Syrah Resources (ASX: SYR) is set to resume diamond drilling at its Balama Graphite and Vanadium Project in north Mozambique early next month, which is likely to be highly anticipated given the impressive results to date.
In 2012, Syrah defined a tier 1 deposit of graphite in terms of quality and size.
The contained graphite of the Balama deposit is expected to exceed the rest of the world's reserves of graphite as recorded by the USGS (77 million tonnes as at 2012).
The new campaign will include drilling at the Balama East deposit, where a Resource is due in October and are expected to add tonnages to the Resource base.
A total of 17 holes for 2,040 metres are anticipated to be drilled at Balama East in the coming months which is expected to be sufficient to define an Indicated Resource.
A total of three holes for 360 metres will be drilled at the Sushi Zone to better define this area which is observed as having exceptionally coarse flake graphite.
Balama West drilling
The Balama West deposit now hosts an Inferred Resource of 564 million tonnes at 9.8% total graphitic carbon (NYSEMKT:TGC) and 0.21% V2O5 at a 5% TGC cut-off.
Within this global resource the combined high grade zones from the Mualia and Ativa zones contain an Inferred Resource of 157 million tonnes at 17.1% TGC and 0.43% V2O5 at a 5% cut-off.
Only 150 metres lateral distance separates the the Mualia and Ativa zones.
The Ativa Zone comprises an Inferred Resource of 21 million tonnes at 20.8% TGC and 0.38% V2O5 and is open in all directions and at depth.
Drilling will focus on closing off the Ativa Zone.
Syrah anticipates that the tonnage of the deposit will grow significantly with little or no sacrifice in the graphite grade (>20% TGC).
Closer spaced infill drilling will also take place to bring the deposit up to JORC Indicated status, and it is likely that the Ativa Zone will provide for several decades production of graphite.
A total of 16 holes for 2,170 metres are expected to be drilled at the Ativa Zone.
Meanwhile, the Mualia Zone comprises an Inferred Resource of 136 million tonnes at 16.6% TGC and 0.43% V2O5 and is open to the west and east and at depth.
The Mualia Zone is slightly lower grade than the Ativa Zone, and ordinarily this would not warrant further drilling given that the Ativa Zone will already have sufficient graphite for several decades of production.
However, it was noted in trenching data that Mualia has areas of high grade zones at surface (>21% TGC).
Also, field observation of outcrop indicates that the highest grade zone may be at the west of the deposit, which has yet to be tested in any form.
Additionally, the overall vanadium grade at Mualia (0.43% V2O) is slightly higher than that at the Ativa Zone (0.38% V2O).
Therefore, it is possible that certain areas of Mualia may be of even higher grade than Ativa in both graphite and vanadium.
A total of seven holes for 1,225 metres are anticipated to be drilled at Mualia to better define the high grade zones.
If assays show that the Mualia Zone contains areas with grade equal or better than the Ativa Zone, drilling will be extended to define an Indicated Resource at Mualia.
All drilling at Balama is expected to be completed by late July 2013. A Scoping Study is underway and is slated for release in early May 2013.
Syrah is also making substantial progress on securing offtake partners for Balama graphite.
The company has cash in hand of around A$13.4 million after some of the company's directors recently decided to sell their option holdings and a very small portion of their shareholdings to a significant institutional investor in the Australian market.
This injected a further $2.6 million into Syrah in March.
There is significant newsflow and catalysts for re-rating ahead for Syrah. The recent pull-back in price provides new entry opportunities for what is possibly the pre-eminent graphite deposit in the world.
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