Syrah Resources (ASX: SYR) is applying for a Mining Licence over its 1 billion tonne graphite and vanadium Balama project in Mozambique as work extracting a bulk sample confirmed the softness of the ore.
It has also completed infill drilling at the Ativa Zone (18.6 million tonnes at 21% total graphitic content and 0.39%V2O5) that would allow it to be upgraded to Indicated and Measured Resource status.
This is expected to be released within two months with a significant quantum in the ore reserve category to support debt financing for project development, discussions of which have commenced.
Environmental work on the project is ongoing and scheduled for completed by October 2013 and the company has held extensive community consultations with local villages.
Powerlines connecting Balama to the National Grid progressing well and expected to be completed in four months while water rights to Chipembe Dam have been secured, paid and confirmed.
In addition, the Port of Pemba Authority confirms ample available capacity at the port for the volume of graphite proposed to be shipped by Syrah.
Application for Mining Licence
Following completion of the Balama West Scoping Study, Syrah completed additional work to convert the Study to an Economic Feasibility Study as required under the Mozambique Mining Law.
As the Balama West resource is currently in the Inferred category, Syrah is unable to publish the results of the Study.
A Mining Licence has now been applied for with the Government of Mozambique. Environmental work is ongoing and expected to be completed by October 2013.
Large Scale Pilot Plant Test Work
Meanwhile, the excavation of bulk samples of graphite ore to conduct final large scale pilot plant test work from the Balama East and West has confirmed the ore is soft and very easily dug using conventional excavation processes.
Syrah does not believe that any blasting will be required until the oxide zone is depleted which is likely to be at least a decade from start of mining. This will further reduce mining costs below that considered in the Scoping Study/Economic Feasibility Study.
The testing of the bulk samples will optimise the flow sheet and process plant. This will be completed over the next three to four months.
Syrah has completed infill drilling of 36 holes totalling 3,366 metres at the Ativa Zone at Balama West that is expected to upgrade the current resource of 18.56Mt at 21%TGC and 0.39% V2O5 to Indicated and Measured status.
Graphite mineralisation has been intercepted as expected with several holes sent to the laboratory for processing.
The Ativa Zone is to date the highest grade zone at Balama and once it has been upgraded, the company expects to release the Scoping Study outcomes shortly thereafter.
Discussions have commenced with international debt financiers and potential trade partners regarding the securing of project development finance for the Balama Graphite and Vanadium deposit.
Over the past few months, extensive community consultations have been held with local villages by Syrah representatives in conjunction with personnel from specialised consulting firm Coastal and Environmental Services.
Based on community feedback, Syrah is very confident that it has the support of the local communities.
The Balama Project will provide extensive employment in the area. It is currently estimated that approximately 300 people will be involved in construction of the mine and 200 in the ongoing operations in Mozambique.
The erection of powerlines connecting Balama to the National Grid is progressing well and expected to commission in about four months time.
Commercial price delivered to site is expected to be less than 5 cents per KWH due to the considerable Hydroelectric power generation in Mozambique.
Syrah has secured rights to 1,000,000 cubic meetres of water from Chipembe Dam located just 10 kilometres from the proposed site of Balama's processing plant. This is sufficient to meet Balama's operational needs.
Port Of Pemba
Further discussions have been held with the Pemba Port Authority to secure capacity at the Port.
There is presently suitable available capacity at the Port of Pemba with 8,500 TEU (TEU: twenty foot equivalent container unit) handled last year, capacity of 18,000 TEU as advised by the Port Management company with an upgrade for the port to be complete by the end of 2014 doubling the container capacity to approximately 36,000 TEU.
Vanadium Metallurgical Testwork
Vanadium testwork is progressing well and Syrah expects to update the market within the next month.
Syrah Resources' confirmation that no blasting would be required to extract ore from Balama has the potential to reduce mining costs.
The application for a Mining Licence also highlights the progress that the company has made with upgraded Resource estimates for the high grade Ativa Zone and the project Scoping Study expected shortly.
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