Graphite One Resources Inc. has tapped a vast graphite deposit in Northwest Alaska that rivals the top tier of graphitic carbon projects around the globe.
Graphite Creek, as this emerging world-class project is aptly named, has long been suspected to host somewhere between six and 20 million tons of crystalline-flake graphite. This assumption was based on a 100-meter thick graphite-rich layer that can be traced for some five kilometers (three miles) along the northern slopes of the Kigluaik Mountains.
“It’s about five kilometers in length, the average width we see is about 100 meters and the dip-length that we can see at surface we expect to be between 100 and 200 meters,” Graphite One CEO Charles Chebry told Mining News as the company was gearing up for the 2012 exploration program at Graphite Creek.
The 4,248-meter drill program carried out at Graphite Creek in 2012 cut through thick graphite-enriched zones that exceeded the early expectations of Chebry and the Graphite One team.
“The 2012 18-hole drill program has been very successful in establishing the potential of the project,” said Graphite One Resources President Anthony Huston. “Areas of both high-grade, large-flake and bulk tonnage type mineralization have been defined and the system remains open along strike and at depth as defined by the geophysics and mapping, confirming the strength and continuity of this deposit. While more work remains to be done, there is clearly potential for a world-class mineralized system to be delineated.”
Based on the results of Graphite One’s 2012 drill program, Claude Duplessis, Eng., consultant for SGS Canada Inc., prepared an inaugural resource for this emerging graphite deposit. Using a cutoff of 3 percent graphitic carbon, Graphite Creek has an inferred resource of 107.2 million metric tons averaging 5.78 percent graphitic carbon, or some 6.2 million metric tons of graphite.
This maiden NI 43-101-compliant resource for Graphite Creek catapults the project to among the top graphite deposits in the world. According to Technology Metals Research, a United States-based tech-metals research firm, Graphite Creek ranks second only to Energizer Resources Inc.’s Molo deposit in Madagascar in terms of size; an impressive feat for a project had never previously been drilled.
Lured by gold
Gold Rush-era prospectors first stumbled upon the Graphite Creek deposit located about 40 miles (65 kilometers) north of Nome while scouring the Seward Peninsula more than a century ago. Like these prospecting pioneers, it was gold that lured the Graphite One team to the Nome region.
Then known as Cedar Mountain Exploration, the company spent the 2010-2011 seasons exploring the gold potential of the Kelly Creek property.
“We were drilling on the Seward Peninsula and getting 0.8 grams (per metric ton) gold and it just wasn’t enough to go back to the market and raise the necessary funds that we felt were needed for that area,” Huston told Mining News.
In the meantime, green energy applications were spurring new demand for graphite. Knowing that a large deposit of this carbon polymer was located on the Seward Peninsula, the Cedar Mountain team began digging deeper into the graphite market.
“Graphite is vital for lithium-ion batteries, pebble bed nuclear reactors, and fuel cells among other uses. This has allowed for the price of graphite to rise; in the past seven years, the price has nearly tripled. Graphite is the mineral of tomorrow and as such, cannot continue to be overlooked and undervalued,” the Edmonton, Alberta-based explorer concluded.
Determining that emerging green energy applications such electric vehicles are likely to continue to drive up the demand for the carbon polymer, the company began digging deeper into the carbon-rich potential of Graphite Creek.
Though Graphite Creek had never been drilled, the promise of the deposit was obvious. In addition to the thick layers of graphite that could be traced on the surface, the property has a century-long history of being a source of high-grade graphite.
“The (Tweet) family had mined graphite here and put it on a barge back in the early 1900s,” said Huston.
With World War I driving a strong demand for graphite, Norwegian gold miner Nicholas Tweet staked the high-grade Graphite Creek deposit in 1915 and leased the claims to the Alaska Graphite Company. Over the ensuing two years some 500 tons of graphite was mined from high-grade lenses and shipped to Seattle and San Francisco.
Though production stopped at the end of the war, the Tweet family has held onto its claims to the minerals rights at Graphite Creek – waiting for the right time and the right company to realize the potential of the abundant high-grade graphite found there.
Convinced that now is the time to develop the vast carbon-rich deposit, Graphite One approached the Tweet family about taking a look at the property. In a deal that was sealed with a handshake, the Tweets agreed to let Graphite One complete a due diligence survey; in return the explorer pledged it would share the details and results of the investigation with the family.
“We shook hands, and we did our own due diligence on the property for about eight months,” Huston reflected.
Realizing the tremendous potential of the 3,400-acre (1,375 hectares) property, Graphite One closed an option and lease deal with the Tweet family in January 2012.
Under the terms of the agreement, Graphite One has an option to earn a 100 percent interest in the Graphite Creek Project over a three-year period through exploration work totaling C$1.525 million and cash payments of C$425,000. Upon meeting the terms of the option agreement the project will be governed by a 20-year lease with automatic renewal provisions. The lease agreement provides the Tweets a 5 percent production royalty, which can be reduced to 3 percent by cash payment of C$2 million for each 1 percent purchased.
Closing a deal on the property, Graphite One completed a C$6.4 million financing and changed its name from Cedar Mountain in March.
Resource established
Graphite One kicked off its 2012 exploration program in April with an airborne electro-magnetic survey over the entire land package. This geophysical program lit up the highly conductive graphite layers beyond the bounds of Graphite One’s original land position, prompting the explorer to stake an additional 17 claims.
“Graphite One has more than tripled the original strike length which dramatically increases the potential deposit size from the previous 150 to 250 million metric tons of graphite-bearing rock,” said Huston.
In addition to extending the apparent strike to more than 17 kilometers (10.5 miles), early drill results revealed that the graphite-rich zones ran deeper than first envisioned.
Hole 12GC001, drilled just northeast of the project’s namesake creek, cut 411.7 meters of 2.1 percent graphite. This intercept includes 127.9 meters of 4.1 percent and 41.73 meters of 6.7 percent graphite.
Hole 12GC002, drilled about 300 meters to the southwest, cut 353.4 meters of 2.7 percent graphite. This intercept includes 165.3 meters of 4.23 percent, 46.4 meters of 6.6 percent and 21 meters of 10.1 percent graphite.
Stepping out some 1,500 meters to the northeast, 12GC004 cut 237.8 meters of 2.66 percent graphite, including 136.58 meters of 4 percent and 40.6 meters of 6.35 percent graphite.
Establishing a strong continuity between the geophysical response and the graphite-rich zones encountered during drilling, the company proceeded to systematically drill a 2,200-meter section of the deposit.
12GC010, the northeastern-most hole drilled, cut 216.7 meters averaging 3.13 percent graphite, including 21.6 meters averaging 11 percent graphite.
12GC003, drilled at the southwest extent of the current resource, cut 234.8 meters averaging 2.18 percent graphite, including 61.9 meters averaging 3.52 percent graphite.
All told, 17 holes drilled in the resource area cut thick zones of high-grade graphite and providing the data to establish the maiden resource of 6.2 million metric tons of graphite.
One of the advantages of this deposit, yet to be touted by Graphite One, is that the majority of the highest grade graphite drilled in 2012 was encountered at the top of the deposit.
Near-surface, high-grade intercepts include:
•12GC002 cut 14.3 meters of 10.1 percent graphite starting at a depth of 26.7 meters;
•12GC004 cut 17.6 meters of 9.36 percent graphite starting at a depth of 20.4 meters;
•12GCH003 cut 17.1 meters of 11.07 percent graphite starting at a depth of 3.9 meters;
•12GCH005 cut 54.9 meters of 10 percent graphite starting at a depth of 6.1 meters;
•12GCH006 cut 31.7 percent of 10.1 percent graphite starting at a depth of 12.2 meters; and
•12GC010 cut 21.6 percent of 11 percent graphite starting at a depth of 13.5 meters.
All of these intercepts are from the top of the reported graphite intercepts.
When asked about this near-surface high-grade mineralization, Huston said “most of the high-grade is on top and right along the fault-line.”
Increasing the cut-off grade to 7 percent, Graphite Creek has an inferred resource of 25.44 million metric tons, averaging 9.69 percent graphitic carbon for 2.5 million metric tons of graphite.
The 18th hole
The 18th hole established solid proof of Graphite Creek’s blue-sky potential. This hole (12GCH008) cut 177 meters averaging 3 percent graphitic carbon, including 52 meters averaging 6.09 percent graphite. Surface mapping and the electromagnetic surveys indicate a continuity to the carbon-rich layers stretching along the 2,200 meters between hole 8 and the resource area established by the other 17 holes.
“The step-out hole shows the high-grade mineralization is continuous for more than 4.4 kilometers (2.8 miles) as confirmed by drilling,” Huston said.
Based on the 52 meters of 6.09 percent graphitic carbon tapped in hole 8, the consultant that calculated the resource estimates the 4.4-kilometer strike is likely to host between 9.9 million and 38.9 million metric ton of graphite.
Huston said this potential only represents a small portion of the likely carbon rich layers identified by the geophysical results, mapping and sampling along the Main trend, not to mention a second trend of graphite identified to the south.
“The rock grab samples continue to reiterate the presence of high-grade graphite mineralization along both the main trend and the southern (Araujo) trend,” Huston said. “Now that the main trend is over 18 kilometers in strike length we have only drill tested 12 percent of the trend in detail which further builds to our story as we continue to work towards a resource.”
Looking ahead
Though Graphite One has an enormous area to explore, its goal for 2013 is to increase the confidence in and around the current resource area to a point it can complete a preliminary economic assessment by the end of the year.
“We want to prove out to the indicated stage and we have shown right now that we have the ability to be, if not the largest, one of the largest graphite deposits with high graphite percentage in the world,” Huston told Mining News. “We would like to do 5,000 to 8,000 meters of drilling; we feel that will get us to where we need to be.”
The company, though, has not determined whether it will concentrate on only the 2.2-kilometer-long resource area or increase the strike toward hole 8.
“We are going to look at it internally and discuss whether or not we are going to get the bets bang for our buck by doing that,” said the Graphite One President.
While the Graphite One team works out a plan for the 2013 drill season, the company is awaiting the results from roughly 10.5 metric tons of material it sent out to labs for mineralogy and metallurgy studies.
The results from this testing due out in the first quarter of 2013 will be an important milestone as Graphite One begins to consider the economic viability of Graphite Creek.
The size and shape of graphite largely determines the value of the carbon polymer.
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 is currently selling for around US$3,000 per metric ton, a 300 percent increase over the price that the lithium-ion battery ingredient was fetching five years ago.
Graphite Creek has long been regarded as a source of the more desirable large flake graphite.
Laboratory analysis of three 15-kilogram samples collected by Cedar Mountain in 2011 confirms the potential for large flake graphite at the project.
One of the samples taken from a historical stockpile of high-grade material averaged 56.9 percent graphite. The other two samples – one of schist containing disseminated graphite and a second sample of mixed schist and massive graphite – returned 8.2 percent and 14.5 percent graphite, respectively.
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. The 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 floatation resulted in recoveries from 86.8 to 92 percent graphitic carbon.
Graphite One hopes the mineralogy and metallurgy studies due out early in 2013 will return similar results, increasing the value of the enormous graphite deposit in Northwest Alaska.
“Based on the size of the resource, flake content and potential, we believe this to be the largest reported flake graphite deposit in the world, and look to take an aggressive approach in 2013 to advancing the project towards production in the near future,” touted Huston.
