian markets, the Molo represents an ideal source of graphite.
·Acquisition Target: Energizers Molo project contains a very rare and valuable large flake graphite deposit. Given the projects favorable logistics it could potentially be a target for an integrated lithium battery or refractory company.
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RECENT EVENTS
·September 19, 2012: Reported it had received additional assays from its NI 43-101 graphite resource drill program on the Molo deposit. The results continue to outline the targeted deposit size and boundaries, as well as the grade of the Molo deposit. The Company also announced that mine site design and logistical planning is underway
·July 25, 2012: Energizer reported the assays for the previously announced 421.3 metre intersect of graphite and trench sampling. The intersection has a 6.12% C grade and 358.5 metres of trench sampling has a 6.21% C grade.
·June 3, 2012: Energizer reported that it intersected 434 metres of graphite mineralization in drill core.
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ENERGIZER RESOURCES RECEIVES ASSAY RESULTS FOR THE REMAINING 23 OF 47 DRILL HOLES AND 8 OF 18 TRENCHES FROM ITS NI 43-101 GRAPHITE RESOURCE DRILL PROGRAM ON THE MOLO DEPOSIT
·Received assay results from its remaining 23 diamond drill holes and 8 trenches, which the Company believesvalidates the potential size of the Molo deposit to be between 80 million and 120 million tonnes.
·Assays have outlined anaverage grade of between 5% and 8% carbon, and a higher grade zone with an average grade ofbetween8% and 10% carbon flanking the deposit on its western edge.
PROJECT DEVELOPMENT
·In order to expedite a feasibility study, the Company will initiate pilot plant test work in South Africa at Mintek, and plans to follow the maiden PEA (targeted for December 2012) with a feasibility study. The results of the pilot plant test work will help in the construction of a mobile pilot plant facility for on-site test work analysis which could:
·Help de-risk the project : and
·Provide suitable sample material quantities for potential off-take partners.
MOLO IS JUST ONE OF 17 PROSPECTS
·17 Separate Graphite Zones have been identified within the Green Giant Project.
·Only seven of the 17 zones have been drilled to date. Three of these seven zones have excellent potential.
·The estimated 80 million to 120 million tonnes within the targeted Molo does not include a zone to the east and attached to the Molo (see diagram). This area is another graphite-bearing zone of similar dimensions to the Molo (this zone has not yet been drilled and therefore will not be part of the upcoming NI 43-101).
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Ken Chernin, MBA
Special Situations Analyst
Equity Research
Jennings Capital Inc
Suite 320 | 33 Yonge Street | Toronto, Ontario | M5E 1G4
T: 416.304.3968
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Disclaimer - The information contained in this communication, and any attachments thereto, was obtained or derived from sources we believe to be reliable. We do not represent that such information is accurate or complete and it should not be relied on as such. Any opinions expressed herein reflect our judgment at this date and are subject to change. Jennings Capital Inc. and/or its employees and/or its associates may from time to time hold shares, options or warrants in any company mentioned in this communication, and any attachments thereto, and may buy or sell such securities. This communication is not to be construed as an offer to sell or solicitation to buy any securities. Jennings Capital Inc. is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and Canadian Investor Protection Fund.
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Disclaimer - The information contained in this communication, and any attachments thereto, was obtained or derived from sources we believe to be reliable. We do not represent that such information is accurate or complete and it should not be relied on as such. Any opinions expressed herein reflect our judgment at this date and are subject to change. Jennings Capital Inc. and/or its employees and/or its associates may from time to time hold shares, options or warrants in any company mentioned in this communication, and any attachments thereto, and may buy or sell such securities. This communication is not to be construed as an offer to sell or solicitation to buy any securities. Jennings Capital Inc. is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and Canadian Investor Protection Fund.
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