In the coming years Alaska may have the country’s only producing graphite mine.
Graphite One Resources, a Vancouver-based exploration company, has begun permitting on 129 graphite claims at its Graphite Creek prospect on the Seward Peninsula. The mineral deposit is on the northern slope of the Kigluaik Mountains about 40 miles north of Nome and about 10 miles from spur-road access off of the Taylor Highway.
Graphite One Vice President and Director Dean Besserer the company conducted a $5.5 million drilling campaign in 2012 that showed great promise for the prospect from its 18 drill-core sites. He called the 16,800-acre property a “world-class flake (graphite) deposit,” during a Nov. 6 presentation at the Alaska Miners Association convention in Anchorage.
“We are the United States’ only advanced, high-grade flake graphite deposit,” Besserer said.
In an interview he said the company is in the early stages of an expected three-year permitting process and hopes to start developing the site as soon as late 2016.
The estimated development cost of the mine could be from $120 million to $150 million. Besserer said at that price it could have as little as a 1.5-year initial payback window.
The graphite deposit has inferred resources totaling 23.4 million short tons, according to a December 2012 Graphite One report. A highlight of the deposit is 8.6 million tons of near-surface material with a 13.5 percent mineralization. Another subsurface portion of 27.9 million tons of base has a 9.7 percent flake graphite base.
The near-surface deposit runs for approximately 1.3 miles along the base of the mountain range, and the entire host formation is continuous over about 10 miles, according to the report.
At an average long-term production rate of 20,000 tons of graphite per year, the mine would almost certainly have a 50-year life, but additional finds could extend that out to 100-plus years, Besserer said.
A final drill season is needed to pin down exactly where to start site development, he said.
To relate the deposit to gold in terms of value, he said the 8.6 million-ton, high-density deposit would equate to more than 1 million ounces of gold at current gold prices of about $1,300 per ounce and a conservative flake graphite price of $1,200 per ton.
The large flake graphite present at Graphite Creek that Besserer said makes the prospect especially promising has traded at $1,400 to $1,500 per ton in recent weeks after hitting a near-term bottom of about $1,200 early this year. Through much of 2011 it was trading at more than $2,500 per ton after being less than $1,000 as recently as 2007.
Comparatively, the more common amorphous or lump graphite trades for about $400 per ton.
Because of the relatively high concentration of graphite necessary to make a deposit viable when compared to copper or precious metals, he said less ore needs to be processed in graphite mining. As a result, the Graphite Creek mine will have a much smaller footprint than some of the other surface mines in the state, he said.
He projected ore processing at 200,000 tons to 400,000 tons per year. He added that graphite operations don’t use chemicals such as cyanide like some metal mines do to leach material from the ore.
“We’re going to be a glorified gravel pit,” Besserer said.
The deposit’s location along the continuous mountain slope would make for a “bench” mine along the slope as opposed to an open-pit dug on levels beneath the surface, he said.
Without an operating graphite mine, the United States imports all of its graphite. Canada currently has two small graphite mines and a third scheduled to begin production sometime in 2014.
In recent years China has produced about 70 percent of the world’s graphite, but depletion of the country’s flake deposits has hurt its quality, while demand for flake graphite has doubled since 2000, Besserer said.
Aside from being a popular lubricant, graphite is increasingly used in lithium-ion batteries and fuel cells, when in flake form. It is also considered one of the best-know thermal conductors.
It’s those technical applications, Besserer said, that will continue to grow demand and price particularly for flake graphite.