By John Miller,
editor-in-chief, The ASIA Minerâ„¢
STRATEGIC Energy Resources (SER) is seeking an investor to help bring a world-class, near-production ready graphite project in South Australia into operation.
The Uley Graphite Project on the Eyre Peninsula, near the regional centre of Port Lincoln, operated in the early 1990s but was suspended in 1993 due to very low graphite prices and high freight costs.
The processing plant has since been kept under care and maintenance, and the entire operation needs some capital investment to be in a position to profitably produce graphite owing to increased global demand and much higher prices.
SERâ€™s managing director Mark Muzzin told The ASIA Miner that the company is extremely confident in the future of Australiaâ€™s premier graphite deposit but is seeking an investor coupled with offtake agreements to move it forward.
â€œSER doesnâ€™t have the capital resources at this stage to start producing and you would not take on a project like this without having offtake agreements in place.
â€œWe are seeking a partner to help get the plant back up to spec and also hope they will have the market tied up with a customer for the product.
â€œWe believe the investment will be from an international group from Asia, Europe or the USA. When we took on the project in December 2008 we saw that the graphite price was well above the levels of the early 1990s. On paper it appeared that the project would be economically feasible.â€
Exploration in the 1980s by CRA estimated that the graphite tonnage is 387 million tonnes @ 7.4% graphite. Detailed exploration by the previous joint venture revealed an in-situ indicated geological resource adjacent to the plant site of 2.87 million tonnes @ 13.4% graphite. This is sufficient tonnage to annually provide up to 15,000 tonnes of product for more than 25 years.
SER is having Coffey Mining complete a JORC compliant statement on Uley Main Road deposit. Coffey has also been engaged to run a pit optimization on Main Road as well as ranking the other known deposits for their potential.
Mark Muzzin says, â€œThe first stage is to get the Main Road anomaly into a JORC category. We have also appointed consultants to investigate processing to see what modern options are available and also costing, as we donâ€™t know exactly how much money it will take to get the plant up to spec.â€
Regarding the use of graphite, he says most people think immediately of pencils but that is only an incredibly tiny part of the market. â€œGraphite is predominantly used in the metal processing industry and for refractory bricks. It is used in the car industry for brake linings while flexible graphite products are used for gaskets and the like. Graphite has many lining applications and is also used for batteries and heat sinks.
â€œOurs is premium quality and a larger flake product, which is what most customers want. Large flakes have good thermal high temperature protection qualities as well as good electrical conductivity.â€
When the project was operating it was producing three different grades of graphite â€“ plus 100-80 mesh and plus 80 mesh, which were 94-97% carbon, and there was also a coarser plus 50 mesh. The product was well accepted by customers, including BHP, RASA Corporation from Japan and Ashby Graphite from the US.
Mark Muzzin says, â€œExtensive exploration work has been done at Uley and the plant was in production. We know there is world-class mineralization and it is now a matter of upgrading the plant to get the project back into production.
â€œIt has been under care and maintenance since 1993 and a couple who used to work in the mine has been living there. The first time I was there in January they actually started up the plant.
â€œThe front-end of the plant is a bit rusted because thatâ€™s where it is exposed and thatâ€™s where a sizeable proportion of the funds would go.
â€œWe really have to do a bit more work on the processing side to optimize the best result.â€
He says itâ€™s not really a mining project in terms of extraction. The mineralization is very close to the surface. It is basically stripped with graders so it is a very simple process.
â€œWhoever needs the product can have operations up and running in quite a short period. Everything is there, the plant is in pretty good shape, weâ€™ve got the water, weâ€™ve got power with a small substation, phone and data lines are there and we have all the sheds and the accommodation. It just needs a bit of a revamp on the processing side.
â€œWe are only 23km away from Port Lincoln with deepwater port facilities and we are well serviced by sealed roads and rail. Uley ticks all the boxes as far as infrastructure and location are concerned.
â€œFortunately in Australia we have stable governments and we have had a lot of support from the State Government, so this is a fantastic opportunity for the right people who need the product.â€
Contact: Mark Muzzin, Strategic Energy Resources managing director. Email: [email protected] or phone: +61 3 9629 2330.