Mason Graphite lists on TSXV as project development gathers pace
By: Simon Rees
30th October 2012
Updated 36 minutes ago
Several months ago graphite was the industry’s minéral du jour, with the market excitedly looking at a wide array of graphite projects in which to invest or closely monitor.
Graphite’s intrinsic value is its robustness as a material, both light and strong, and the number of applications for which it can be used. Its conductivity of heat and electricity is superb and it finds considerable favour with the steelmaking and auto parts industries.
But, from the market’s perspective, perhaps the most exciting development is the use of graphite in smart phones, laptops, lithium batteries and fuel cells, where it also has applications in the nuclear and solar energy industries. The potential for hybrid-electric and electric cars to spur graphite’s uptake has also been highlighted.
One project now hoping to turn heads is Mason Graphite’s Lac Guéret, located 290 km north of Baie Comeau, in Quebec. The company has just listed on the TSX Venture Exchange under the ticker LLG, its shares trading effective October 30.
The project was acquired from Cliffs Natural Resources in April through a $15-million deal without royalties. “The [sale] process was crowded but we won … The sale stands at $15-million, with half up-front and the other half split between when we publish a feasibility study and when we reach commercial production,” Mason Graphite’s VP corporate development Simon Marcotte told Mining Weekly Online.
“It’s not because graphite became hot six months ago that we decided to get into graphite. The recent strength in graphite is kind of the wind at our back, but we’ve been after this asset for almost three and a half years,” he added.
The project is currently delineated at 7.59-million tons measured and indicated, grading 20.4% graphitic carbon (cg). Inferred resources stand at 2.8-million tons, grading 17.29% cg. The graphite is flake, which has a higher number of applications and lower processing costs compared with amorphous graphite.
“A lot of people are talking about batteries as a reason to invest in graphite. Yes, it’s true that this is a coming development, but we’re still probably four to five years away before this has a meaningful impact,” Marcotte said.
“So we plan to build based on the current graphite market that we can easily penetrate because of our projected low-cost production rate. If batteries do come along commercially, and if vehicles are increasingly hybrid, then this upswing will all be extra gravy,” he said. “But we won’t need to rely on the upswing in order to make this a successful project.”
The company initiated an 18 000-metre drilling campaign in July. This is now coming to close and Mason Graphite will use the results to update the project’s resource levels accordingly. “[The drill campaign] should be done by early November, which will allow us to do two resource updates. The first will be announced by year-end 2012 and will probably be between 30-million tons and 40-million tons, grading around 20% cg. The second update will come in Q1 2013, with 50- to 60-million tons at the same grade expected.”
Further exploration is expected, while capital expenditure for project development will be well below $100-million. “We’ll have a preliminary economic assessment [PEA] and an environmental impact assessment by year-end 2013 and we’ll start the feasibility study as soon as the PEA is released,” Marcotte said.
Meanwhile, transport and infrastructure are robust. “From the main highway to the project there’s a well-maintained logging road that’s wide enough for two trucks to pass,” Marcotte said. “The level of power consumption will also be fairly low.”
Relations with the First Nations community that owns the land, the Pessamit, has been amicable. “Our relations are very good; the Pessamit own the land but they don’t live there. We signed an agreement with them for drilling rights; there have been no bumps in the road.”
First production at Lac Guéret is set for 2015. “The plan is to start with an output of 25 000 t of concentrate a year that could easily be ramped up to 50 000 t a year in order to be ready for developments in the batteries market,” Marcotte said.
Mason Graphite pins great hopes on its CEO Benoît Gascon and his experience of the market and its end-users. “We’ll be talking to graphite consumers, tapping into Benoît Gascon’s detailed knowledge of the market and the buyers, almost all of whom he has met face-to-face,” Marcotte said.
“The project will be a ‘category killer’, as the market calls it. This means the project could be as powerful in the graphite market as Cameco is in uranium or as big in potash as Potash Corp is,” he said. “It’s going to be special … it’s going to be the biggest graphite deposit in the world.”