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Purity in its Veins: Zenyatta Targets Ultra High-Purity Graphite from a Very Unique Discovery
Given the frequency of its attention this year, it's fair to say that 2012 was the year of graphite. Much of its allure comes from the increasingly high-tech demand in applications such as Li-ion batteries, fuel cells, vanadium-redox batteries, pebble bed reactors and graphene, just to name a few. Traditional applications include electrodes, refractories, carbon brushes, brakes and lubricants among many other uses.
Today demands on graphite total a global market of over 2.5 million tonnes that is growing. But not all graphite is created equal, and there's more to the market than just the difference between flake and amorphous types.
Manufacturers are paying a premium for high purity graphite. Often this comes as synthetic graphite, which accounts for 1.5 million tonnes per year. Due to its far higher price, the value of the global market of synthetic graphite dwarfs natural graphite by a margin of $13 billion to $2 billion, respectively.
Synthetic graphite refers to graphite with a purity rating of over 99%, versus natural, which tends to fall generally between 70-94%.
For Zenyatta Ventures [ZEN:CA], the discovery of the company's rare Albany 'Vein Type' graphite deposit may offer as close to synthetic materials as nature can provide. A first test from a rough concentrate yielded an incredibly high purity of 97.2% graphite. Subsequent testing is on-going to optimize the process to achieve >99%.
This can make all the difference, as prices for synthetic graphite grades fetch $7,000-$20,000 per tonne, compared to natural graphite which gets $500-$2000 per tonne. Most graphite companies on the market right now, are chasing flake graphite, of which there is no global shortage, whereas the rarer high purity vein graphite has less competition and a bigger, much more lucrative market. Zenyatta is the only company in the World developing a vein type graphite deposit.
VEIN TYPE GRAPHITE PREMIUM
This unique form of natural graphite is by far the purest form that Mother Earth as made available, and incredibly rare. Less than 1% of the world's graphite output comes from this type of deposit, but the world definitely would love to see more. Of all forms of natural graphite, vein graphite is the easiest to process. This distinction rewards producers of the element with the best graphite price on the market.
The high purity levels come from its creation, starting as a hot fluid that seeps through fractures and fissures in the earth and burns off impurities. It's nature's very own graphite processing plant.
Vein graphite can be near the purity of synthetic, while not requiring the high-energy cost of creating synthetic graphite from petroleum coke at an oil refinery. Also, just as significant, the production of synthetic graphite from petroleum coke is very destructive to our environment in the burning off of contaminants. Zenyatta's intent is to take its vein graphite and upgrade it to 99.9% purity. Doing so would allow their deposit to compete against synthetic supplies. The Albany deposit appears to have the volume of graphite to make end users, who buy synthetic, to stand up and take notice.
If sold only as vein graphite (without an upgrade) the price is somewhere in the $2,000-$3,000 range. But if you upgrade your supply, you can significantly improve the economics. The highest grades receive between $7,000-$20,000 per tonne.
Now the question is, how expensive is it to upgrade the vein graphite to synthetic grades? That's a question that Zenyatta is presently working on. They're currently working on this process at SGS Lakefield, and they're now into their second round of tests. The hope is to improve upon the rough nature of the first round of tests that weren't optimized beforehand. This included floating the graphite, and doing a leach procedure in acid. The second test will feature an adjustment of only one variable (grind size), which adds negligible cost. It is quite common to carry out many tests before a separation process is optimized. The belief is that they will be steps closer to identifying all of the variables necessary to get it to >99%.
A close eye will be paid to the costs for upgrades in order to ensure feasibility of the project. A successful transformation to purity levels of synthetic-grade graphite at a low per-tonne cost will be a major milestone, for which Zenyatta would certainly be lauded.
UPGRADING ZENYATTA'S DISCOVERY
What was initially an exploratory mission to find copper-nickel, landed Zenyatta one of the largest vein graphite systems in the world. Now the plan going ahead is to drill it out for a 43-101 graphite resource, and hopefully be into pre-feasibility by mid to late 2013.
With purity ratings much closer to synthetic than to other natural graphite, Zenyatta's deposit appears to host highly sought-after qualities. Vein-type graphite starts at such a high level of purity that they think they can achieve >99% at a very low cost. But to be fair, they're still very much embroiled in working through this process.
Though this process sounds complicated, it's easier than the current method of making synthetics. This type of graphite is made by taking petroleum coke from a sweet crude refinery, and cooked to 3000 degrees Celsius during several steps. This is expensive and energy dependent, to the tune of $3000-$5000 per tonne to produce. Much of the world's supply of synthetic graphite comes from the US and the Middle East, but is tied to sweet crude supply, which is diminishing.
Judging from what we see in Zenyatta's vein type graphite, it's doubtful that their process will even come close to the high costs to produce synthetic graphite, giving them a huge competitive advantage. If successful, this could be a form of a graphite loophole: Lower costs with higher returns. As well, it avoids the touchy subject of environmental impact, which synthetic graphite incurs a lot of.
THE BOTTOM LINE
It's not only big enough of a story that Zenyatta seems to have found a really high grade of rare graphite on Canadian soil; But when you factor in the further development of the upgrade process from vein graphite to synthetic's >99% purity, this story takes on a mystical quality.
Should the adjustment of its upgrading process be as simple as changing the grind size and other minor variables, then Zenyatta will be into another stage sooner than you think. The demands for graphite are steadily increasing, and cries for domestic supplies from outside China are also being amplified.
Zenyatta is merely a few percentage points away from successfully developing a new process for one of the rarest forms of graphite in the world. By chasing prices in the $7,000 - $20,000 per tonne range, this would put Zenyatta into the stratosphere, above and beyond its peers.
G. Joel Chury for the Bottom Line Report
Disclaimer: No information in this article should be construed as individualized investment advice. A licensed financial advisor should be consulted prior to making any investment decision. VantageWire makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of the VantageWire only and are subject to change without notice. VantageWire assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this article and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, VantageWire assumes no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information, provided within this article
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