Flinders sees upside in Swedish graphite revival

VANCOUVER — Just outside the small town of Edsbyn in central Sweden sits the idle Kringel graphite mine, which represents a prime opportunity according to Vancouver-based Flinders Resources (FDR-V).

Delineated by the Swedish government in the 1980s, the Kringel project was developed for roughly US$13 million in 1995 and produced flake graphite through 2001 before the mine was put on care and maintenance when a supply push from China depressed global graphite prices.

Located 300 km north of Stockholm, Kringel produced as much as 13,000 tonnes of graphite annually with average purities ranging from 85% to 94% graphitic carbon, and consists of four separate mineral licenses — all within 25 km of a fully-constructed processing facility.

“The Kringel graphite mine is one of the most advanced graphite projects globally, and being already fully permitted and constructed will be amongst first to deliver premium high quality large flake graphite to European customers,” commented president and CEO Martin McFarlane. “There exists a great opportunity to potentially scale up future production from the mine site area, in order to meet growing demand for high purity flake graphite.”

Historic mining activities were focused on the Kringelgruvan quarry, with overburden having been removed from the Central and South zones in addition to ramp construction along the deposits Western zone, which was developed as mining moved to greater depths. The Kringelgruvan pit holds a historic resource totalling 1.3 million measured and indicated tonnes grading 11.4% carbon.

The northernmost Gropabo deposit hosts graphite mineralization over 480 metres of strike that covers two discrete zones, with the western zone boasting higher grades than its eastern counterpart. Gropabo holds historic indicated resources totalling 2.1 million tonnes grading 6.9% carbon. Previous exploration campaigns have only extended to depths of 50 metres, with the mineralization open at depth and along strike to the southeast.

Mattsmyra is another deposit located to the northwest of the historic Kringelgruvan pit, holding a historic resource of 2.2 million indicated tonnes grading 8.8% carbon. Folding and faulting have cut the mineralized zone into several bodies, with the explored zone extending 2.5 km along strike, and remaining open at depth.

Mansberg is the southernmost deposit and has been drilled along twin geophysical-conductive zones that lie 200 metres apart and remain open to the southeast. Mansberg holds 1.4 million inferred tonnes carrying 9.4% carbon, and will likely be heavily targeted by exploration drilling in a bid to expand its resource potential.

According to Flinders the historic resource — totalling 6.9 million non-compliant tonnes grading 8.8% carbon — could support a mine for over 30 years. The deposits also host a variety of flake calibres, and the company has conducted preliminary metallurgical testing that indicate it could reach high-end purities of 99.5% carbon through a two-stage chemical process. Production to date has focused on a traditional flotation circuit, which limits purities to a maximum of 94%.

Though Flinders has an interesting combination of grade and flake size, it will be the company’s access to existing infrastructure that may give it the upper-hand in what has become a ‘race to production’ in the graphite space. Kringel’s processing facilities include a beneficiation plant with a throughput capacity of roughly 140,000 tonnes per year, a rod-and-ball mill, and a flotation and gravimetric separation system.

Kringel comes complete with a full 13,000-tonnes-per-year production permit and is strategically located to meet European and Asian graphite demand. The site is 15-km from railway shipping lines, 75-km by road to Sweden’s Soderhamn harbour, and 150-km away from the Gavle container port. Being Europe’s largest iron-ore producer, Sweden is also an established mining jurisdiction, with strong labor availability and an established permitting system.

Flinder’s is reprocessing and selling roughly 75,000 tonnes of stockpiled graphite on spot markets, and has undertaken a resource drill program aimed at confirming the validity of the project’s historic resources. The Kringelgruvan plant will also require some refurbishing, while tailings facilities will need to be upgraded in order to meet environmental standards.

Through mid-July Flinders has released results from 15 holes of its 37-hole program, and announced the addition of 700 metres worth of additional drilling, with an updated resource now expected by the end of August.

The company continues to hit strong grades within 100 metres of surface, highlights include: 13.6 metres carrying 11.8% carbon starting from 89 metres depth in hole 3; 8 metres grading 18.3% carbon from 68 metres in hole 7; 9.7 metres of 10.8% carbon from 26 metres in hole 14; and 19.4 metres grading 8% carbon from 17 metres in hole 13,

“Our drilling has met or exceeded all expectations. We have verified that graphite mineralization shows continuity of width and grade along strike and down dip and is consistent with historical data,” McFarlane said. “Additionally, drilling has extended known mineralization to one-hundred metres depth and new graphite zones have been identified parallel to and down dip from known mineralization.”

Flinders has had no trouble raising money thus far for its project, having joined the Toronto Venture Exchange in mid-February, completing a $5.2 million private placement consisting of 10.4 million units. The company followed-up with another placement in early March, when it raised $15 million through the placement of 8.8 million shares at $1.70 per unit.

“Importantly, with Kringel at such an advanced stage of development, the cost of re-starting operations will be relatively modest and this financing is expected to deliver most if not all of its restart budget requirements,” McFarlane predicted.

Flinders has received a big market boost since the end of June, with company shares leaping 24% or 32¢ since the first week of July en route to a $1.68 presstime close. Recent drill results continued to provide momentum as Flinders enjoyed a 5% or 8¢ jump following its most recent drilling update on July 9. The company maintains 45 million shares outstanding — 18% being held by insiders — and a $75.5 million market capitalization.