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Proactive mining analyst Ryan Long takes a close look at graphite stocks amid the movement of tectonic plates in the industry.
China has monopolized the world production of natural graphite for over 30 years, producing about 60-80% of the world’s natural graphite.
But a large number of cutting-edge developments around the world, combined with high prices, means that the geographic distribution of the natural graphite market is about to change.
Demand for graphite is rising as its use in lithium-ion battery anodes increases, pushing prices up.
The price of flake graphite (94% C-100 mesh) in China has risen from $530/t in September 2021 to $830/t in May 2022 and is expected to reach $1,000/t by 2025.
Natural graphite sold in Europe traded at a premium to Chinese natural graphite, rising from $980/t in September 2021 to $1,400/t in May 2022.
Higher natural graphite prices are likely to provide the momentum needed to launch new natural graphite projects outside of China.
As a result, some forecasters believe that China’s share of the global natural graphite market could fall from 68% in 2021 to 35% by 2026.
As the distribution of the natural graphite market changes, so too is the market size expected to change, as the White House Critical Metals Report suggests that demand for graphite from fossil fuels in the energy transition by 2040 will increase 25 times compared to production in 2020. .
In this article, we will look at some of these international natural graphite mining companies that are already in operation and looking to expand their operations, as well as those project developers who are ready to move into production and benefit from rising natural graphite prices.
Northern Graphite Corp (TSX-V: NGC, OTCQB: NGPHF) owns three leading graphite assets. The company currently operates the Lac des Iles (LDI) mine in Quebec, which produces 15,000 metric tons (t) of graphite per year.
The LDI is nearing the end of its life, but Northern has signed an option to acquire the Mousseau West project, which it plans to use to extend the life of the LDI plant.
The Mousseau West project is located 80 km from the LDI plant, which the company believes is an economical distance to transport goods.
Northern plans to increase LDI production to 25,000 tons per year (t/y) using Mousseau West ore. The estimated resources of the Mousseau West project are 4.1 million tonnes (mt) with a Graphite Carbon (GC) grade of 6.2%.
In the meantime, the company is also upgrading its Okanjande-Okorusu mine, which is under renovation. Okanjande-Okorusu’s fresh measured and indicated resources are 24.2 Mt with a total gas grade of 5.33%, inferred resources are estimated at 7.2 Mt with a total gas grade of 5.02%, weathered/transitional measured and indicated resources are 7 .1 million tons with a total gas content of 4.23%, the estimated resource is estimated at 0.6 metric tons. content 3.41% HA
Northern recently completed a Preliminary Economic Assessment (PEA) for the restart of its Okanjande Okorusu mine, assuming a mine life of 10 years, an average net present value after tax of $65 million, an after-tax internal rate of return of 62%, and a graphite price. 1500 dollars per ton.
Estimated operating costs for the project are $775 per tonne and capital costs are $15.1 million to restart production. Northern plans to resume production by mid-2023 with an average capacity of around 31,000 t/y, but in the longer term, Northern plans to build a new large processing plant with a capacity of 100,000-150,000 t/y.
Its third site, the Bissett Creek Project, has an NI 43-101 Mineral Resource estimate of 69.8 tons of measured and indicated resources at 1.74% GC grade and 24 tons of inferred resources at 1.65% GC grade.
An updated PEA published in December 2018 lists an average annual production of 38,400 tonnes over the previous 15 years. Operating expenses averaged $642 per tonne of concentrate, with capital expenditures of $106.6 million for Phase 1 and an additional $47.5 million for Phase 2 expansion capital.
Initial production is expected to be 40,000 tons per year, and as the market grows, this will increase to 100,000 tons per year, giving the project a net present value after taxes of $198.2 million USD 1,750 per ton concentrate. Construction of the first Bisset Creek plant is expected to begin in the second quarter of 2023.
Tirupati Graphite PLC (LON: TGR, OTC: TGRHF) is an integrated manufacturer of advanced natural flake graphite, specialty graphite and graphene. The company is currently ramping up production at its Sahamamy and Vatomina mines in Madagascar, aiming to produce 84,000 tons of flake graphite per year by 2024.
Sahamamy currently has a JORC 2012 Mineral Resource estimate of 7.1 tonnes at 4.2% GC, while Vatomina currently has a JORC 2012 Mineral Resource estimate of 18.4 tons containing 4.6% GC.
By September 2022, Tirupati will increase its flake graphite production capacity in Madagascar from 12,000 tons per year to 30,000 tons per year, making it one of the few major producers of minerals outside of China.
Volt Resources Ltd (ASX:VRC) has stakes in two graphite projects, the first is a 70 percent stake in the Zavaliev graphite business in Ukraine and the second is a 100 percent stake in the Bunyu graphite project in Tanzania.
In Zavalyevsk, Volt currently plans to produce between 8,000 and 9,000 tons of graphite products per year ending June 30, 2023, following a successful resumption of production.
Volt plans to develop the Bunyu project in two phases to speed up production. The 2018 Feasibility Study for Phase 1 identified an operation producing 23,700 tons per year over a 7.1-year mine life. Operating expenses are estimated at $664/t and capital costs at $31.8 million, resulting in a net present value of the project after taxes of $14.7 million. United States, and the internal rate of return is 19.3%.
The final feasibility study for the second phase will be completed simultaneously with the construction of the first phase. The Stage 2 DFS will be based on the December 2016 Pre-Feasibility Study (PFS) which determined an average annual yield of 170,000 I over a 22-year life cycle. Operating expenses averaged US$536 per tonne of concentrate and capital expenditures amounted to US$173 million.
Assuming an average graphite concentrate price of $1,684 per tonne, the net present value of PFS10 after taxes in 2016 is $890 million and the after-tax internal rate of return is 66.5%.
Sovereign Metals Ltd (ASX:SVM, AIM:SVML) is promoting its Cassia rutile graphite mine in Malawi.
The Kasia deposit is unusual as it is a residual heavy deposit with a large amount of graphite. The JORC 2012 Mineral Resources of the project are estimated at 1.8 billion tonnes at an average grade of 1.32% GC and 1.01% rutile.
Kasia is expected to be developed in two phases. The first stage will produce 85,000 tons of flake graphite and 145,000 tons of rutile per year at a capital cost of US$372 million.
The second phase of the project will produce 170,000 tons of flake graphite and 260,000 tons of rutile per annum and increase capital costs by US$311 million.
The scoping study (SS), completed in June 2022, showed a net present value8 after taxes of $1.54 billion and an after-tax internal rate of return of 36% over an initial mine life of 25 years. SS assumes an average basket price of $1,085/t graphite and $1,308/t rutile, and operating costs of $320/t rutile and graphite products.
Sovereign Metals has begun work on the PFS, which is expected to be completed in early 2023. The results of the expansion and pre-drill programs are expected in the second half of 2022.
Blencowe Resources PLC (LON: BRES) is promoting its Orom-Cross graphite project in Uganda. The Orom Cross project currently has a JORC 2012 estimated Mineral Resource of 24.5 tonnes with a GC grade of 6.0%.
The recently completed pre-feasibility study of the project showed a net present value after taxes of $482 million and an internal rate of return after taxes of 49% at an average basket price of $1,307 per ton of graphite over a 14-year timeframe. mine services. The project’s operating costs are $499 per tonne and capital costs are $62 million.
The project is expected to be developed in phases, with a pilot plant expected to start up in the second half of 2023 with an annual production capacity of 1,500 tons, followed by the start-up of the first production facilities in 2025 with an annual production capacity of 36,000 tons. 50,000-100,000 tons by 2028, up to 100,000-147,000 tons by 2031. The project is expected to be completed by DFS by the end of 2023.
Blackearth Minerals NL is advancing its Maniry graphite project in southern Madagascar and a final feasibility study (DFS) is expected to take place in October 2022. The JORC 2012 Mineral Resource estimate for the project is 38.8 tonnes with a GC grade of 6.4%.
The updated SS, published in December 2021, defines an after-tax NPV10 of $184.4 million and a pre-tax internal rate of return of 86.1% at an average graphite price of $1,258 per tonne.
The project is expected to be implemented in two phases, with a first phase capital cost of US$38.3 million and an average annual production of 30,000 tons over four years. The capital cost for the second phase is US$26.3 million with an average annual production of 60,000 tons over 10 years. The average cost of operating a mine under the project is $447.76/ton of concentrate.
Blackearth also owns a 50 percent stake in a joint venture with Metachem Manufacturing Company, a leading manufacturer of expandable graphite and other processed products, to develop an expandable graphite plant in India.
A joint venture called Panthera Graphite Technologies plans to start developing the plant in September 2022, with completion scheduled for early 2023 with first sales expected in the second quarter of 2023.
The plant expects to produce 2000-2500 tons of expandable graphite per year for the first three years. Then the joint venture plans to increase production up to 4000-5000 tons/year. With a first phase capital expenditure plan of $3 million, the first full year of production is expected to gross $7 million, with second phase annual revenue rising to $18–20.5 million.
Evolution Energy Minerals Ltd (ASX:EV1) is promoting its Chilalo graphite project in Tanzania. The high grade Chilalo Mineral Resources are estimated at 20 tons at 9.9% GC and the low grade Mineral Resources are estimated at 47.3 tons at 3.5% GC.
The DFS, published in January 2020, determined an after-tax NPV8 of $323 million and an after-tax internal rate of return of 34% at an average graphite price of $1,534 per tonne. The estimated capital cost of the project is US$87.4 million and the average annual production is 50,000 tons over the 18-year life of the mine.
An updated DFS and Front End Engineering (FEED) project for Chilalo is currently underway. Evolution also commissioned Auramet International to advise Chilalo and provide funding for the project.
Post time: Dec-13-2022