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Syrah Resources Proves Up Balama Potential, Unearths High Grade Graphite

Syrah Resources (ASX: SYR) has delivered to the market a set of high grade results from eight reconnaissance trenches at the project which show an average grade of 14.5% total graphitic carbon, or 16.2% total carbon, across 328 samples.

The highest grade trench was T2 which averaged 23.3%. One of the other higher grade zones was 4 kilometres away in trench T8 which averaged 17.9% total graphitic carbon.

The 8 trenches, T1 to T8, covered a total length of 1,809 metres with the longest trench (T5) covering 350 metres perpendicular to the graphitic stratigraphy.

Indicating the size potential of Balama, the distance from T1 to T8 is about 4 kilometres in strike length, which is about half the length of the Balama mineralisation.

The longest trench (T5) covers only a small portion of the across strike extent of the Balama mineralisation.

This early stage exploration program was designed to locate high grade graphite zones for drill targeting and to collect material for metallurgical testwork.

Previously announced metallurgical testwork showed that Balama contains medium to coarse grained graphite that can easily be upgraded to a high grade 94%C concentrate at high recoveries.

Balama has already differentiated itself from graphite deposits in Canada, Europe and Australia through its large tonnage potential, high grade and coarse flake size, which is being revealed through exploration and metallurgical work.

Further upside to the project is the associated highly anomalous vanadium geochemistry, which is widespread and provides the potential for vanadium credits.

Forward Plan

Syrah is now planning to begin metallurgical testing on the samples collected from the trenching program.

The current test work will aim to improve earlier metallurgical results and determine how consistent the metallurgical characteristics are over a larger extent of the deposit.

Importantly, it will also produce enough material to be sent to potential customers for assessment.

Meanwhile, Syrah has also secured a diamond drill rig and reverse circulation rig to begin drilling later this month.

The company is planning a program of at least 5,000 metres of diamond drilling and 10,000 metres of reverse circulation drilling.

Syrah is targeting the release of a maiden JORC Resource in the March quarter of 2013.

Strategic Location

The Balama Graphite Project is a 106 square kilometre granted prospecting licence located within in the Cabo Delgado province in the District of Namuno of northern Mozambique.

The project is about 240 kilometres by road west of the port town of Pemba.

Pemba Port is a deepwater container port and is the third largest port in Mozambique.

It is anticipated that that the Balama graphite concentrate will be transported and shipped from Pemba Port.

The project is located close to a water supply, with the Chipembe dam just 14 kilometres to the northeast.

High Graphite Demand

In the current market, graphite prices have been increasing solidly and demand is outstripping supply.

Prices of coarse flake graphite have risen from around US$600 per tonne to US$3,000 per tonne between 2004 and 2011.

Most analysts believe there is little chance of graphite returning to its lows and that the price of graphite has the potential to rise further.

Demand is being driven by the need for products such as batteries and fuel cells, as well as a new technology called graphene - a one atom thick sheet of carbon that has a number of potential uses in electronics.

Automotive and iron and steel industries are the key end-users of the material.

China produces about 70% of the world's graphite but is experiencing slowing growth and reserve depletion.

Graphite has recently had quite substantial return to interest from the investment community due to its near-term prospects and long-term growth potential.

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