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Energizer Resources Skyrockets After "Ultra-High Purity" Graphite Concentrate Revealed From Molo

Jul. 29, 2013 2:48 PM ETNSRCF
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Shares of Energizer Resources (OTCBB:ENZR) (TSE:EGZ) almost doubled this morning after reporting greater than 99.9 per cent graphitic carbon from a finished concentrate of its Molo flake graphite deposit in Madagascar, completed as part of a series of preliminary metallurgical tests to enhance both the operating and capital costs presented in an economic study from January.

The company's stock was lately up 87 per cent as of 11:15am ET, at 20.5 cents on the Toronto Stock Exchange, rising as high as 24 cents this morning.

"We are delighted to have achieved an ultra-high purity of greater than 99.9% graphitic carbon on the first test," said president and COO Craig Scherba in the statement accompanying the news on Monday.

"This is highly significant and reconfirms, as demonstrated from the mineralogical results in our completed Preliminary Economic Assessment (PEA) Study, the exceptional quality of our graphite. As outlined in our previous news releases and PEA Study, the Molo is situated in an extremely rare and unique geological setting which has resulted in our flake graphite being both very high in purity and in quality."

The company said the "ultra-high purity" graphite concentrate was achieved in a first-pass, single stage hydrometallurgical purification test done by SGS Canada. The result was comprised of an average of five repeat assays on the concentrate over two days.

The tests were done to analyze the ability to upgrade the Molo graphite to an ultra-pure concentrate, with the company now able to begin the development of a comprehensive hydrometallurgical process flow sheet as part of a full feasibility study of the project.

The concentrate seen was generated in a single cleaner flotation test without optimized conditions, Energizer said, with the company using a conventional leach technology for the purification process.

In June, SGS started phase 1 of the Molo pilot plant process, made up of a series of systematic series of tests to finalize an optimized process flow sheet for the deposit, focused on minimizing costs while maximizing graphite flake size fractions, grade and recovery. Results from the phase 1 process are expected to be released within the next 30 days, Energizer said, adding that they are anticipated to have a "significant positive impact" on the company's existing projected economics, which include a pre-tax $421 million net present value at a 10 per cent discount rate, an IRR of 48 per cent, and a payback period of three years.

The final phase is for SGS to design and construct a pilot plant to process roughly 200 tonnes of Molo graphite ore. The pilot plant is anticipated to begin processing in August, and will result in the production of between 6 and 10 tonnes of graphite concentrate, which the company will use to further off-take discussions.

The company further added that the results of the preliminary metallurgical tests revealed that total organic carbon and carbonate carbon concentrations were below the analytical detection limits of 0.05%, suggesting that essentially all carbon contained in the samples were present in the form of graphitic carbon and confirming the quality of the graphite.

"According to industry experts, only natural flake graphite has the necessary attributes that allow it to be used across all applications where natural graphite can be used," the company's statement read. "The three largest demand markets for high-purity natural flake graphite today, and going forward, are refractories, battery and energy storage, and specialty graphite foils." Graphite has achieved critical mineral status, with over 180 applications today that are dependent on the material.

Energizer late last year unveiled an NI 43-101 resource estimate for Molo, which ranks the deposit as one of the largest in the world.

Indicated resources at the Molo deposit total 83.99 million tonnes, grading 6.36 per cent carbon (C), above a 2 per cent C cut-off grade, with inferred resources totalling 40.32 million tonnes grading 6.3 per cent C.

The conventional open pit project is expected to mine 1.17 million tonnes per year of ore, at an average head grade of 8.5 per cent with a stripping ratio of 1.65. With completion of the full feasibility study targeted for the fourth quarter of this year, the start of mine construction is expected in the third quarter of 2014, and production is anticipated in the fourth quarter of 2015 at an output capacity of 84,000 tonnes per annum (tpa).

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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