2014 Drill Results Confirm Graphite Creek as an Emerging, Reliable Supplier Stateside

Vancouver, BC / ACCESSWIRE / November 12, 2014 / Graphite One Resources (TSXV:GPH, OTCQX:GPHOF) appears to be closing in on it's prized Graphite Creek Deposit in Alaska clearing the path for a new graphite giant to come online.

The company just reported an update on its drill results for 2014, reporting that visible graphite was detected in all 22 drill holes. As for the deposit size, inferred resources indicate 284.71 Mt (Metric Tonne, equivalent to 1,000 kilograms) of graphite at a grade of 4.5% Cg, 95.93 Mt at 7.2% Cg, 37.68 Mt at 9.2% and 8.63 Mt at 12.8% Cg.

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Putting that in perspective, the company estimates that could mean a 100 life for a mine there and it is estimated to be only 3-4 years away from production. Considering the currently shaky supply of graphite coming from China at a time when graphite demand is expected to roar thanks to lithium cell (smartphones, notebooks, tablets) and fuel cells (Tesla, Tesla, Tesla) particularly.

Let's take a look at how other graphite suppliers are faring. Syrah Resources (AU:SYR), an Australian miner with a prospecting license in Mozambique is working on the world's largest known deposit of graphite at 1,050 Mt, with 10.2% grade at 99.1% purity and has a market cap of AUD $606 million (CAD 593 million). That market cap reflects particularly the importance of the deposit size along with reliable grade and purity. Northern Graphite Resources (TSXV:NGC) in Canada has an estimated 70 Mt to work with pending production, but with just 1.74% grade and 99.9% purity. Northern Graphite has a market cap of CAD $37 million, which still seems high compared to Graphite One at CAD $16 million, considering the vastly superior deposit size and grade. Zenyatta (TSXV:ZEN) is pursuing a deposit of 45.2 Mt with a grade of 3.1% with 99.9%. Zenyatta has a market cap well over CAD $100 million.

A key milestone for Graphite One as it moves forward will be to complete a Preliminary Economic Assessment (PEA) which is due to be completed in 2015. In the immediate future, the company indicates that two drill holes were completed intended to provide core samples for advanced metallurgical tests planned for this winter. It seems that Graphite One's stable supply of high-grade graphite couldn't come on-stream fast enough.

The Current Supply Problem

The U.S. imports 100% of its graphite supply and currently has no domestic production. In would be more economically stable for the States to find more reliable supplies closer to home, least of all to avoid hindering mega-business projects like the Tesla giga-factory for lithium-ion batteries. With the U.S. importing more than 48% of its graphite supply from China alone.

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U.S. Geological Survey

The U.S. State Department, the European Commission and the British Geological Survey have all listed graphite as a critical raw material. 64% of the world's graphite supply came from just one country in 2013 – China. That unsettles the market for different reasons. Firstly, China has already put an export ban on rare-earth materials, could China put a ban or other limit on graphite supply? What would that affect manufacturing and prices? China is no stranger to interrupting world resource supply either.

"There are no rare-earth style quotas at the moment...But the country is doing things that could restrict the raw materials supply. The government doesn't like exporting raw materials that other people make money from. It is trying to build a value chain to unlock the value in its natural resources."

Simon Moores, a graphite market specialist with Industrial Minerals in London, told The Critical Metals Report

Late in 2013, 10% of the world's graphite supply was taken offline when the Chinese government ordered the closure of an entire region of graphite producers on environmental grounds, estimated to be about 60,000 t/y according to UK-based market research firm Industrial Minerals Data. Before that, 20% of world graphite supply was shut down when the Chinese government halted production Pingdu, China's oldest graphite-producing region with about 100 000 t/y also, on environmental grounds.

Naturally, producers which rely on stable graphite supply, including in lithium-ion batteries used in gadgets such as smartphones, notebooks and now electric cars are keen to see more suppliers come on the market and preferably close to home. Graphite One's Alaskan supply provides the clearest route back to the U.S. and easy-access shipping lanes on the Pacific coast for international transport.

The world would benefit from many more players in the supply market and the U.S. has a China-dependency problem which it needs to resolve. Graphite One is steadily ticking the markers on the way to production and the PEA will be next milestone. An upcoming mine with an estimated 100 life span coming on stream in Alaska just couldn't come fast enough.

Graphite One Resources currently (TSXV:GPH, OTCQX:GPHOF) has a market cap of CAD $16 million.

SOURCE: VCN Publishing