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A Freak of Nature: Zenyatta's High-Purity, Hydrothermal Graphite Deposit by Accesswire
SOURCE: VantageWire - Prior to Zenyatta Ventures' (TSXV : ZEN) discovery of the Albany deposit , the first hydrothermal style graphite deposit was discovered in the 1600's. Located in Northern England, the Borrowdale deposit was mined through artisanal methods for natural (high purity) graphite, which at the time had little use. Graphite in the 1600's was used for not much more than marking sheep, or for molding nice round cannon balls. Today high quality graphite is helping us develop new high tech technology like Lithium-ion batteries in cars, computers and smartphones... a long way from marking sheep.
Most high-purity graphite in use today is synthetic; made from petroleum coke related to refining oil. High-purity graphite demands high prices of $7,000 - $20,000 per tonne and costs, $5,000 - $6,000 per tonne to make. However, Zenyatta's graphite supply is naturally formed, and after removing the quartz and feldspar is incredibly high in carbon purity (99.96%). This particular deposit is unmatched in purity and size by any other natural hydrothermal graphite deposits being worked today.
The Sri Lankan (vein-type or hydrothermal) mine, which was discovered in the 1800's and still operational today, is comparable in geological style to Zenyatta's discovery. However, this particular Sri Lankan deposit is a narrow vein graphite deposit unlike Zenyatta's more appropriately named hydrothermal breccia pipe graphite deposit. From a vein width of only 5cm, the Sri Lankan mine can only take out an annual amount of 5,000 tonnes.
Drilling is presently underway to determine the size of the Zenyatta deposit which will be much larger than the Sri Lankan deposit given the previous drill intersections of 100-200 metres. With these larger intersections, it's not unreasonable to believe that once developed, the Zenyatta project could produce up to 20 times the Sri Lankan operation's output, or more.
HYDROTHERMAL V.S. FLAKE GRAPHITE
Most graphite deposits being talked about during this latest graphite boom have contained the flake variety. Flake graphite deposits are very common globally. It is formed from organic material from prehistoric oceans which dies and settles on ancient sea floors. Over millions of years, the sedimentary process took hold, and with great pressure and temperature transforms the organic material into graphite.
While flake graphite deposits are sedimentary, Zenyatta's graphite deposit is of volcanic origin. It is a rather large breccia pipe of carbon that originated from the mantle of the earth; much like diamond, another type of carbon. This forms from molten magma pushing its way to the surface through a major continental rift, and loaded with carbon dioxide (CO₂) and methane (CH₄).
Through a freak of nature, this carbon was preserved, and formed a deposit of high purity carbon, almost instantaneously. By forming hot and in a flash, there is far less time for the graphite to accumulate impurities, unlike flake graphite, which develops over millions of years.
In Sri Lanka, the opening that allowed the carbon-filled magma to escape was much smaller, with vein-widths of up to only 5cm. This is how the term "vein graphite" became a normal descriptor. Though formed in the exact same way, Zenyatta's graphite is spread across a much larger zone or pipe, and showing signs of being a much larger deposit with high quality recoverable graphite.
A NEW HIGH-PURITY GRAPHITE OPTION
Often not talked about, the synthetic (high purity) graphite used in environmentally friendly electric vehicles is formed in an incredibly environmentally unfriendly manner. Synthetic graphite provides the high-purity levels that manufacturers desire, because of its conductivity, durability and temperature resistance. However, it is manufactured through applying intense thermal treatment (up to 3000°C) to petroleum coke or needle coke to make graphite. The entire process is quite costly, approximately $5,000 to $6,000 a tonne.
Petroleum coke is typically a nasty, dirty sludge leftover from refining oil, that's rife with all types of contaminants, including sulphur. The contaminants are burnt off, which in turn is released into the atmosphere.
So, when many in government and the public at large push for electric cars, and other graphite-related consumer products, there's a possibility that they're ignorant to the backstory involved to bring that synthetic graphite to fruition. In the case of Zenyatta, the natural graphite in place on their deposit has already had Mother Nature clean it up for them; no contaminants to deal with.
Other than feldspar and silica (essentially beach sand), the graphite is pure, and could have a simple mining operation without the complicated requirement to treat the graphite for contaminants. However, unlike many of the flake graphite companies in their junior graphite peer group, Zenyatta can possibly sell into the same graphite market as the synthetic graphite producers.
The high-purity market's cutoff is anything greater than 99%. Zenyatta's latest second round of tests returned grades of 99.96%. These are purity grades that have seen selling prices that range from $7,000 per tonne up to a whopping $20,000 per tonne.
At stake, Zenyatta's ultra-high purity Albany project gives the company a comfortable position in order to compete in the $13 billion (global production at 1.5 million tonnes annually) synthetic graphite market.
THE BOTTOM LINE
The Zenyatta team really received a huge boost from its contractors at SGS Lakefield that proved they could remove the feldspar and silica from the graphite deposit. Though they haven't gone into much detail about the process, it's apparently cheap, easy, and not proprietary. It's a well-known, off the shelf process. What is very intriguing is the potential for large margins if done cheaply and selling into a pricey market.
The Albany hydrothermal style graphite deposit is located near all types of infrastructure, including a gas line, hydro line and the Trans Canada Highway which is located 30km to the south, as well as a rail line 70km away. Not only did Zenyatta catch a break from Mother Nature, but they found themselves in a geographically beneficial location as well, in the friendly mining district of northeastern Ontario.
Essentially, the Zenyatta story is braced by the possibility for low-cost production into a high-revenue sector. It's the kind of story not often found in the industry, benefitting from an incredibly rare geological discovery.
On the heels of the 2012 drilling campaign, Zenyatta will now be focusing on defining the size and grade of its rare findings. This year's drilling program will be bigger and yield more results, and compliment last year's campaign that intersected a large mineralized zone of graphitic breccia and veining. Those results yielded up to 6.6% carbon over 170 meteres, from widely spaced drill holes. Nine holes were drilled, and established widespread graphite mineralization laterally for several hundred metres and to a vertical depth of 400m, where it remains open.
The drilling program currently underway will consist of a minimum of 10,000 metres, and will further test the extent of the Geotech VTEM airborne conductor that measures 1400m east-west by 800m north-south. This program will require 40 holes and test the theory of two separate graphite breccia pipes. It should go on until August, at which time the company plans to calculate a NI 43-101 resource estimate.
With a fully funded $4 million exploration program set for 2013, and still a lot of news to come, Zenyatta appears poised to make this year as monumental as 2012. Through continued drilling and metallurgical work, the company should be able to convince any remaining doubters that they have something truly remarkable in their high-purity hydrothermal Albany graphite deposit; a one of kind freak of nature.
G. Joel Chury
For the Bottom Line Report
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