Graphite Creek deposit grows less remote

Due to its isolation in the far reaches of Western Alaska, Graphite Creek has long been regarded as an enormous deposit of an industrial mineral with little value. Today, however, graphite has been elevated to the status of a technology mineral and the once-secluded deposit sits on the threshold of the burgeoning Arctic shipping lanes that promise to dramatically reduce the transport time between Europe and Pacific ports.

With demand on the rise and access to Graphite Creek drifting closer to world markets, Graphite One Resources Inc. has spent the past two years confirming the project as the largest deposit of graphite in North America, and among the largest in the world.

This work has culminated in an inferred resource of 186.9 million metric tons averaging 5.5 percent graphitic carbon, for a total of 10.35 million metric tons of graphite, using a cut-off grade of 3 percent. Increasing the cut-off to 7.0 percent graphitic carbon, an inferred resource of 37.68 million metric tons averaging 9.2 percent (3.47 million metric tons) graphite has been outlined at the project.

"The continuity of the mineralization and simple geological structures at Graphite Creek has allowed us to grow our resource to an impressive size with very little drilling (28 drill holes to date)," said Graphite Creek Vice President of Exploration Dean Besserer.

Expanding Graphite Creek

Situated roughly 40 miles (65 kilometers) north of Nome, Graphite Creek has long been suspected to host between 6 million and 20 million tons of crystalline-flake graphite. This assumption was based on a 100-meter-thick graphite-rich layer that outcrops to the surface for some five kilometers (three miles) along the northern slopes of the 42-mile (68 kilometers) Kigluaik Mountains on Alaska's Seward Peninsula.

A 4,248-meter drill program carried out by Graphite One in 2012 confirmed the historical assumption along about half of the surface exposure. This drilling established a maiden NI 43-101-compliant inferred resource of 107.2 million metric tons averaging 5.78 percent graphitic carbon, or some 6.2 million metric tons of graphite.

The final hole of the 2012 program, drilled about 2,200 meters southwest of the resource, cut 177 meters averaging 3 percent graphitic carbon, including 52 meters averaging 6.09 percent graphite. This step-out hole, taken alongside the results of surface mapping and geophysical surveys, indicate that the graphite deposit extends well beyond the bounds of the resources established with 17 holes drilled in 2012.

Graphite One's goal for 2013 was to extend the resource to the step-out hole. With equity markets tight, the company held out until September to close a C$2.2 million financing.

Once the funds were raised, it did not take Graphite One long to complete a 10-hole drill program that extended the deposit both to the southwest and northeast, confirming 4.8 kilometers (3.0 miles) of continuous near-surface high-grade graphite mineralization.

The first two holes of the 2013 program were drilled to the northeast, extending the Graphite Creek deposit some 400 meter in that direction.

Over the course of three weeks, Graphite One succeeded in more than doubling the strike of the Graphite Creek deposit and expanding the resource by around 68 percent.

"Our small drill program from 2013 allowed us to prove that the mineralization is continuous and extends for nearly 5 (kilometers), further demonstrating the size of this deposit," said Graphite One President and CEO Anthony Huston.

Aggressive timeline

As expansive as the deposit at Graphite Creek has become, all indications are that the resource could be expanded to several times its current size.

The current deposit represents drilling along less than 30 percent of an 18-kilometer- (11.2 miles) long conductor zone revealed by an extensive airborne magnetic-electromagnetic survey flown in 2012 and the drilling completed to date has demonstrated a close correlation between the conductor and graphite in the ground.

With a 10.35-million-metric-ton inferred graphite resource, Graphite One has little need to expand the deposit. Instead, the company will focus its planned 2014 drill program on upgrading the confidence of the world-class deposit it has outlined with an eye on putting that into production.

"An infill drill program during 2014 will significantly de-risk this deposit by bringing the resource into the measured indicated and/or indicated measured category, and will help us develop our preliminary economic assessment," explains Besserer.

With an eye on jumping into the graphite market as early as possible, Graphite One has entered into a memorandum of understanding with the Alaska Department of Natural Resources, for engagement with the state's large mine permitting team.

"As we move towards our PEA (preliminary economic assessment) and BFS (bankable feasibility study) this is an integral part of the process as we strive to keep our aggressive timeline towards development," Huston explained.

JDS Energy and Mining Inc. is working on high-level engineering and logistics studies for the Graphite Creek project. Results of the studies will be part of a PEA for Graphite Creek due to be published by the first quarter of 2015.

As Arctic sea ice becomes less prevalent, an increasing number of cargo ships are passing a few miles west of Graphite Creek as they make the top-of-the-world traverse between Europe and Asia. While it may be years or even decades before the Arctic shipping lanes north of Russia and Canada become reliable and widely used, the increasing likelihood that the Bering Straits will become a busy throughway has Alaska and U.S. officials scrambling to establish infrastructure for such an eventuality.

After studying more than a dozen locations, the U.S. Army Corps of Engineers and Alaska Department of Transportation identified Port Clarence and Nome as the two best locations for a deep-sea port to serve as a base to protect national interests, support ship traffic and serve economic development in the Arctic.

While either location would put Graphite Creek within 50 miles (80 kilometers) of a deep-sea port, Port Clarence, located about 24 miles (39 kilometers) west of the project, would be the most advantageous.

The Graphite Creek property lies along the shores of Grantley Harbor, providing a potential water route to barge graphite from the project to Port Clarence.

DOT and the Corps cited proximity to mining projects, Bering Straits shipping lanes and natural deep water as reasons Nome and Port Clarence topped the list. The agencies are currently completing feasibility studies for these sites with an eye on attracting investments and public-private partnerships needed to fund development.

Marketable graphite

Being on the threshold of global shipping lanes is only as important as the product you have to ship.

The Graphite Creek deposit is shaping up to be a rich source of the quality of graphite prized for high-technology applications.

The most abundant form of naturally occurring graphite is the fine-grained amorphous variety. This lowest form of the carbon polymer is used traditionally in steelmaking - lending its heat resistance to crucibles and furnace bricks, as well as serving as a carbon-boosting additive in the steel itself.

Lithium-ion batteries and other high-technology applications, however, require a higher order of the carbon polymer known as large flake graphite.

Large flake graphite containing 94-97 percent carbon, the grade needed in electric vehicle batteries, is currently selling for around US$1,400 per metric ton, down about half from the peak of around US$3,000 per metric ton in 2011 but substantially higher than the US$1,000-per-metric-ton levels of 2008.

Laboratory analysis of three 15-kilogram samples collected by Graphite One in 2011 identified the potential for large flake graphite at the project.

To qualify as large flake, graphite particles must be larger than 80 mesh. Mesh size refers to the number of openings per linear inch of mesh, so the larger the mesh size the smaller the material.

More than 75 percent of the graphite content of all three of the Graphite Creek samples analyzed by Hazen Laboratories qualified as large flake. A sample of mixed schist and massive graphite, at 93.6 percent, had the highest large flake graphite distribution.

Additionally, some 65 percent of the large flake graphite is greater than 40 mesh, a premium form known as jumbo flake.

In addition to testing the physical characteristics, Graphite One had one of the 2011 samples tested for recoverability. Using a combination of gravity separation and flotation resulted in recoveries from 86.8 percent to 92 percent graphitic carbon.

Graphite One is continuing bench-scale metallurgical work with the goal of developing a simple concentration and leaching process that will produce an ultra-high purity graphite product, potentially positioning Graphite Creek to compete in the C$13-billion, or 1.5 million-metric-ton-per-year, synthetic market.

Huston said, "The Graphite Creek property is the largest known flake graphite deposit in North America, and we look forward to continuing to develop marketable graphite products to meet the global graphite demand, which is growing rapidly."