GRAPHITE ONE PUSHING TO PRODUCTION [https://graphiteoneresources.com/investors/related_links/index.php?&content_id=168][/url]
GRAPHITE ONE PUSHING TO PRODUCTION TO FEED TECH SECTOR HUNGRY FOR HIGH-GRADE GRAPHITE
VANCOUVER – North America needs lots of it but doesn't produce any. It is integral to a raft of important new technologies, from lithium-ion batteries to pebble bed nuclear reactors. It is also the raw ingredient behind graphene, the highly-touted supermaterial so strong, conductive, and versatile that it is expected to change the world.
It is flake graphite and Graphite One Resources' (TSXV: GPH) deposit on Alaska's Seward Peninsula, which sits at surface and in sight of tidewater, is among the largest deposits in the world.
Three years ago Graphite One was a gold exploration company. In early 2011, while raising money for its Alaskan gold project, company president and CEO Anthony Huston found himself chatting with a broker about graphite.
Huston's background is in technology, so he already understood graphite's integral role in new technologies. Delving deeper, he realized that North America produced very little graphite, especially the high quality kind that the tech world needs.
Huston asked his lead Alaskan geologist if there were any graphitic schists near their project. The answer was no, but the geologist had another idea. Years ago he had assessed a really nice graphite project near Nome for the United States Geological Society and he still knew the family that owned it.
The Tweets are well known in Alaska; family business N.B. Tweet and Sons is one of the largest gold dredgers in the state and has operated placer mines on the Seward Peninsula for more than 110 years. But during World War I the family produced another commodity: 500 tons of graphite, mined from surface on the family's claims, hauled by tractor 3 km downhill to a barge, and shipped to the southern states to feed steel forges and munitions factories.
When the war ended graphite demand slid and the Tweets turned their attention to gold. But they kept their claims on the Kigluaik Mountains in good standing, partly because a geologic report from 1919 described the Kigluaik deposits as "very high grade (up to 98% carbon)…even the poorest material is regarded as good ore as compared to many commercial locations."
Having held the ground for almost a hundred years, the Tweets weren't going to sell it to just anyone. Similarly, Huston and his team needed to be sure this new direction was right for their shareholders. The now-partners spent a year getting to know one another and completing due diligence investigations.
By early 2012 they had a deal. Graphite One is earning full ownership of Graphite Creek, as the project is now known, by making staged payments to the Tweets totaling US$425,000. A final payment of US$250,000 in early 2014 will complete the earn-in. The Tweets also hold a 5% production royalty, which can be reduced to 3% for $4 million. In addition, Graphite One had to put at least $1.25 million into the ground, a requirement it far surpassed with a $4.5-million exploration campaign last summer.
That program produced two key results.
First, it delineated an inferred resource of 164.5 million tonnes grading 4.61% carbon. The resource includes a high-grade, near-surface of 7.8 million tonnes grading 13.49% carbon that could become a starter pit.
Second, the resource stretches along 2.2 km of strike, but geophysical surveys tracked the graphitic schist along 18 km of strike. Huston says drills are currently stepping out along the lengthy favorable zone and are "finding very similar results to what we found last summer."
As such there is potential for Graphite Creek to host a very large flake graphite deposit.
"Where it gets exciting is that we definitely have the potential to have over a billion tonnes of graphite, so we really believe we could have the largest graphite deposit in North America, if not in the world," says Huston.
Not only is it large, the graphite at Graphite Creek is also high purity and large flake. In initial metallurgical tests last year, material from Graphite One produced a rough concentrate that graded 99.2% carbon. Lithium-ion batteries require 99.9% carbon, which is easily attainable from a rough concentrate of 99.2%.
Huston and his team want to be making graphite grading 99.9% carbon and selling it into the burgeoning lithium-ion battery market in three years. The next big goal along that route is completing a feasibility study by the end of 2014. In the meantime, Graphite One's drills are focused on two tasks: growing the defined resource and stepping out along strike to prove up the potential for a much bigger resource down the road.
Graphite Creek is well situated for a rapid push to production: there are roads with 20 km and tidewater is just 3 km away. But why the haste to get into production?
For the simple reason that demand for flake graphite keeps climbing and supplies are not keeping up.
The graphite market is experiencing a perfect storm: demand from conventional applications for low grade, microcrystalline graphite continues apace, while novel applications are driving up demand for high purity, large flake graphite. Meanwhile, the world's largest graphite producer – China – is limiting and taxing exports.
As a result, analysts see a global graphite deficit looming. The situation prompted the United States to label graphite a supply critical material; the European Union added graphite to its list of strategic materials. Exactly when the deficit will hit, however, depends on a list of hard-to-forecast factors, ranging from global economic growth to the number of hybrid electric cars on the streets and from the pace of global nuclear energy growth to science's success in achieving great things with the newest graphite product, graphene.
For now, the world produces and uses about 1.1 million tonnes of graphite annually. About 60% of that graphite is microcrystalline or amorphous, the least valuable and most abundant form of graphite. The rest is flake graphite, which has a higher carbon content – 80 to 98%, compared to 70 to 80% in amorphous. It also occurs in flakes, as the name implies, and carries less ash and sulphur contamination.
Amorphous graphite has long made up a bigger chunk of the market than flake graphite, but that balance is shifting. Most new graphite applications require high quality material and several of those new applications have big futures.
At the top of the list are lithium-ion batteries. Lithium-ion batteries boast the best energy density to weight ratio among batteries, so they have become the go-to for portable consumer electronics. They are also used to power fully electric vehicle and are making inroads into the hybrid electric vehicle market, replacing nickel-metal hydride batteries.
With rising demand from cell phones, tablets, and hybrid and electric cars, the lithium battery market is expected to growth 25 to 30% annually over the next few years. Some of those batteries are very small, but others are large – a single lithium-ion car battery can require as much as 40 lb. of flake graphite.
Other kinds of batteries also require graphite. Vanadium redox batteries, for example, which are used to store the energy generated by wind turbines and solar panels, require up to 300 tonnes of graphite per 1,000 MW of storage.
Then there are pebble bed nuclear reactors, a safer type of nuclear reactor being developed and built in South Africa, China, the United States, and the Netherlands. Fed by fuel embedded in graphite pebbles, pebble bed nuclear reactors require 3,000 tonnes of graphite on start-up and consume another 1,000 tonnes each year of operation.
These applications alone are expected to grow demand for large flake graphite notably in the short term. The longer term outlook looks even brighter, for one reason: graphene.