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Syrah Resources: The Future Graphite And Vanadium Behemoth
Triton have done very well to secure a major offtake agreement. But that does not in any way detract from the accurate assessment that Peter Arendas has made of the position of Syrah at Balama. Syrah's higher market value is not without reason. They are much further advanced with their project development, and have good infrastructure - water, roads, and low-cost grid power. Very significant, too, is that SYR have a formal Mining License from the Mozambique government. Why significant? Because the Mining Law in Mozambique has been substantially changed, as of 1 January 2015, and now represents a much higher hurdle for new, would-be miners, like Triton.
Another subtle point is the existence of substantial, very rich zones of both graphite and vanadium, such as the Ativa and Mepiche zones described by Peter Arendas. These zones are so large, and so rich, that for many decades to come, mining will only occur there, with graphite grades around 18%, and V2O5 of 0.4%. Anything less than 13% graphite is officially classified as waste. The overall grade of 10.7% graphite, for the whole billion tonne resource, is of academic interest only, and irrelevant in any mining consideration.
The assumption that any other mines in East Africa are "on the same geological structure", and should therefore be deemed equivalent, is a very dangerous one. The Balama area was subject to a later-stage granite intrusion, (which, after millions of years of erosion, is now Mount Coronge) and which is suspected to have brought about secondary metamorphism, resulting in the very rich zones of graphite and vanadium mentioned by Peter Arendas. We just don't know the position of any of the other potential mines at this stage.
Apr 2, 2015. 07:49 AM
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Graphite: A Way To Profit From The Move To Electric Vehicles
Thanks, Jaberwock, for your intelligent analysis of the graphite scene and market.
However, there seems to be one factor which has not been considered. There is an elephant in the room, casting a huge shadow over all the companies mentioned, but which appears to have been ignored in these comparisons.
The Balama deposit, in Mozambique, (owned by Syrah Resources; SYR on the Australian Exchange) has a resource currently estimated at 1.15 BILLION tonnes, at 10.2% graphite. That means about 115 million tonnes of contained graphite. Last year, the US Geological Survey estimated the total of all known reserves in the world at 77 million tonnes. So Balama contains substantially more than the total of ALL the other graphite orebodies known in the world. As you would probably expect, there are large zones much richer than the overall average grade
And this comes with good infrastructure (main road access, water, cheap power, and port facilities). The deposit outcrops at the surface, so strip ratios are negligible.Their published plan is to start production late 2014 - at an initial rate of 220K tonnes per year, which is about one-fifth of current world consumption.
Capex has not yet been formally announced, but has been unofficially estimated at levels closely comparable with Northern, Focus and Mason. Unit operating costs, however, will be much lower.
But that's not all. The orebody contains substantial amounts of vanadium, which metallurgical work has shown to be easily removed from the graphite, and processed intowhat the company has described as "possibly the highest grade vanadium concentrate in the world". The volume of vanadium produced is likely to be significant in terms of world demand, and this will obviously further strengthen the project economics.
It puzzles me that the almost-certain impact on the world graphite market has been largely ignored in North America. This will clearly be, by far, the largest graphite mine in the world, one of the richest, and certainly one of the lowest cost operations. It seems fairly clear that most of the smaller prospective miners will find it difficult to compete in any remotely price-sensitive market.
I appreciate Jaberwock's considered approach, and therefore ask whether Balama, and its likely consequences for the graphite industry, was included in his assessments.
Sep 15, 2013. 11:37 PM
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