Any mining professional will tell you that the best place to find a new mine is right next to an existing one. Standard Graphite Corp. (TSXV: SGH) is rapidly moving towards production on its Mousseau East property in Quebec. In addition to being extremely well positioned geographically, the recent positive metallurgical results indicate the property is well on its way to becoming as successful as its illustrious neighbour.
“We are developing an advanced stage graphite project, with a producing mine as our neighbor which is arguably one of the world’s most successful graphite mines,” says Chris Bogart, President and CEO of Standard Graphite.
The Mousseau East property was acquired by Standard in 2012, and is located some 40 kilometres northeast of the town of Mont-Laurier in northwestern Québec. It is within 50 kilometres of Timcal Canada Inc.’s producing Lac-des-Îles graphite mine, which is currently the larger of the two flake graphite producing mines in North America. Timcal’s Lac-des-Îles average grade is 6.5 % Carbon Graphite (Cg), and it has been in production for almost 25 years.
“Timcal has the only graphite mine of any significance in all of North America, and it’s our neighbour,” Bogart says.
The Mousseau project also has important parameters in addition to its location. Excellent metallurgy, infrastructure, and is a high grade deposit with a low-strip ratio, all of which lends to the hypothesis that it will be a lower cost producer.
“The work we have done shows the potential value of the ore, and that Mousseau should be a very economically viable mine” says Bogart. “. The Mousseau property is shaping up to be an analogous deposit, with similar ore, grade and mining scenario to Lac-des-Îles. When graphite prices were depressed in the 1990’s, Timcal’s was the only new graphite mine in the world that stayed open because of its economics. “We see this as a highly relevant comparison in the world of new graphite mines that are being explored and developed with unproven or unknown base case scenarios”.
Standard Graphite will be starting their next drill program this spring after a successful drill program in late 2012.
“This is a follow up drill program because of the successful results we had on our initial drill program,” Bogart says. We successfully twinned the historic deposit, identified step-out targets from the known graphite zones and have identified new exploration targets through positive drill results.
Standard Graphite recently initiated a metallurgical testing program to characterize the graphite present on the main portion of the historical deposit. “We are extremely pleased with these initial results having achieved a commercial product using standard processing methods,” says Bogart. “Results can be expected to improve further by optimizing and customizing the processing to our material. After that program, we expect to announce our maiden 43-101 resource.”
The project development has been exceptionally positive so far. Standard Graphite set out their exploration program, and executed it on time and on budget with excellent results. Three very important things happened to make it possible, explains Bogart.
“We confirmed the historic resource to our satisfaction,” he says. “We delineated resource expansion opportunities and we also achieved excellent metallurgical results.”
Prices for graphite have been increasing in recent months, and over the last couple of years prices for large flake, high purity graphite have more than doubled. The price for flake graphite is $2,000 to $3,000 per tonne depending on flake size and grade. There is a posted price for graphite which provides a guideline with respect to longer term trends but transactions are largely based on direct negotiations between the buyer and seller. Graphite prices are also a function of flake size and purity with large flake commanding premium pricing. Graphite prices have come down since the 2012 highs due to slower growth in China and economic weakness in the US and Europe but are still at a premium compared to the last decade. No new graphite mines were built during the last cycle and the supply problem should become more acute as economies recover.
With Quebec recognised as a mining friendly jurisdiction and ranked in the top five of mining jurisdictions worldwide, Standard Graphite is well positioned to help fill the demand gap from China.
China produces about 70 per cent of the world’s graphite, production and export growth has begun to level off and export taxes have now been instituted. Canada has the distinction of having the best geology worldwide, along with Brazil, for graphite exploration and development which is extremely positive for companies like Standard Graphite to capitalize on the inevitable demand in this market.
About Standard Graphite
Standard Graphite Corp. is rapidly positioning itself as North America’s premier pure-play graphite exploration & development company.
The company is developing the Historic Mousseau East Deposit and controls a 100% interest in 12 highly prospective graphite properties within known graphite districts in both Quebec and Ontario.
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