Three Canadian juniors vie to corner graphite market

Gold is not the only game in town.

Ever since the Soviets suspended shipments of graphite to the non- communist world back in 1981, prices for the black, crystalline carbon have risen to as high as $1,100(US) per tonne, depending on the size of the crystals and the amount of impurities in the flakes.

At least three junior mining companies in Canada are competing to become the first major producer of flake graphite in North America.

Given this mineral’s track record in terms of difficult metallurgical problems, their job will not be an easy one. Markets are currently small but growing.

See Page 11 for a story on the growing market for graphite

In the long run, the mine that can produce the largest flakes, together with the highest graphitic carbon content will likely survive.

The three properties, all at various stages of exploration and development, are located in the same gneissic complex in the Grenville geologic province in Ontario. Disseminated deposits of flake graphite in the Grenville province are believed to have formed when carbonaceous sedimentary rocks were metamorphosed some 1.4-1.5 billion years ago.

Vancouver-listed Cal Graphite Corp., which has the most ambitious plans to become the biggest Canadian graphite producer, has entered the pre-production phase. It has awarded a $260,000 engineering contract to Geocon of Mississaugua, Ont., who will design a mill site, all-weather road and a tailings disposal area on a 1,000-acre property held by Cal Graphite in rather elevated terrain in Butt Twp., near Huntsville, Ont.

The company intends to bring an open pit mine into production there at a rate of 3,000 tons per day, by 1989. The deposit, which has ore reserves totalling 29.5 million tons at an average grade of 4% graphitic carbon, is big enough to support mining at these rates for 34 years.

Asked about the traditionally difficult technical problem of maintaining flake size while crushing graphite ore, President John Sterling told The Northern Miner that the host rock has an unconfined compressive strength of only 9,000 to 11,500 lb per sq in which means that only light crushing using a high-speed tertiary impact crusher is enough to readily liberate the crystalline flakes. Flotation can then be used to seperate the graphite from the gangue material.

Metallurgical tests conducted by Penn State University in the U.S. rated samples of Cal Graphite’s ore 23% higher than graphite from a mine in the Malagasy Rebublic (formerly known as Madagasgar). Graphite from this mine has for decades been the acknowledged world standard for graphite quality.

Lab tests have also indicated that over 50% of the recoverable flakes (using a simple flotation circuit) from the Cal Graphite deposit is of +48 mesh size (0.3 mm) with a carbon content of 92%.

The company’s plans are to produce 20,000 tonnes of product per year by mid-1988 to generate gross revenues of $18-$23 million. Mining and milling costs are estimated to be between $350 and $400 per tonne of finished product. Marketing is being handled by Amalgamet Canada, a subsidiary of Preussag ag of West Germany.

Capital costs for the mine and mill are estimated by chief planning engineer Les Dunks to be about $10 million. Payback would take about 5 years.

The biggest problems facing the company will be dealing with environmental concerns in Ontario’s cottage country and keeping costs down. Stripping ratios are estimated at about 1 to 1. Princeton Resources Corp.

Perhaps the first company to enter the race to capture the graphite market was Vancouver-listed Princeton Resources Corp. This company spent three years outlining a deposit which has proven reserves of 14 million tonnes averaging 3% crystalline graphite to a depth of just 150 ft. Located in gently rolling terrain between Ottawa and North Bay, near the community of Bissett Creek, this deposit could be the site of an open pit mine and milling facility which could produce 15,000 tonnes of product a year. A 200-ton-per-day pilot plant is operating on the site. Results show that about 92% of the product is retained on a +100 mesh screen.

The mineralization here outcrops at surface so mining will be inexpensive.

Mineral marketing giant khd of West Germany has been commissioned by Princeton to do a pre- feasibility study and engineering mill design. A 600-kg sample of graphite from the deposit is being evaluated by potential clients and, depending on the results of the feasibility study, the mine and mill could be operating by late next year, according to a spokesman for Princeton.

Khd has issued Princeton a $21-million letter of credit, good for two years which could be used to secure the necessary bank loans to finance the project should debt financing be necessary.

The company expects the $12-18 million project to generate gross profits of $6.8 million a year. Total mining and milling costs are expected to be about $400 per tonne of finished product. Stewart Lake Resources

Last year, tse-listed Stewart Lake Resources Inc. became the third company to enter the race by acquiring a property from Falconbridge Ltd. For $10,000, it acquired a 100% interest in a property located 40 km north of Kingston, Ont.

Based on limited work done so far, indications are this property has a much smaller graphite deposit than either Cal Graphite or Princeton. But it has an even higher grade.

Work done by Falconbridge in the 1940s and 1950s outlined two narrow, parallel lenses along a strike length of 120 m to a depth of 90 m. Total tonnage was estimated to be 207,000 tons at an average grade of 11.2% graphitic carbon.

This year Stewart Lake has done an underwriting and completed max-min ii, vlf and magnetic surveys to extend the strike length of the potential ore-bearing zones to more than 5,000 ft away from Stewart Lake to the east. “There is potential on the property for about one million tons,” company director Ernest A. Gallo tells The Northern Miner.

Stewart Lake plans to drill 10,000 ft of core to a depth of about 300 ft along a strike length of 3,200 ft to test the conductors. Hole spacing will be 200 ft initially, but 100 ft spacings may be sufficient to prove up reserves, depending on the nature of the mineralization. Drilling has started.

Cal Graphite has 5,340,002 shares outstanding, trading at about $8; Princeton Resources has 4,783,180 shares, trading at around 68 cents ; and Stewart Lake has 1,927,699 shares, trading at $2.25, and an unknown number of warrants trading at $1.85.