Cal Graphite near production, Stratmin expands mill

Similarities of the projects include open pit operation, state- of-the-art milling techniques and equipment, and careful attention to environmental concerns. Both companies have negotiated in advance with international distributors for the sale of their graphite product.

There is an obvious difference in the size of the projects.

Stratmin is treating close to 450 tons of material per day at its rented mill near Notre-Dame-du-Laus. When its new mill, under construction about 30 miles north along Hwy. 309 at St-Aime-du-Lac-des- Iles, is ready in February, 1990, the company will have a production capacity of about 1,550 tons per day.

Total inferred reserves at the Lac- des-Isles property stand at 26 million tons, including mineable reserves of five million tons grading 6.9% graphitic carbon.

At its Ontario property, Cal- Graphite is planning to treat 5,000 tons of material per day. Project reserves currently stand at 60 million tons grading almost 3% graphitic carbon, good for about 50 years of mine life at the aforementioned production rate.

Natural graphite is classified in three ways: the higher-priced, crystalline flake variety found at the Stratmin and Cal-Graphite properties, and vein and amorphous. Amorphous graphite is described as soft and irregularly shaped, while the vein type comes in the form of lumps, chips and dust.

Graphite resists chemical reagents, is infusible in most common fluxes and is extremely heat-resistant. In pure graphitic form, the mineral is an excellent conductor of electricity and heat. Its numerous industrial applications include in refractory bricks and furnace linings, crucibles, brake linings and batteries.

Also, it can expand to many times its size, allowing material manufactured with the flakes to withstand better extreme pressure and temperature.

Cost of the completed Stratmin project will be about $16.5 million. That includes $1.5 million for modifications to the Notre-Dame-du- Laus mill which is being rented from Asbury Graphite Mills, Vice- president Daniel Goffaux said. Property improvements include a new tailings pond and loading dock.

Asbury has been North America’s only graphite concentrator. The New Jersey-based company, with a small graphite deposit near Notre- Dame-du-Laus, has operated the mill on a seasonal basis for several years.

On the marketing side, Stratmin has signed a 15-year contract with Asbury for delivery of a minimum of 11,000 tons of graphite concentrate per year. Also, as an agent, Asbury has agreed to sell an additional 11,000 tons per year. And Stratmin has an agreement-in- principle with C. Itoh Ceramics of Japan for delivery of 5,500 tons per year for five years.

Financing of the project involved a bank loan of $13.5 million and establishing a $1-million line of credit with the bank. Also, Stratmin raised $2.52 million through a private placement involving shares.

The start of production in February had an almost immediate effect on the balance sheet. For the second quarter of 1989, Stratmin reported a net profit of $34,138 with a net operating cash flow of $159,690.

A brief tour of the property by mine director Denis Bray included an inspection of the main pit which is expected to be dug out to a depth of 250 ft. The pit, 1,650×800 ft, will have about a 6-year life. Host rock for the graphite flakes is marble.

The new mill, where treatment by flotation will involve mainly cell tanks and the use of one column, was initially to have had a capacity of 550 tons per day. The company decided to increase the capacity to about 1,000 tons per day, at minimal cost, during the construction phase.

Stratmin will employ 120-130 workers at the project (both sites). Operations at both mills will be run on a 24-hour, 7-day-per-week basis.

Unlike Stratmin’s Lac-des-Iles deposit which is a few hundred yards from the highway, Cal-Graphite’s claims lie away from the main road, adjacent to Algonquin Park. In charge of the site visit was President John Stirling, a fisherman-outdoorsman and former ship’s mechanic who said, “I want to improve the environment.”

Delayed in its start-up, the project should be up and running during the fourth quarter of this year, possibly by the end of October, Stirling said.

New environmental regulations requiring engineering design changes to the waste disposal plan caused one delay. However, the lost time was not a complete loss, Stirling said, because design alterations undertaken during that period resulted in a cost-saving to the company. Also, a boom in the construction industry in southern Ontario caused delay problems, in particular in having the electrical equipment installed.

The main deposit, showing an average thickness of about 160 ft, extends below the surface to at least 1,000 ft, Stirling said. While the first years will involve an open pit operation, Stirling said the mining will eventually move underground. An independent contractor will be hired to blast and haul the ore (the host rock is sedimentary in origin and easily crushed) to the mill.

Stirling said exploration uncovered 3-4 million tons of material grading 10-15%. Rather than mining those reserves as one, he said the high grade material will be used to improve the mill head grade when needed.

About 80% of the production will be sold at the mine with a purity of up to 94%. Depending on the particle size, Stirling said, the graphite flake is priced at 33-65 cents (US) per lb.

The remaining 20% of production will be trucked to Sudbury, Ont., where Cal-Graphite has built a refinery and research plant. There, purity of the graphitic carbon will be upgraded to as high as 99.97%. Refinery products will be priced at 80 cents -$1.50 per lb, depending on the required flake size and carbon content.

Cal-Graphite’s marketing agent will be Amalgamet Canada, a division of Premetalco, a subsidiary of Preussag A.G. of West Germany.

Stirling said the company has saved money in the construction of the mill, which will feature vertical flotation columns only, by purchasing some second-hand equipment at disposal sales. For example, power for the mill will be provided by two large diesel-propane generators which once served as back-up equipment at a mining project in the United States. Total cost of the mining project, Stirling said, will be less than $15 million.

One of Cal-Graphite’s financial supporters is American businessman Henry Hillman. The company reported Hillman recently acquired additional shares, raising to 10.5% his interest in Cal-Graphite.

Other companies exploring for graphite in Canada include Stewart Lake Resources in the Kingston, Ont., area; Societe d’Exploration Miniere Mazarin at Fermont, Que., near the Labrador border; Black Hawk Mining and Lodi Metals near Perth, Ont.; and Victoria Graphite near Portland, Ont.

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