Syrah Resources (ASX: SYR) has intersected almost 288 metres of high grade graphite mineralisation from surface at its Balama Project in Mozambique, with further exploration upside that the mineralised zone is likely to continue for some depth beyond what has been discovered so far.
Drilling at Balama is reinforcing its high grade nature, with graphite similar in grade to what was previously discovered in overlying trench T5, which averaged 12.7% graphitic carbon.
The first diamond drill hole measured about two thirds of the down dip extent of T5, with the average grade of this portion about 15.7% total graphitic carbon.
The graphite flakes also appear to be predominately coarse to very coarse in size, which is extremely promising as coarse flake graphite generally attracts higher sales prices.
What is important to note here is the entire intersection was graphite bearing, which indicates the widespread nature of the mineralisation.
Importantly, the first diamond hole intersected only a small section of the entire cross section across graphite bearing horizons on Mount Nassilala.
Graphite mineralisation at Balama has been mapped over a strike of greater than 7 kilometres.
To the west, the mineralisation is hosted on Mount Nassilala which rises about 200 metres from the surrounding plains.
Potentially, the entire mountain may consist of graphitic schists as there are no significant exposures of any other type of rock on the entire mountain.
To the east, the graphite wraps around the southern boundary of Mount Coronge, a granite intrusion.
The graphite in this area appears to be quite a higher grade and coarser flake than the graphite on Mount Nassilala.
To the north of the mountains the graphite mineralisation extends underneath the plains based on graphite observed in pits dug into the plains by locals fossicking for tourmaline gemstones.
Due to the cover it is not presently known how far to the north the graphite mineralisation extends.
Balama has already differentiated itself from graphite deposits in Canada, Europe and Australia through its large tonnage potential, high grade and coarse flake size, which is being revealed through exploration and metallurgical work.
Previously announced metallurgical testwork showed that Balama contains medium to coarse grained graphite that can easily be upgraded to a high grade 94%C concentrate at high recoveries.
Further upside to the project is the associated highly anomalous vanadium geochemistry, which is widespread and provides the potential for vanadium credits.
Drilling progress
Syrah has begun drilling the second hole, which has reached a depth of 23.5 metres and has already intersected graphite mineralisation across its entire length.
Visually the graphite appears very similar in grade and flake size to that of the first hole.
First assays from drilling are expected in early July.
Maiden resource
Syrah is estimating a drill rate of around 100 metres per day, which amounts to a one hole every three days.
A reverse circulation rig is also expected to mobilise to site within the next few weeks.
This means Syrah anticipates delivery of a maiden JORC Resource much earlier than the previously anticipated March quarter of 2012.
The company now expects to release an initial resource before the end of 2012.
Strategic Location
The Balama Graphite Project is a 106 square kilometre granted prospecting licence located within in the Cabo Delgado province in the District of Namuno of northern Mozambique.
The project is about 240 kilometres by road west of the port town of Pemba.
Pemba Port is a deepwater container port and is the third largest port in Mozambique.
It is anticipated that that the Balama graphite concentrate will be transported and shipped from Pemba Port.
The project is located close to a water supply, with the Chipembe dam just 14 kilometres to the northeast.
High graphite demand
In the current market, graphite prices have been increasing solidly and demand is outstripping supply.
Prices of coarse flake graphite have risen from around US$600 per tonne to US$3,000 per tonne between 2004 and 2011.
Based on demand and supply fundamentals there appears little chance of graphite returning to its lows and the price of graphite has the potential to rise further.
Demand is being driven by the need for products such as batteries and fuel cells, as well as a new technology called graphene – a one atom thick sheet of carbon that has a number of potential uses in electronics.
Automotive and iron and steel industries are the key end-users of the material.
China produces about 70% of the world’s graphite but is experiencing slowing growth and reserve depletion.
Graphite has recently had quite substantial return to interest from the investment community due to its near-term prospects and long-term growth potential.
AnalysisÂ
Syrah Resources is in the “box seat†with its Balama Graphite Project in Mozambique and potential to host a large, high grade graphite deposit. In light of the progress to date, the valuation of Syrah does not look overly demanding.
Source: http://www.proactiveinvestors.co.uk/companies/news/43170/syrah-resources-intersects-288m-of-graphite-at-balama-brings-forward-target-date-for-maiden-resource–43170.html
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