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Syrah Resources Strikes High Grade Graphite In First Drill Hole At Balama

Syrah Resources (ASX: SYR) has intersected high grades of graphite, with associated vanadium, in the very first drill hole of the Western Zone drilling program at its Balama Graphite Project in Mozambique.

A maiden Resource is now scheduled for November 2012.

The average grade of the entire 287.5 metre length of the first hole is 10.1% total graphitic carbon and 0.12% vanadium.

The intercept included a zone of 103 metres at 15.9% total graphitic carbon and 0.24% vanadium from 67 metres.

Within this higher grade zone was an intersection of 60 metres at 19.9% total graphitic carbon and 0.30% vanadium from 84 metres.

All of the average flake sizes in the zone from 67 metres to 170 metres were logged to be coarse flake (200 - 500 microns) or coarser (500 - 1000 microns).

The significance of these positive early results is that Balama is being confirmed as a very high grade graphite deposit on a global basis, which is also supported by the earlier trench results and strike extent of over 7 kilometres.

Balama West could make an ideal location for an initial open pit during project development as there is extensive, very high grade graphite and excellent grade vanadium at surface.

Balama West and Balama East are only a small portion of the entire outcropping mineralised system.

Assays for the other 14 diamond holes drilled at Balama West are expected to arrive continually over the next month, and a likely to be highly anticipated given these initial assays.

Extensive graphite mineralisation

The first drill hole was drilled directly underneath trench 5, which assayed 12.7% total graphitic carbon and 0.16% vanadium, which was in line with Syrah's expectations.

Previous exploration has shown that each of the 15 holes at Balama West, which ranged from 250 to 320 metres in length, began and ended in graphite mineralisation.

Every hole returned graphite mineralisation down the entire length except for one which encountered a 30 metre thick pegmatite dyke near surface.

Previous trenching results provided an average grade of 14.5% total graphitic carbon and 0.17% vanadium over the entire length of trenching.

A geological cross section of the Balama West area illustrates that results of the first drill hole correlated strongly with earlier trench assays from trench 5. This cross section shows that the high grade zones continue to surface.

Trench 5 contained a 141 metres zone at surface grading 18.3% total graphitic carbon and 0.24% vanadium.

Included in this high grade section is an outstanding high grade zone of 84 metres at 20.1% total graphitic carbon and 0.26% vanadium.

Higher grades to the east

Graphite mineralisation in the Balama East area visually appears to be significantly higher grade than the graphite at Balama West.

Syrah has now drilled 12 holes at Balama East totalling 2,311 metres.

At Balama East, drill holes to the immediate north east of Mount Goronge, a granite intrusion, intercepted the granite but at deeper levels in each hole moving away from the granite.

These five holes are mineralised from surface to the intercept point with the underlying granite, while the remaining holes at Balama East began and ended in graphite mineralisation to about 250 metres depth.

Syrah believes that the intrusion of the granite in this area has likely upgraded the graphite.

Vanadium by-products

Importantly, there is the potential for a valuable vanadium by-product, with the wide zone of 103 metres at 0.24% vanadium.

A grade of greater than 0.2% vanadium is commonly considered economically interesting for standalone vanadium deposits.

As vanadium is planned to be a by-product of graphite production, the vanadium at Balama may be worth recovering at grades of over 0.1%. Worth noting is the entire width of the first hole recorded 0.12% vanadium.

Earlier metallurgical testwork has shown that micas, which include the vanadium mineral roscoelite, can be separated from the graphite.

Scoping Study team finalised

Syrah has finalised its Scoping Study team for the Balama Project.

Snowden Group has been appointed as the lead manager of the Study, while MSA Group has been appointed to provide a JORC Resource.

George Annandale, who has experience in both graphite and vanadium mineralisation including roscoelite - the main vanadium ore mineral at Balama, has been appointed as consulting metallurgist.

Analysis

Syrah Resources is fast proving Balama's potential to play host to a very high grade graphite deposit.

Today's impressive results bode well for the potential for the company to define a large maiden graphite Resource in November 2012.

Mineralisation is extensive, with only a small portion of the 7 kilometre strike length explored. This is evident in the majority of drill holes so far beginning and ending in graphite mineralisation, as well as the mineralisation extending for the entire length of most holes.

Syrah is well funded to continue exploration efforts in Mozambique, with around $3.9 million in cash reserves at the end of the June quarter 2012.

The company anticipates receiving $800,000 from the sale of its Saudi Arabian interests in the next few months. Syrah has sufficient cash to fund its activities for the foreseeable future.

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