Stratmin bids to open first graphite mine

Production of graphite concentrate is expected to begin by early November from Stratmin Inc.’s (ME) open pit graphite mine located 22 km south of Mont-Laurier, Que. Known as the Mont-Laurier property, the deposit hosts probable and possible reserves of 13.7 million tonnes grading in excess of 7% graphite per ton. “That grade is actually closer to 8.5%” J. R. Bouchard, executive vice president of Stratmin, told The Northern Miner. Potential remains to outline additional near-surface reserves.

The production decision is the result of an agreement completed between Stratmin and Asbury Graphite Mills, the largest graphite dealer in the United States. Asbury has operated a small open pit mine at Notre-Dame du Laus, located 45 km south of the Mont-Laurier deposit.

Stratmin plans to truck 300 tonnes of broken rock per day to the Asbury mill, which has a capacity for 500 tons per day. Under the terms of an agreement, Asbury must purchase 5,000 tonnes of Stratmin concentrate per year during a five-year renewable contract period.

The deal remains subject to the results of a feasibility study being completed by Stratmin. Also, a 2,100-tonne bulk sample will be processed at the Asbury mill. The first shipments are scheduled to begin in late August. Pending the receipt of positive results, production at a rate of 5,000 tonnes of concentrate per year could begin by November, Stratmin says.

Operating earnings to Stratmin are estimated at $2.3 million per year before depreciation, administration expenses and taxes. Revenues are estimated at $4.3 million per year. The company has approximately 9.5 million shares issued.

An advantage of the deal with Asbury is that Stratmin does not have to build a mill. However, future plans envisage a concentrate production level of 15,000 tonnes per year, Bouchard says. Capital costs to build Stratmin’s ow mill are about $6 million, he added. “If the market can sustain a grea ter amount (of graphite), we’ll do it.”

There is no shortage of graphite in the world. The problem facing would-be producers has been the same one faced by most industrial minerals operators — finding buyers. Stratmin says that negotiations are also in progress with Japanese and European buyers.

According to the U.S. Department of the Interior’s Bureau of Mines, 34,871 tons of graphite, valued at $13 million(US), was consumed by U.S. industries in 1987; a decline from 44,380 tons in 1985 and 35,036 tons in 1986. Global production totalled 670,000 tons in 1987. According to the Bureau of Mines, recoverable world reserves exceed 1.5 billion tons.

The tight market, especially in the U.S., is expected to cause problems for the handful of Canadian junior mining companies pursuing graphite developments. The two most advanced projects in Ontario are controlled by Stewart Lake Resources (TSE) and Cal Graphite Corp. (VSE). Both have said that they plan to become major North American sources of high grade flake grahpite in the past. Stewart Lake anticiptes the start-up of production by the end of 1989 from an underground operation.

“We have no concern about other competitors” Bouchard explained. With Stratmin the first out of the starting gate, he believes that the company already has a competitive edge over others.

The start of production this fall makes Stratmin the first significant graphite producer in North America. The material is used in batteries, steelmaking, brake linings and a variety of other industrial applications.