$4M drilling program underway at graphite prospect

Map/Courtesy/Graphite One Resources Inc.

Graphite One Resources Inc. is slowly checking steps off its to-do list in preparation for development of its graphite claims north of Nome.

The Vancouver-based exploration company holds title to 129 claims at its Graphite Creek prospect on the Seward Peninsula.

It is in the midst of a $4 million drilling campaign, the commencement of which was announced in an Aug. 27 release.

The exploration will continue for about six weeks, until Oct. 15, Graphite One Vice President of Exploration Dean Besserer said in an interview.

“What we’re doing in this short campaign is infill drilling allowing us to bring the resource into the indicated and inferred category,” Besserer said.

Graphite One embarked on three years’ worth of pre-development permitting last year for what it considers a world-class flake graphite deposit.

At the November 2013 Alaska Miners Association gathering, Besserer said the hope was to begin development late in 2016. Financing exploration has taken longer than expected, he said, pushing a likely groundbreaking for the mine back about a year, to late 2017, with first production coming the following year.

The prospect is located about 40 miles north of Nome on the northern slope of the Kigluaik Mountains, about 10 miles from spur-road access to the Seward Peninsula’s Taylor Highway.

If developed, Graphite Creek would be the lone graphite mine in the U.S. Chinese mines have dominated the market for decades.

A $5.5 million exploration campaign in 2012 that included 18 drill-core sites and more work last year revealed an inferred graphite resource of 23.4 million tons, according to a resulting company report. The deposit is highlighted with a vein of 8.6 million tons of near-surface material containing 13.5 percent mineralization. A subsurface portion of nearly 28 million tons of base has a flake graphite content of 9.7 percent.

The near-surface deposit runs for about 1.3 miles along the base of the range and the entire formation is about 10 miles long on a 16,800-acre parcel.

It is being investigated with a 50-year initial life projection, while further discovery could push it out as far as 100 years.

Besserer said the promising results of the 2012 season still needed to be fine-tuned to support financing for development, expected to cost from $120 million $150 million, and that is the reason for this year’s drill work.

“Right now we’re just trying to get our prefeasibility done,” he said.

At that price the Graphite Creek mine could have a payback window as short as a year and a half, according Besserer.

The fact that Graphite Creek is a flake deposit makes it particularly valuable. Flake graphite, used in lithium-ion batteries, has traded between $1,000 and $2,500 per ton since 2007, while more common amorphous or lump graphite trades for about $400 per ton.

Besserer described a graphite mine as a “glorified gravel pit” to the Alaska Miners Association and downplayed its impact on the land recently to the Journal.

“It’s not a gold mine; its very environmentally benign, so hopefully people see this as a good thing all around,” he said.

The other big project in the region getting more attention is the U.S. Army Corps of Engineers prospecting work to develop a deepwater port, likely in the Pt. Spencer-Port Clarence area west of the Graphite Creek claims.

Besserer said Graphite One representatives have been at a number of the Corps’ public meetings and that a nearby deep draft port would definitely benefit the project as a place to store material, but it is not necessary to move the graphite mine forward.

If 50,000 tons of graphite concentrate were collected at the mine each year — a large graphite mine but small relative to other types of mines — he said shipping would consist of a few shallow draft barges per year.

“Either way we’re just kind of on the coattails of the oil and gas guys, the real reason why they’re looking at a deep draft port,” Besserer said.

Young holds hearing
on Port Clarence

Rep. Don Young, chairman of the House Subcommittee on Indian and Alaska Native Affairs said at a Sept. 10 hearing he plans to move legislation in December that would transfer federal land to Bering Straits Native Corp. and the State of Alaska.

The Point Spencer Coast Guard and Public-Private Sector Infrastructure Development Facilitation and Land Conveyance Act sponsored by Young would transfer nearly 2,400 acres of uplands to BSNC and about 180 acres of near shore land, including an airstrip, to the state. Originally developed as a U.S. Coast Guard navigation station, the bill would allow the Coast Guard to retain use 140 acres and give it the option to lease space from the Native corporation if need be.

BSNC first asked for conveyance of the site in 1976.

“The bill gets lands in the hand of the stakeholders and gives the means to them to work together on the sensible development of the small purse of land in the Bering Straits region,” Young said in the subcommittee hearing.

Kip Knudson, director of state and federal relations for Gov. Sean Parnell, testified that the state wants to work together to develop a port, but that the finer points of the bill need to be adjusted from the state’s perspective. Specifically, he said the state would not be able to operate the airstrip under FAA guidelines given the currently proposed conveyance.

“An Arctic deepwater port is critical to the region, to the state and to the nation and the sooner we get it the better,” Knudson said. “The governor knows that a partnership will bring about this faster.”

Elwood Brehmer can be reached at [email protected].


11/23/2016 - 2:08pm