Graphite prospect near Nome holds big potential

There is ample development potential in Alaska’s lone graphite prospect, according to a preliminary economic report on the mine venture.

The Graphite Creek flake graphite deposit near Nome is being pursued by Vancouver-based Graphite One Resources. A preliminary economic assessment of the resource and Graphite One’s plans to extract and process it found the project could have a value to investors of more than $1 billion and a payback period of just four years.

If developed, Graphite Creek would be the country’s only operating graphite mine and give the U.S. a stake in the graphite market that has been dominated by Chinese mines for decades.

Considered a high-grade, large flake graphite deposit, the Graphite Creek prospect sits about 40 miles north of Nome in the Kigluaik Mountains on the Seward Peninsula. It is about 10 miles from spur-road access to that region’s Taylor Highway.

Specifically, the prospect runs for 11 miles along the north flank of the small mountain range, with portions of it exposed at ground level.

“It’s been a long road to the (preliminary economic assessment),” Graphite One CEO Anthony Huston said in a formal statement. “As we move into the next phase of development, we will continue to work closely with Alaska state authorities and the local communities around the deposit, including Alaska Native corporations, to unsure that our project meets the highest environmental, safety and sustainability standards.”

The junior mining company spent nearly $10 million exploring the prospect from 2012 to 2014 and has since shifted to economic and environmental evaluations.

While earlier company predictions had mine development starting as soon as 2017, delays in advancing the project have pushed construction and startup into the 2020 timeframe.

Flake graphite is a primary component of potent lithium-ion batteries — the power cells for electric cars and storage banks for some renewable energy projects. The average lithium-ion battery is 16 percent graphite by weight, according to the U.S. Department of Energy.

The Graphite Creek deposit holds more than 5.7 million metric tons of indicated and inferred graphite in ore with a resource grade of at least 7 percent, according to the company. That resource base would support a milling operation of about 1 million metric tons per year for at least 40 years, the assessment states.

Graphite One representatives have described the prospective mine as similar to a large gravel pit; graphite mining does not require the chemicals and metallurgical processes often found in hard rock metal mining.

The company is planning for an on-site processing facility that would produce up to 60,000 tonnes per year of semi-refined, 95 percent graphite concentrate. Capital costs for the mine and mill and associated infrastructure are estimated at $233 million.

From there, the concentrate would be trucked in shipping containers to Nome and then barged to a separate manufacturing plant, likely in Washington, where it would be refined again to a 99.95 percent graphite concentrate.

The resulting coated spherical graphite and purified graphite powder — which is the “rejected” graphite that could not be processed into coated spherical graphite, according to the company — would be the marketed finished products.

The cost for the manufacturing plant is estimated at $130 million, for an all-in project cost of $363 million.

Graphite One General Manager Dave Hembree said during a talk to the Alaska Miners Association last November that the company would prefer to site the manufacturing facility in Alaska if a suitable location with low-cost power could be identified.

At full production of nearly 42,000 tonnes per year of coated spherical and 13,500 tonnes of powder graphite, the project would produce about 55,000 tonnes of graphite concentrate at an operating cost of $1,774 per tonne, the assessment states.

Graphite One forecasts the blended market price for its products would be at least $5,000 per tonne.

“With the prospect of a low-cost, 40-year mine life using half of the identified graphite resources, and given our projected production costs and conservative price assumptions, we are confident that Graphite One has the potential to become a reliable provider of graphite materials critical to clean-tech, high-tech and national security applications,” Huston added.

Elwood Brehmer can be reached at [email protected].

02/21/2017 - 10:21am