TORONTO (miningweekly.com) – Canadian graphite project developer Northern Graphite this week filed a bankable feasibility study (BFS) for its Bissett Creek graphite deposit, in eastern Ontario, confirming the project’s financial returns sufficient to justify the investment.
The BFS found that Bissett Creek’s production level, when compared with the total market, should enable its successful introduction in the supply of large and extra-large graphite flake products, without impacting the supply-demand relationship and resulting prices, allowing the company to take full advantage of the expected constrained graphite supply dynamic of the current market.
Graphite demand and prices have increased substantially over the past few years as a result of the ongoing modernisation of China and other emerging economies, which has resulted in strong demand from traditional steel and automotive markets. New applications such as lithium-ion batteries, vanadium-redox batteries, fuel cells and nuclear power have the potential to significantly increase demand for the allotrope of carbon.
Northern Graphite said China currently produced about 70% of the world’s graphite and an export tax and a licensing system had been instituted to restrict exports and encourage value-added processing in China. Recently, more legislation was introduced which would make it increasingly difficult to construct new graphite mines in China.
Existing Chinese production was also expected to decline owing to the effects of many years of high grading, the consolidation or elimination of smaller producers, and improvements in labour and environmental standards.
“The recent proposals on new mines are the third major graphite supply-related announcement out of China this year and follow calls for rare-earth-element-type protection from the largest Chinese graphite producer, and the formation of a State-owned amorphous graphite monopoly.
“As a result of the supply-demand situation for graphite, both the European Union and the US have declared graphite a supply critical mineral,†CEO Gregory Bowes said in a statement.
However an analyst told Mining Weekly Online that large economic deposits are rare and right now, most operating mines in North America are small. “We could see the need for 30 to 40 new graphite mines over the next decade,†the analyst said.
FAVOURABLE ECONOMICS
Mining Weekly Online in May reported that Northern Graphite found itself among a handful of miners developing a high-quality graphite project, scheduled for production within the next year or so. The miner planned to open its Bissett Creek project, one of the first new graphite mines to open outside China since the 1990s, by the end of 2013.
The proposed development of the project entails the construction of an openpit mine and a 2 500 t/d processing plant. It would consist of conventional crushing, grinding and flotation circuits, followed by concentrate drying and screening and is based on proven methods and equipment that are widely used in the mineral industry.
The Ottawa-based company planned to build a natural gas pipeline to the site from the main TransCanada pipeline, about 15 km away, to fuel five 1 MW generators that would produce electrical power. Waste heat from the generators would be used to dry the concentrate, resulting in low overall energy costs of $0.079/kWh.
About 97% of the tailings will be non-acid generating.
Over the first five full years of operation a total of 4.2-million tons of ore would be processed at an average head grade of 2.22% graphite to produce an average of 18 600 t of graphite concentrate at 94.5% graphite a year.
About 80% of production would be +80 mesh large flake and half would be XL (+50 mesh) and XXL (+32 mesh) flake.
Cash operating costs will average C$851/t of concentrate over the first five years. Capital costs are estimated at $102.9-million, including a $9.4-million contingency, but excluding any financial assurance relating to reclamation obligations.
Among Northern Graphite’s peers counted Ontario Graphite who was also developing a graphite mine at its Kearney deposit, located in the same region as Northern Graphite’s Bisset Creek, and the Almenara graphite project, being undertaken by Magnesita, an unlisted company in Brazil.
The company’s TSX-V-listed stock traded 5.36% lower at C$1.06 apiece on Tuesday afternoon.
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