Nome graphite mine progress slowed, but ongoing

Development of the Graphite Creek mine near Nome has been delayed, but progress continues on the project that could become the country’s lone such mine.

Executive chairman of Vancouver-based Graphite One Resources Doug Smith said his company is moving from exploration to the technical and economic evaluation phases of the project. At the same time, Graphite One is in the midst of another round of fundraising, “a never-ending requirement in the business of junior mining,” Smith noted.

He said large drill samples are currently being technically evaluated and results that will feed into the mine’s preliminary economic assessment should be available in late February.

The Graphite Creek prospect sits about 40 miles north of Nome on the northern slope of the Kigluaik Mountains on the Seward Peninsula. It is about 10 miles from spur-road access to that region’s Taylor Highway.

Considered a high-grade, large flake graphite deposit, Graphite Creek would give the U.S. a stake in the graphite market that has been dominated by Chinese mines for decades.

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.

Smith said Graphite One is continuing to collect environmental data in parallel with community outreach and preliminary economic assessment work that will hopefully lead to a favorable feasibility study in a couple years.

“As soon as the water starts to flow then we have water samples to get and those types of things,” Smith said in an interview.

Initial development is likely three years out if all goes according to planned and funding is available, according to Smith. Earlier company predictions had mine development starting as soon as 2017.

Graphite One spent nearly $10 million exploring the deposit between 2012 and 2014. The current inferred resource is 154 million metric tons averaging 5.7 percent graphite; the indicated resource is 18 million tons with an average graphite content of 6.3 percent.

The indicated resource is more than 1.1 million metric tons of in-situ graphite. Some of the highest concentrations are up to 10 percent graphite making for what is believed to be a very high-quality resource, according to Smith.

No drilling was done in 2015.

“Our focus has been on lab work,” Smith said.

However, further infill drilling is still needed to determine the exact scope of the mine, he said — indicated resources stretch for 750 meters. Base assumptions are for a 50,000-ton per year mine with an initial 15- to 20-year life, with the understanding it could run much longer.

“We have a significant amount of graphite there for many, many years given the size,” Smith said. “We’d look at a 50,000-ton per year operation that’s, as mines go, not a large operation, but as graphite mines go that’s good size.”

He described the future mine as a large quarry without some of the requirements of other mines. That the main resource is on the surface, making it easier to access, is another big benefit to the project.

“The graphite goes through a milling process and then it goes through a float-sink process, but it does not go through a leaching process like a metal mine would,” Smith said.

Development costs should be in the $125 million to $150 million range, with further investment needed if upstream processing into concentrates optimal for shipping can be done on-site, he projected.

The potential workforce at the mine is still unknown because whether it will be a year-round operation is also undecided, given the quarry-style and seasonal barge access at the Port of Nome could make for a seasonal mine. In that case, a more intensive summer mining operation could add to the workforce and lead to processing in the mining off-season, Smith surmised.

Elwood Brehmer can be reached at [email protected].

01/20/2016 - 1:14pm