In March 2016 I had the opportunity to visit a leading North American research and development company, focused on materials and components relating to energy-storage devices. I was invited to visit the facility by Alabama Graphite Corp (AGC) (TSX.V:ALP, OTCQX:ABGPF), to see how AGC’s development of coated spherical purified graphite (CSPG) is progressing, and to get a better understanding of the battery prototyping and production processes.

For competitiveness reasons, the invitation was issued with the proviso that I not identify the company that I visited, or the personnel that I interviewed, under the terms of a strict non-disclosure agreement. The company (which I will call EngineeringCo for the purposes of this article) assists a number of players in the critical-materials space with the development of value-added processes, with particular expertise in Li-ion batteries (LIBs). EngineeringCo was at pains to make sure that the only work that I saw during the visit, pertained to processes and components relating to and produced from, AGC natural-flake graphite.

I was able to take a number of photographs during my visit, which are included below (click on the thumbnails to enlarge the images). Also included is a separator / electrode cross-section schematic, and other images produced by EngineeringCo and AGC that were verified during my visit.

Nevertheless, I had the opportunity to discuss a number of topics of wider interest to the use of natural graphite in LIBs with a senior scientist at EngineeringCo (whom I will call Dr. X), who is well known by many in the graphite industry and beyond, for his experience and expertise in the processing of graphite, anode production for LIBs and LIB prototyping and validation.

Regardless of the ultimate application, the early stages of natural-graphite processing are generally the same. The graphite ore is mined or excavated, and then crushed so that the contained graphite flakes can then be concentrated, via flotation. The crushed ore is typically placed into water with an additive such as pine oil or kerosene, which creates a thin film on the surface of the water. Graphite flakes are hydrophobic and lighter-weight, and being repelled by the water they remain at the surface, while the heavier rock matter simply falls to the bottom of the flotation cell. The result of these and associated processes is run-of-mine (ROM) concentrate, and historically has been the goal of most graphite juniors, looking to produce a saleable material as a result of their endeavors.

More recently, companies like AGC have realized that the way to maximize the value of their graphite ores is to apply secondary processes to this ROM concentrate, with the goal of producing so-called battery-grade graphite for LIBs. These secondary processes include purification, micronizing, spheroidizing and coating, to produce CSPG, a high-value graphite product that can be used for the anodes in LIBs. Each of these steps requires careful optimization, with the process parameters being tailored to the unique characteristics of each specific ROM concentrate.

I asked Dr. X why companies choose a particular order for completing the secondary processes of purification, micronizing, spheroidizing and coating ROM concentrate, for battery-grade materials. Not unsurprisingly, he commented that it boils down to economics. In the past, graphite mines would generally categorize their ROM concentrate into two broad categories; coarse flakes (+80 mesh / +180 µm) would be sold into higher-end applications (such as graphite crucibles, extruded shapes and steelmaking), whereas the finer material was only given secondary consideration, for use in pencils and other applications (such as powdered metallurgy, composite brake pads, forensic dispersions, zinc-carbon ‘lantern’ batteries, dry lm and liquid lubricants, and the like).

When first commercialized over 25 years ago, LIBs utilized anode-active materials comprised of mesophase carbon microbeads (MCMBs), produced via an expensive process by a single Japanese company, Osaka Gas Co. Osaka Gas was not able to reduce the cost of MCMB synthesis, in the face of LIBs becoming commodity devices, requiring commodity pricing on all of the materials and sub-components used to manufacture them. MCMBs soon lost their dominant market share to graphitized chopped carbon fibers (GCCFs), produced by Toshiba, BP Amoco and other companies.

The increasing demand for LIBs put further pressure on the anode-material producers and GCCFs were in turn superseded by two materials: graphitized, surface-coated synthetic graphite, and surface-coated natural purified flake graphite. Today, battery manufacturers increasingly favor the replacement of synthetic graphite with natural graphite in anodes for LIBs, for a number of reasons:

• The carbon-based precursor materials for the synthetic route have to be graphitized through a costly heat-treatment process. Since natural graphite is already graphitic in nature, it is an inherently lower-cost material to produce;
• LIB anodes require high-purity, spheroidal particles with sizes in the range of 10-25 µm. Synthetic graphite, once graphitized, is generally brittle and more resistant to processing, in contrast to natural graphite, which is more lubricious and amenable to such processing. This means that natural graphite is significantly easier to spheroidize than synthetic graphite (with some observers arguing that synthetic graphite cannot actually be spheroidized at all). Spheroidal particles are preferred as they contribute to maximizing the overall energy density value of the battery (more on this, later in this article);
• Most premium-quality natural crystalline flake graphite exhibits superior performance to synthetic graphite. For example, CSPG produced from AGC’s Coosa graphite deposit, with a particle size of D50 = 18.3 µm has a reversible capacity (the energy capacity that can be consistently and reversibly achieved upon cycling) of 367.21 mAh/g, just shy of the theoretical maximum of 372 mAh/g. In contrast, one of the industry’s best commercial synthetic graphite products with a particle size of D50 = 15.8 µm, has a noticeably lower reversible capacity of 347.2 mAh/g. More on these values, later in this article;

Typically the larger the flake size, the higher the purity of the untreated graphite, which resulted in the initial recent industry emphasis on the proportion of large-flake graphite in any given deposit (the more, the better, went the mantra). What this focus missed, however, is the fact that the process of converting large flakes into smaller particles of a suitable size for anode production, is expensive because any additional grinding is energy intensive, adding additional cost to processing. Indeed, the larger the flake size, the more energy is required for this size-reduction process.

If instead, the process began with smaller flake sizes, and the purity of these materials could be improved through low-cost purification techniques, finer flake material would become particularly attractive for producing battery-grade graphite, and in fact more cost effective than starting with large-flake material. Deposits would not require significant proportions of large-flake graphite to be suitable for battery-grade graphite production; having larger proportions of finer flake material could in fact be an economic advantage.

This latter approach is the one that AGC has taken with its ROM concentrate. Dr. X pointed out that the flake sizes in AGC’s Coosa graphite deposit are fairly evenly distributed. Instead of trying to convert all of this material into battery-grade graphite, a simple screening filter could separate the ROM concentrate into -100 mesh / -150 µm flake, for battery applications, with the remaining +100 mesh / +150 µm particles for traditional higher-end applications. Further screening to produce +80 mesh / +180 µm, +50 mesh / +300 µm and +32 mesh / +500 µm fractions could be applied, to further differentiate the coarse-flake material for specific end-use applications.

Battery-grade graphite requires high purity for effective operation. Traditional purification processes include baking the graphite with sodium hydroxide, and the acid-leaching approach, widely used in China, to dissolve the impurities out of the graphite. In the acid-leaching process, the ROM concentrate is immersed in a mixture of hydrochloric and hydrofluoric acids. The hydrochloric acid removes oxides present as soluble chlorides, but does not react with the silica impurities that remain. Hydrofluoric acid is needed to remove the silica, in the form of soluble fluorosilicic acid. This results in large amounts of acid washings; in China these are typically not neutralized or treated but are often simply flushed into local waterways, causing damage and pollution to local aquifers and wells.

While chlorides are not noxious, the fluorides produced, at the concentrations resulting from this process, are particularly toxic. While the cost of the acids used in the acid-leach process are relatively cheap (USD 300-350 / t of graphite purified), such costs do not take into account the cost of the treatment of the waste streams that would be required of any processing plant located in a Western jurisdiction, which according to AGC may be as high as USD 5-7k / t of graphite treated, using reverse osmosis. Clearly then, the acid-leach process is unlikely to be a cost-effective approach for any environmentally responsible graphite purification plant.

Another method is a variation of the Acheson process (originally used to produce silicon carbide and synthetic graphite), which involves the placement of large quantities of ROM concentrate and coke into a pit in the ground, and running high electrical current through it via two electrodes. The high electrical resistance of the mixture causes it to heat up quickly, producing a chemical reaction that results in relatively pure graphite. Operating temperatures are in the range of 2,800-3,000 °C. The presence of fine-flaked material in such a process is potentially dangerous because of the risk of combustion. Thus the graphite has to be pelletized prior to purification, with these pellets being re-crushed afterwards, before being further processed. However, the smaller the starting flake size, the more difficult and expensive it is to pelletize the material.

Other methods include the use of fluidized-bed technology, where the graphite is continuously fed into a reaction chamber and subject to a stream of inert gas at high temperature, which causes the impurities to volatilize (convert into gaseous mists) and to be removed from the graphite, which eventually burns off (and partially settles) in the off-gas chamber / neutralization process. The removed impurities are captured via scrubbers and turned into benign products such as gypsum.

The aforementioned thermal process is typically run at 2,400-2,600 °C – higher than the volatilization temperature of the impurities found within the graphite. Such high temperatures require significant energy consumption and are thus relatively expensive.

Using a process that eliminates the need to pelletize, can be run at lower temperatures, and which avoids the pollution associated with acid leaching, is therefore essential to the cost-effective purification of finer-flake graphite.

Although EngineeringCo has access to lower-cost purification processes that are suitable for finer-flake materials, AGC had already turned to another North American company (which we’ll call PurificationCo here – again, their identity is confidential) to work on this challenge for their material. I have previously visited the facilities of PurificationCo, and had the opportunity to discuss the purification process developed for AGC, with senior staff at PurificationCo, after my visit to EngineeringCo.

According to PurificationCo, the purification process for AGC material is essentially a halogenation process, where chlorine gas is used to convert the impurities to volatile chlorides. With an appropriate system design, the chlorine gas can be recycled, resulting in a relatively inexpensive process. The process is the standard process for purification of titanium dioxide to make paint pigments, with production in 2015 of about 3 Mt of titanium dioxide. The process runs at significantly lower temperatures than those of fluidized-bed processing – resulting in significant energy cost savings.

The surface area of finer graphite flakes is higher than for coarse-flake material, and much higher than graphite pellets, and this is advantageous for a process of this type because it makes it easier for the chlorine to diffuse into the graphite particles, and to react with the impurities present.

Dr. X commented that the graphite purity obtained during the purification step must be higher than the minimum purification specification for the battery-grade graphite at 99.95 wt% C. This was confirmed by PurificationCo.

This is because there are a number of post-purification processing steps required to produce such materials. Despite efforts such as air purification and other measures, each processing step has the potential to cause minor contamination in the material, at the parts-per-million (ppm) level. For this reason, the purification process produces a 99.98%+ purity graphite, higher than the final purity specification of 99.95%+ for the finished products.

I asked Dr. X how graphite purity is actually measured. He said that a carefully measured sample of a given graphite product is placed into a low-profile ceramic crucible, loaded in a small muffle furnace, where it reacts with oxygen. This reaction produces carbon dioxide which evolves as a gas. What remains is a tiny quantity of ash which contains the non-carbon content of the graphite. This ash is then weighed and analyzed for content, to determine the purity of the original graphite.

Interestingly Dr. X commented that this process can be used to identify the source of the graphite being tested, since each deposit has a characteristic distribution of impurities. Image analysis of the ash under magnification, combined with computerized statistical analysis, allows EngineeringCo to compare a given sample with a large database of previous samples. This is a useful tool for verifying the source of materials, for buyers and end users. The company also uses atomic-absorption spectroscopy to check the elemental content of the ash, for the presence of some 19 specific elements that are particularly problematic for battery operation, if found at elevated levels in the graphite. Full-blown chemical analyses can also be conducted using standard ICP analysis.

After purification, the next process step for the AGC material is to micronize it – to reduce the average particle size to some value within the 10-25 µm range that is optimal for anodes (the specific value will depend on customer requirements). This is achieved using jet milling, where the graphite flakes are drawn into streams of high-velocity gases that cause the flakes to collide with each other and to break apart, reducing their size to the target value. The EngineeringCo folks showed me how the process is controlled by altering the duration, the gas pressure and velocity in the system, and the mass of flake material processed at any one time. Small test batches are always done before processing bulk materials, since different graphite sources can exhibit different properties during the jet-milling process. Note, micronization may also be performed before spheroidization – and, in some cases, may be required, depending on the graphite material.

Before and after milling, the particle-size distribution of the graphite powders needs to be measured, so that the appropriate set of parameters to achieve the target size value can be determined, and to ensure that the jet-milling process has been effective. This is determined using a device that passes a laser through the powder, mixed with water with the addition of a detergent. The laser light will scatter as a result of its interaction with the particles, and the distribution of particle sizes can thus be determined, via a histogram plot. Cumulative volumes are also plotted against particle diameter, on the same chart.

The cumulative volume allows the operator to determine the ‘D values’ for the sample – essentially the range of particles sizes, and an average value. The particles are modeled as equivalent spheres in the system. The D10 value corresponds to the diameter of the equivalent sphere, at which 10% of the sample consists of smaller particles. D50 is the median diameter – the diameter at which half the sample consists of smaller particles. D90 is the point at which 90% of the sample consists of smaller particles. The D10 and D90 values represent a particular range of diameter values, with the D50 value representing the average particle size. All three values are useful in specifying the characteristics of a given powder.

Once milling is complete, the resulting powder is then classified into precise particle-size-based fractions of the overall material.

The next step in the process is spheroidization – converting the graphite particles into rounded, potato-like shapes. The closer the particles are to being spherical in shape, the greater the performance of the anode in the battery. Why is this?

It has long been proven by mathematicians that the most effective way to randomly pack as many particles into a given volume as possible, is if the particles within that volume are perfect spheres. If arranged carefully, then in any given volume the maximum theoretical space that can be taken up by the spheres, is 74% of the overall volume. For randomly packed spheres, this maximum drops to just below 64%. The further away a particle is from being spherical in shape, the less efficient is the random packing of those particles into a given volume. Spiky or needle-shaped particles, for example, when packed randomly, have an efficiency of packing somewhere in the region of 30% – significantly less than that for spheres.

So why do we care? Because the anode density – the amount of actual graphite that can be packed into a given volume – directly affects the energy density of the battery. This is the amount of energy that can be stored in the battery, per unit volume of graphite (measured in Wh/l). The denser the graphite anode, the greater the energy density on a full cell level.

Dr. X commented that this is one reason why synthetic graphite for graphite anodes is so expensive, because as produced, the particles tend to be long and thin. Even the best efforts to produce spheroidized graphite from synthetic graphite result in lower capacities per unit of battery volume, because they are ultimately less spheroidal. The conversion of these needle-like shapes into spheroidal particles is more energy intensive than for natural-flake graphite, and with lower yields.

Synthetic graphite can also see lower graphitic carbon content than natural graphite. The latter affects that critical parameter of any battery anode, its reversible capacity.

As previously mentioned, the theoretical maximum reversible capacity for graphite anodes is 372 mAh / g. EngineeringCo has measured values of 367.21 mAh / g for anodes produced from AGC graphite. This compares to values of 290-330 mAh / g for typical synthetic graphite, and 340-350 mAh / g for the best anodes produced from premium-quality synthetic graphite.

Needle-like particles are also undesirable because they have a tendency to break into small pieces during processing, and if still present, those pieces may diffuse in the electrolyte during operation, to the cathode, potentially causing a short circuit. Even if this can be avoided, these pieces may absorb electrolyte, impairing the capacity of the battery because of first-cycle losses (chemical reactions at the interface of the anode during the first charge/ discharge cycle).

EngineeringCo uses a highly proprietary spheroidizing process for the AGC materials, causing the particles to smooth each other through collisions that eventually result in the desired spheroidal shape. Sharp edges present in the original flakes are broken off and are redeposited onto the surface of the spheroids. The subsequent yield of the process, according to Dr. X, is 75%+, compared to the typical yields of processes undertaken in China at 20-30%. The cost benefit of such yield improvements are self-evident, if they can be scaled.

Furthermore, the remaining 25% of non-spheroidized graphite, with a typical particle D50 of 3-10 µm, can be used as conductivity-enhancement additives in the battery cathodes. Dr. X commented that junior graphite companies generally have little appreciation for the opportunities relating to cathodes, in addition to battery anodes. Premium-performance conductivity-enhancement materials are typically worth in the region of USD 15-20k / t – significantly higher than the USD 12-14k / t that spheroidal graphite produced from natural graphite can command. These materials could also be used in the production of alkaline and zinc-air batteries, conductive paints and coatings, to name a few markets.

Ultimately the performance of the graphite, once produced, is related as previously stated, to its density in the anode. Tap density is frequently used to describe this parameter – calculated by mechanically tapping a graduated cylinder containing graphite material, until little further volume change is observed. EngineeringCo uses autotap machines to determine tap density, by recording the height of material in a container, and its mass.

Dr. X argues that a more useful parameter is the bulk density of the material, because when used to produce anodes, the graphite particles are free flowing, and are not tapped. The bulk density is the ratio of the sample mass to the volume that it occupies (including gaps between the particles), without being tapped. It is measured using a Scott volumeter. This uses a receptacle of known volume and mass, into which graphite is poured through a funnel that sits on a baffle assembly. As the graphite pours through the baffles, it fills the receptacle until it overflows. The powder is leveled off using a flat edge and then the cup is re-weighed, to determine the mass of graphite and thus the bulk density, since the volume is known.

The bulk density needs to be as high as possible because the battery anode is produced using a painting process, and is not pressed or otherwise ‘tapped’ – thus requiring particles to be as close to spherical as possible, as previously explained, for space-packing reasons. More on that process, later in this article.

Once spheroidized, the graphite particles need to be classified by size and then coated. There are a couple of important reasons for this. The first is to improve the safety of battery operation. As mentioned previously, if there are any sharp edges left at the surface of the graphite particles prior to anode formation, these may break off and diffuse to the cathode during operation, increasing the chances of a short circuit in the system at the cathode, leading to thermal runaway. ‘Smearing’ the particle surface during spheroidizing and then adding a coating reduces the probability of these sharp pieces breaking off the graphite particles in the anode, during operation.

The second reason is to reduce problems at the surface-electrolyte interface (SEI) in the anode, that result in first-cycle losses. During the first cycle in the battery, a foam layer can build up at the SEI which can reduce the reversible capacity of the battery during subsequent charge / discharge cycles. Again, the presence of small pieces of graphite can increase the thickness of this SEI layer and coating the particles helps to reduce it, by decreasing the Brunauer, Emmett, and Teller (BET) parameter for the particles. This is a measure of the effective surface area of the particles; the higher the BET surface area value, the greater the probability of sharp surfaces being present on the particles.

EngineeringCo uses a proprietary method for applying a 10 nm carbon-based coating on each of the particles, which is subsequently cured to polymerize the coating at the surface. The coating provides continuous coverage of each particle to reduce the BET surface area, while at the same time allowing the Li⁺ ions in the electrolyte to pass through small pores or channels, to contact the surface of the graphite particles in the anode. Larger molecules (such as the small pieces of graphite previously mentioned) are prevented from getting through. The ability to protect the surface of the anode without impeding the flow of Li⁺ ions is crucial for effective battery operation, and the proprietary coating allows this to happen.

The coating process is the final step in the production of the CSPG material, and the graphite is then ready to be used in the production of anodes for LIB testing.

All battery prototypes at EngineeringCo are individually produced, in either button (CR2016 or CR2032) or cylindrical (AA, 18650 or 32650) form factors, depending on the particular goals of the project. Putting together the batteries is undertaken in an argon glove box, because of the reactivity of the Li-ion electrolyte in the air. Dr. X indicated that in commercial facilities, the construction of batteries is undertaken in dry rooms which have a special atmosphere called ‘dry air’, which can be breathed by the workers in them, but which prevents the oxidation of the Li-ion electrolyte and other compounds used in battery construction.

For the cylindrical batteries, the anode, separator, and cathode components are wound together in a spiral, before being placed inside a cylinder. The anode is produced from a long strip of copper foil, typically 10 µm thick, which is coated on both sides with a paint of CSPG particles, each layer being approximately 45 µm thick. The cathode is produced from a long strip of aluminum foil, typically 20 µm thick, which is coated on both sides with a paint of one of several metal-oxide compounds, such as lithium cobalt oxide, lithium iron phosphate, lithium manganate, or lithium nickel manganese cobalt, depending on the battery configuration to be tested. These cathode layers are approximately 90 µn;m thick.

Mixed in with this cathode metal-oxide powder is approximately 8 wt% of the conductivity-enhancement additives previously mentioned, that is typically equal parts carbon black and graphite. Such additives are always included in the cathode formulations. Typically, synthetic graphite is used, though as Dr. X commented previously, there is an opportunity to use the natural graphite that remains after spheroidizing, in this additive. The additive is required to improve the conductivity of the cathode during operation, as well as to control the viscosity of the paint when it is being applied to the foil. The graphite here therefore has a different function that the graphite being used in the anode. The aluminum foil used in the commercial production of cathodes may also be coated with carbon.

In between the anode and cathode strips is a 20-25 µm thick separator strip, typically produced from an ultra-high-molecular-weight polypropylene or polyethylene film, which has a controlled level of porosity. This gives some ‘space’ for the electrolyte between the two electrodes. The overall thickness of the anode component is approximately 100 µm, whereas the cathode strip is typically 190-200 µm thick. The difference in thickness is a result of the different reversible capacities of the materials used in the anodes, with the best cathode materials having values that are less than half that for natural-graphite anodes. Therefore, the cathode thickness is approximately double that of the anode, to balance the electrochemistry of the system, during operation. The diagram included in the images below shows a schematic of the anode / cathode / separator arrangement inside the battery.

Once the spiral has been wound and placed in the cylinder, the electrolyte is added, and the cylinder is sealed via either crimping or laser welding. Button-shaped battery prototypes use disks instead of spirals inside the container, though the configuration is effectively the same as for the spiral systems. The batteries are then ready to undergo proprietary formation, followed by testing, which involves repeated charging and discharging of the batteries, to determine the first-cycle losses, reversible capacity, and any changes in characteristics over time.

By the time of my visit, EngineeringCo had previously processed over 10 kg of AGC graphite material into CSPG material, and produced at least 50 batteries from it. Multiple prototypes and tests are required to establish representative performance metrics for the batteries, and the graphite contained within them.

The visit to EngineeringCo was very enlightening and it was a great opportunity to see the operations used to produce CSPG materials from AGC’s graphite, and the process of testing and evaluating such materials in actual battery prototypes. My thanks go to EngineeringCo, Dr. X and his colleagues for hosting me, PurificationCo and to Alabama Graphite Corp. for the invitation to see these processes in action.

Disclosure: at the time of writing, Gareth Hatch is neither a shareholder of, nor a consultant to, Alabama Graphite Corp. (“AGC”). Neither he nor Technology Metals Research, LLC received compensation from AGC or from anyone else, in return for the writing of this article.

In October 2015 I paid a visit to the Coosa graphite project in the USA, being developed by Alabama Graphite Corp. (TSX.V:ALP, OTCQX:ABGPF) in Coosa County, Alabama.

Located in a past-producing region of the state known as the Alabama Graphite Belt, the Coosa project is approximately 50 miles south-southeast of Birmingham and 20 miles north of Montgomery. The project is also 30 miles northeast of the Bama Mine project, also owned by Alabama Graphite Corp (AGC).

20 miles to the northeast, AGC has its field office and core storage facility in Sylacauga, which I also had the chance to visit. Sylacauga is home to the world’s largest marble quarry, and the source of the pure, white marble used in the construction of many famous buildings and memorials in the USA, including the US Supreme Court building, the US Capitol rotunda and the Lincoln Memorial in Washington, DC.

I was hosted during my visit by Don Baxter, President & CEO of AGC, Rick Keevil, VP for Project Development and Jesse Edmondson, Project Geologist for Coosa and also Director of Community Relations.

Per the October 2015 NI 43-101 guided mineral-resource estimate for the Coosa deposit, at a 1% graphitic carbon (Cg) cut-off grade, 78.5 megatonnes (Mt) of the resource is at the Indicated level @ 2.39% Cg and 79.4 Mt is at the Inferred level @ 2.56% Cg. This results in an estimated 3.9 Mt of Cg present in the mineral resource at Coosa. The resource estimate was based on the results of 109 drill holes totaling 7,900 m (25,900 feet) and 9 trenches totaling 1,150 m (3,800 feet).

Graphite development companies typically report on the distribution of flakes sizes in their graphite deposits. Metallurgical results announced by the company in May 2015, and subsequently reported in the PEA report indicate that approximately 25-30% of the graphite present at Coosa is in the form of large flakes (+80 mesh or >180 μm). However, as we will see later in this article, AGC’s intended approach to production potentially negates the need for significant quantities of large-flake graphite to be present in the deposit, since the company’s plan is to process graphite across the range of flake sizes, into higher-value engineered graphite products.

You can see photographs taken during the visit in the galleries below (click on each image to enlarge it).

The name of the Coosa project has its roots in the local history of the area. Historically Coosa was a Native American province which included parts of present-day Alabama, Georgia, Tennessee, and South Carolina. This province gave its name to the Coosa River, which flows at the western boundary of Coosa County. The area is situated towards the southern end of the Appalachian mountain range, in the Northern Piedmont geological province.

AGC holds the mineral rights to a total of 17,000 ha (42,000 acres) of land at and around the Coosa project location. Mr. Baxter indicated that the surface rights for the Coosa Project are owned by a timber company, and are currently leased by AGC for exploration use. He commented that AGC has an excellent working relationship with this timber company and that they are supportive of the project’s continued development.

The host formation for the Coosa deposit consists primarily of schists, including quartz-muscovite-biotite-graphite schist, quartz-graphite schist, quartz-biotite-garnet schist and combinations of these. Schists are medium- to coarse-grained rocks, formed through the metamorphosis of shale or igneous rocks. The resulting foliation, or planes of weakness in the rock, makes it relatively straightforward to break up these materials for processing. Mr. Baxter commented that the quartz and other waste minerals that will result from processing these schists, could potentially be sold and used for a variety of end uses, including the production of roof shingles and the like.

Although the project location is rural, the Coosa project is well served by local roads, with interstate highway 65 less than 5 miles from the property. Coosa is close to other local infrastructure, with the nearest town just 5 minutes away from the site.

Mr. Keevil explained that the top 20-30 m (60-100 feet) of the graphite-bearing material at the Coosa deposit has been oxidized and weathered over time, resulting in a very soft rock that is easy to excavate and to process. This was confirmed during the site visit, with on-site sample materials easily crushable by hand. This weathered layer means that for a significant portion of the mine life, no drilling or blasting will be required to obtain the graphite ore; instead simple excavating equipment will be used in an open pit to get at the materials.

With one or two exceptions, junior-mining companies looking to develop graphite projects typically focus on the production of run-of-mine (ROM) concentrates, produced by beneficiating graphite ores using standard processes such as crushing, milling and flotation. ROM concentrates are typically sold directly to end-users in a number of sectors. Given the relatively low value of such materials, projects focused on ROM concentrates likely need to have high head grades in their graphite deposits, to reduce the costs of ROM concentrate production and to generate reasonable margins.

The path to greater revenues (and margins) for any future graphite producer lies in upgrading the ROM concentrate, preferably in-house, so that it can be used to produce the anodes for lithium-ion batteries (LIBs). Battery-grade graphite requires particularly high purity levels, typically greater than 99.9% Cg.

Mr. Baxter explained that the AGC business model is focused on the production of highly engineered graphite, mostly for the production of LIB anodes. Recent initiatives by Tesla Motors and others to produce large quantities of LIBs for electric vehicles and home energy storage, will require significant quantities of graphite to meet demand. In keeping with the ‘green’ credentials of such end users, such graphite will need to be produced in jurisdictions that mandate a significant degree of environmental protection, with respect to the methods used to produce engineered graphite products.

During battery operation, in order for the lithium ions in the LIB electrolyte to efficiently diffuse between graphite particles within the anodes, the particles need to be small, and this is achieved through micronization of the precursor graphite powders. Standard battery-grade graphite requires an average diameter of approximately 10-30 μm.

Such materials also need to be spheroidized – increasing the packing or ‘tap’ density of graphite particles by converting the naturally flat graphite flakes into potato-like shapes. The combination of high purity and tap density enhances the electrical conductivity of the graphite anodes, during use in the LIB.

Conventional wisdom for battery-grade graphite developers, has been to focus on graphite deposits that contain significant proportions of large (>150 μm) graphite flakes, because the purity of the graphite flakes tends to increase with flake size. However, given the additional energy costs required to micronize large flakes, the ideal precursor material would have small flake size, if it had sufficient purity levels (either as-is or through a cost-effective purification process) for the subsequent processing to be economically viable, and if it can be effectively spheroidized.

In addition to micronizing and spheroidizing high-purity graphite, battery-grade powders also need for the individual particles to be coated, typically using a non-graphitic carbon material, to reduce the specific surface area of the powder. Lowering the specific surface area increases the ability of the anode to operate efficiently in the battery in which it will operate, increasing the useful life of the battery. Just as important, it reduces the risk of a runaway chemical reaction, which could lead to a dangerous situation in usage.

Since Mr. Baxter joined the company in June 2015, AGC has transitioned its business model from that of a potential purveyor of ROM concentrates, to a potential producer of high-purity, engineered graphite. Per the Preliminary Economic Assessment (PEA) for the Coosa project, published in November 2015, AGC intends for 75% of its annual production of graphite to be in the form of coated spherical purified graphite (CSPG), for use in battery anodes, with the remaining 25% of production being sold as purified micronized graphite (PMG), for use in a variety of non-battery applications such as powder metallurgy, friction materials, and polymer, plastic and rubber composites.

Mr. Baxter indicated that the proportions of graphite going into each of the two products is related to the particle sizes that result from micronizing and spheroidizing the graphite flake, which has first been subject to a purification step. Particles with resulting sizes >10 μm are converted to CSPG via surfacing coating, and have typical Cg purities of 99.95%+. The remaining particles, with sizes <10 μm will be sold as PMG materials, and have typical Cg purities of 98%+.

The Coosa PEA assumes a 27-year mine life (mining 10% of the mineral resource estimate and focused only on the oxidized top layer of material), and that production at Coosa will start at 5,000 t / year for five years, rising to 15,000 t / year by year 7. It is further assumed that the capital costs associated with such an expansion, are funded from the free cash flow produced in the initial production period. At an 8% discount rate, this results in a pre-tax Net Present Value (NPV) of $444M or $320M post-tax (all $ in USD), and an Internal Rate of Return of 52.2% pre-tax (45.7% post-tax).

I asked Mr. Baxter how these numbers would look if the expansion did not take place (i.e. if the 5,000 t / year production rate was constant throughout the life of the mine). Such a scenario results in an NPV of $157M pre-tax ($120M post-tax) at an 8% discount rate and an IRR of 47.8% pre-tax (42.4% post-tax).

The PEA assumes that CSPG can be sold for $9,000 / t, with PMG fetching $2,000 / t. These prices are based on estimates from Benchmark Mineral Intelligence of current selling prices of $7,000-12,000 / t and $1,800-2,800 / t for CSPG and PMG products respectively.

The PEA also states an estimated operating cost over the 27-year mine life of $1,555 / t. This is a blended operating cost, covering the combined cost of production of CSPG and PMG. If accurate, these numbers would provide AGC with significant margins for its two product lines, particularly the CSPG material.

So on what basis does AGC believe that it can actually and economically produce these engineered graphite products? The company has been testing a number of processes for the purification, micronizing and spheroidizing of its graphite flake in recent months.

In September 2015, AGC announced that 99.99% Cg purities had been obtained across the full range of flake-size distributions. A conventional low-temperature thermal purification process, using chlorination, was applied by an unnamed metallurgical laboratory to graphite concentrates produced by SGS Mineral Services of Lakefield, Ontario. Recoveries of 90%+ following purification were obtained.

This announcement followed on the heels of the initiation of a pilot plant program at SGS, for the processing of a 200 t bulk sample into graphite concentrate. Mr. Edmondson said that the bulk sample came from a total of 10 pits, each providing approximately 20 t to the sample. The pits were evenly distributed across the Indicated mineral-resource area of the property, to represent the variations in grade, flake size and rock type typical to the deposit.

During my visit, Mr. Baxter indicated that tests of micronization and spheroidization processes for the purified Coosa graphite were underway. These processes were hinted at in the PEA report; a news release from the company issued in January 2016, detailed the results of downstream independent LIB tests using graphite anodes produced from Coosa CSPG materials.

The results announced in last month’s news release indicate that AGC’s micronizing, spheroidizing and coating processes were apparently successful. A tap density of 0.985 g / cm³ was achieved (anode production typically requires a minimum tap density of 0.9 g / cm³), along with a desirably low specific surface area, relative to the commercial LIBs tested.

A reversible capacity of 367.21 mAh/g and irreversible capacity loss of 5.09% were obtained for the AGC batteries, compared to 347.2 mAh/g and 6.06% respectively.

If these results can be replicated at the demo and subsequent commercial scales, AGC will have demonstrated the ability to effectively produce CSPG suitable for commercial-grade LIB graphite anodes.

During my visit to Alabama, I asked Mr. Baxter about a couple of news releases issued by AGC earlier in the year, concerning the apparent occurrence of ‘naturally occurring graphene’ at the Coosa project site. He said that samples from the Coosa site had been analyzed at the University of Alabama, and graphene with 2-10 layers had been observed. Analysis was also performed at Queens University in Kingston, Ontario, which apparently observed the graphene layers in samples obtained from the rougher flotation process applied to bulk samples of Coosa materials.

Mr. Baxter described these initial findings (announced prior to his taking the helm at AGC last year) as “interesting but somewhat academic” at this stage. The presence of multi-layer graphene, if confirmed, may indicate that the graphite present at Coosa may be more susceptible to delamination, which if the case, would present the possibility of the use of shearing during processing. However Mr. Baxter noted that AGC was firmly focused on the production of engineered graphite for battery and other applications, and not on graphene production. This was recently reiterated in AGC’s January 2016 Corporate Update, confirming that AGC has no intentions of getting into “the graphene business”.

Mr. Edmondson commented that because the Coosa project is located on private land, permitting for the project will rest at the state level, which should provide a relatively straightforward process when compared to mining projects on Federal or Crown land, elsewhere in North America. The company anticipates that the entire permitting process will require approximately six to eight months for completion. There is significant local and state-level support for the Coosa project, given the number of potential jobs that would be created from the project. The proximity to the Sylacauga marble mine means that there are significant numbers of skilled workers in the area; labor costs are relatively low in Alabama.

AGC is keen to stress its “Made in USA” credentials for a future Coosa mine; Mr. Baxter commented that the proximity of the project to current and future battery manufacturers in the USA, should give the company a key advantage in servicing such potential customers, over other projects located further afield. The company also highlights the Alabama connection on its Web site and presentations, tying in to the state’s own “Made in Alabama” campaign and the apparent advantages that this might have.

Commenting on the future mine design for Coosa, Mr. Baxter said that a goal will be for zero discharge of wastes from the mine. The site will incorporate a number of sedimentation ponds and dry-stack tailings, where waste products will be stored after thickening. All water used for processing will be recycled, with small amounts of ‘make-up’ water used if needed.

The weather in Alabama is such that winterizing of buildings on the future mine and processing site will not be required.

The initial processing mill will be located on-site at the Coosa project. The plant for purification and further processing of the mined graphite will be located approximately 20 miles from Coosa in Rockford, Alabama, to which there is direct access from the Coosa site along county roads. An existing natural-gas pipeline runs through Rockford. The proximity of this pipeline will be beneficial to the capital and operational expenditures, associated with the furnaces needed for the processing facility in Rockford.

After visiting the Coosa project site, talking with AGC management and reviewing the recent announcements from the company concerning its battery-grade pilot-plant work, I believe that AGC’s Coosa project is on a sound technical footing. The decision to go beyond the production of ROM graphite concentrate, in order to provide a ‘one-stop shop’ for its customers will serve the company well, if the price forecasts and actual operational costs are consistent with the PEA estimates. Combined with relatively modest initial production targets, AGC has a sensible and credible business model.

My thanks go to the AGC team for organizing the logistics of my visit, and to Don Baxter, Rick Keevil and Jesse Edmondson for hosting me during my time in Alabama.

Disclosure: at the time of writing, Gareth Hatch is neither a shareholder of, nor a consultant to, Alabama Graphite Corp (AGC). Neither he nor Technology Metals Research, LLC received compensation from AGC or from anyone else, in return for the writing of this article.

I recently updated the TMR Advanced Graphite Projects Index, to reflect two new and two updated mineral-resource estimates, announced since the last update. The effective date of the updates is September 22, 2015. The specifics:

• On March 17, 2015, Graphite One Resources Inc. (TSX.V:GPH) announced an updated NI 43-101-guided resource estimate for its Graphite Creek graphite project in the USA. According to the associated news release, 18.0 Mt is at the Indicated level @ 6.3% Cg and 154.4 Mt is at the Inferred level @ 5.7% Cg, each at a cut-off grade of 3% Cg;
• On June 17, 2015, Great Lakes Graphite Inc. (TSX.V:GLK) announced a maiden NI 43-101-guided resource estimate for its Lochaber graphite project in Canada. According to the associated news release, 4.1 Mt is at the Inferred level @ 4.0% Cg, at a cut-off grade of 2.5% Cg;
• On August 27, 2015, Talga Resources Ltd. (ASX:TLG) announced a maiden JORC-guided resource estimate for its Jalkunen graphite project in Sweden. According to the associated news release, 31.5 Mt is at the Inferred level @ 14.9% Cg, at a cut-off grade of 10% Cg; and
• On September 8, 2015, Kibaran Resources Limited (ASX:KNL) announced an updated JORC-guided resource estimate for its Meralani East graphite project in Tanzania. According to the associated news release, 7.4 Mt is at the Indicated level @ 6.7% Cg and 10.3 Mt is at the Inferred level @ 6.3% Cg, each at a cut-off grade of 5% Cg.

You can access the updated details via the Index page.

The Index currently consists of 36 graphite mineral resources, associated with 33 advanced graphite projects, 25 companies and located within 10 countries. Including the projects on the Index, TMR is currently monitoring a total of 331 graphite projects under development associated with 159 companies in 31 countries.

Disclosure: at the time of writing, Gareth Hatch holds no shares or stock options in any of the companies mentioned in this article, or in any publicly traded graphite company, nor is he doing paid consulting for any such company.

I recently updated the TMR Advanced Graphite Projects Index, to reflect three new and two updated mineral-resource estimates, announced since the last update. The effective date of the updates is January 15, 2015. The specifics:

• On October 17, 2014, Sovereign Metals Limited (ASX:SVM) announced a maiden JORC-guided resource estimate for its Duwi graphite project in Malawi. According to the associated news release, 35.2 Mt is at the Indicated level @ 7.2% Cg and 50.7 Mt is at the Inferred level @ 7.1% Cg, each at a cut-off grade of 5% Cg;
• On October 21, 2014, Triton Minerals Ltd. (ASX:TON) announced a maiden JORC-guided resource estimate for its Balama North Nicanda Hill graphite project in Mozambique. According to the associated news release, 328 Mt is at the Indicated level @ 11.0% Cg and 1,129.0 Mt is at the Inferred level @ 10.6% Cg, each at a cut-off grade of 0% Cg (i.e. no cut off);
• On November 17, 2014, Valence Industries Limited (ASX:VXL) announced an updated JORC-guided resource estimate for its Uley graphite project in Australia. According to the associated news release, 0.3 Mt is at the Measured level @ 17.92% Cg, 1.9 Mt is at the Indicated level @ 11.84% Cg, and 0.9 Mt is at the Inferred level @ 8.89% Cg, each at a cut-off grade of 3.5% Cg. In addition, the company reported a mineral resource of 0.2 Mt at the Indicated level for a stockpile of material at the Uley project, @ 6.23% Cg, with the same cut-off grade;
• On November 26, 2014, Magnis Resources Limited (ASX:MNS) announced a maiden JORC-guided resource estimate for its Nachu graphite project in Tanzania. According to the associated news release, 3.9 Mt is at the Measured level @ 5.58% Cg, 100.0 Mt is at the Indicated level @ 5.12% Cg, and 53.0 Mt is at the Inferred level @ 5.70% Cg, each at a cut-off grade of 3% Cg; and
• On December 15, 2014, Mason Graphite Inc. (TSX.V:LLG) announced an updated NI 43-101-guided resource estimate for its Lac Gueret graphite project in Canada. According to the associated news release, 19.1 Mt is at the Measured level @ 17.88% Cg, 46.6 Mt is at the Indicated level @ 16.90% Cg, and 17.7 Mt is at the Inferred level @ 17.24% Cg, each at a cut-off grade of 5% Cg.

You can access the updated details via the Index page.

The Index currently consists of 33 graphite mineral resources, associated with 30 advanced graphite projects, 24 companies and located within 10 countries. Including the projects on the Index, TMR is currently monitoring a total of 321 graphite projects under development associated with 151 companies in 30 countries.

Disclosure: at the time of writing, Gareth Hatch holds no shares or stock options in any of the companies mentioned in this article, or in any publicly traded graphite company, nor is he doing paid consulting for any such company.

I recently updated the TMR Advanced Graphite Projects Index, to reflect one new and two updated mineral-resource estimates, announced since the last update. The effective date of the updates is October 5, 2014. The specifics:

• On July 24, 2012, Castle Minerals Limited (ASX.CDT) announced a maiden JORC-compliant resource estimate for its Kambala graphite project in Ghana. According to the associated news release, 14.5 Mt is at the Inferred level @ 7.2% Cg, at a cut-off grade of 5% Cg.;
• On August 12, 2014, Kibaran Resources Limited (ASX:KNL) announced an updated JORC-compliant resource estimate for its Epanko graphite project in Tanzania. According to the associated news release, 12.8 Mt of the resource is at the Indicated level @ 10.0% Cg and 9.9 Mt is at the Inferred level @ 9.6% Cg (each at a cut-off grade of 8% Cg); and
• On August 14, 2014, Energizer Resources Inc. (TSX:EGZ) announced an updated NI 43-101-compliant resource estimate for its Molo graphite project in Madagascar. According to the associated news release, 23.6 Mt of the resource is at the Measured level @ 6.32% Cg, 76.8 Mt is at the Indicated level @ 6.25% Cg and 40.9 Mt is at the Inferred level @ 5.78% Cg (each at a cut-off grade of between 2-4% Cg).

You can access the updated details via the Index page.

The Index currently consists of 30 graphite mineral resources, associated with 27 advanced graphite projects, 22 companies and located within 9 countries. Including the projects on the Index, TMR is currently monitoring a total of 312 graphite projects under development associated with 142 companies in 29 countries.

Disclosure: at the time of writing, Gareth Hatch holds no shares or stock options in any of the companies mentioned in this article, or in any publicly traded graphite company, nor is he doing paid consulting for any such company.

Last month I paid a visit to the Miller graphite project in Canada, under development by Canada Carbon Inc. (TSX.V:CCB) in Grenville Township, Quebec. The Miller property was the home of a historical graphite mine in the latter half of the 19th century.

Grenville is situated 50 miles west of Montreal, approximately half way between that city and Ottawa. The journey from Montreal took about 75 minutes via Highway 50. Grenville is close to the town of Hawkesbury in Ontario, with the two sitting on opposite sides of the Ottawa River, which forms much of the boundary between the two provinces.

Generally I don’t visit a mineral project under development, until it has an associated mineral resource estimate that conforms to guidelines such as NI 43-101 or the JORC code. It’s the same criterion that I use for including projects on the TMR indices for rare earths and for graphite. A mineral resource estimate is a useful initial filter for discerning the evolution of technical knowledge associated with a given project. Miller does not have a mineral resource estimate yet; I had, however, heard about the unusual nature of the Miller project (which we’ll get into later) from a number of sources. I therefore decided to accept an invitation to come visit the property, to see for myself. Canada Carbon published a technical report on Miller in May 2014, which follows the NI 43-101 guidelines, in addition to other data associated with work on the project. This report did not include a mineral resource estimate.

I was hosted on my visit by Bruce Duncan, Executive Chairman and CEO of Canada Carbon. Also joining us were Steven Lauzier, the project geologist, and Rémi Charbonneau, a consulting geologist who is the Independent Qualified Person for the project.

The initial exploration work at the Miller property started in February 2013, with a ground survey to locate the original Miller Mine, and to confirm the presence of graphite veins and pods. Subsequent work consisted of additional ground and airborne prospecting work, identifying a series of anomalies via geophysical techniques such as small-loop frequency-domain electromagnetic (MaxMin), very-low frequency (VLF), induced polarization (IP) and versatile time-domain electromagnetic (VTEM) surveying. Significant anomalies of interest were then targeted for ground trenching, accompanied by core drilling.

The trenching work identified a number of graphite veins and pods throughout the property. The graphite can be found alone or associated with minerals such as wollastonite and pyroxene. It has also been found in disseminated form in marble and sulphide-bearing paragneiss, but the veins and pods are of primary interest because of their high grade and potential purity. Mr. Lauzier indicated that veins with grades of 40-80% carbon as graphite (Cg) and pods with grades of 10-15% Cg are common on the property.

Through the trenching work, the company identified three significant showings, designated VN1, VN2 and VN3, and which we visited in turn. The first of these, VN1, contains an irregular vein of semi-massive, coarse graphite, originally under 1-3 m of glacial till, along with pods of graphite mixed with wollastonite. The rocks here consist of banded paragneiss and marble units. The primary vein is exposed along a strike length of 12.8 m, with widths ranging from 10 cm to 1.7 m. Numerous secondary veins can be seen.

VN2 has a massive graphite vein up to 1.5 m thick, and numerous secondary veins and pods which follow the contact between the local marble and paragneiss rocks. Core drilling at this showing indicates that this contact is at least 39 m deep below the surface. VN3 is another massive graphite vein, some 2 m thick and 5 m long, hosted in unaltered marble. Six shallow cores were drilled at this site and the graphitic horizons were encountered below surface, confirming the initial event of the anomalies. You can see these showings in the images below.

Mr. Lauzier indicated that there are numerous additional graphite-wollastonite pods on the Miller property that have been exposed during trenching. The pods are pegmatitic in nature and generally occur in the contact zone between the paragneiss and marble. Numerous graphite veins have also been discovered as well. Mr. Lauzier commented that the graphite veins are likely the result of the transportation of carbon in hydrothermal fluids, which were channeled up through fractures in the rock over time. As the fluids cooled to 700-800 °C, the graphite was precipitated in large, highly crystalline flakes.

During my visit, on-ground grids for additional IP surveying were being prepared across the property.

So what is the big deal about this type of graphite? The formation of hydrothermal veins leads to the presence of very high-purity graphite and such occurrences are rare. The only current source in commercial quantities is the island of Sri Lanka. Once extracted, the graphite is relatively easy to process. The high degree of crystallinity in vein graphite (as a result of the way that it was formed), leads to thermal and electrical properties that are superior to the more typical natural-flake graphite, which forms from carbonaceous sedimentary deposits under heat and pressure. The most interesting and potentially lucrative applications for hydrothermal graphite materials, however, are in the nuclear industry.

So-called nuclear- or reactor-grade graphite is high-purity graphite that is used as a moderator material in thermal nuclear reactors that utilize uranium. Moderator materials are used to convert so-called fast neutrons into thermal neutrons during the fission process, which leads to a sustained (and controlled) chain reaction, and the liberation of significant quantities of energy. Reactor-grade graphite can also be used as a neutron reflector, which can be used to generate a chain reaction from a mass of fissile material that would normally not ‘go critical’ without the presence of the reactor material. In essence, it reduces the amount of uranium or other fissile material required, to sustain a chain reaction.

Because of the interaction of the graphite with neutrons during the nuclear process, it is vital that the material be free of impurities that will absorb neutrons. Boron is the most problematic impurity in this regard; reactor-grade graphite must have a boron, or equivalent-boron content (EBC), of less than 5 ppm. EBC is a measure of the collective effects that all impurities present have, on neutron absorption.

In June 2014, Canada Carbon announced the completion of purity testing on lump / vein graphite samples taken from the Miller property, indicating that a simple flotation process alone could produce graphite with purities of 99.8-99.9% total carbon (C(t)). With an additional simple thermal process, exceptional purities of 99.98-99.998% C(t) were achieved. Significantly, the EBC of the material after flotation concentration alone was 1-3 ppm, confirming that the material is nuclear-purity graphite, without needing hydrometallurgical treatment of any kind. Such material commands significant price premiums over more conventional natural graphite. Test results showed particularly low levels of sulfur in the graphite. The ease of upgrading via flotation would indicate that the impurities present are found at the surface of the graphite flakes, and not significantly intercalated or embedded in the material as is common with more conventional natural flake graphite. The company has published its assays on its website, so that calculated values such as EBC can be reviewed.

Miller is located on private land, whose owners entered into a surface-access agreement with Canada Carbon. Relations between the company and the land owners are apparently cordial; during the visit we met one of the owners, who is supervising the excavation of bulk sample materials from the site, on behalf of the company. Canada Carbon has permission to remove up to 480 t of materials from the property for processing in a pilot plant, to be built by SGS Canada Lakefield (SGS), and based on the aforementioned initial bench-scale flotation process, previously developed by SGS. The company is in the process of crushing and shipping the first 100 t of material from the site, and has until February 2015 to complete the rest of the sampling.

The property is well serviced logistically; In addition to Highway 50 and a power line which both cross the property, there is a rail line less than half a mile south of the highway and access to water via a river which also passes through the property.

The graphite veins and pods that are present at the Miller property make it highly prospective for the production of nuclear-grade graphite – but they also make it a real challenge to be able to produce a traditional mineral-resource estimate. Such estimates are typically derived from drilled samples taken across a project, with the mineral content found within the cores used to establish a 3D model of the geology of the deposit. This is fine in a deposit where the graphite or mineral of interest is disseminated spatially in the host rock; but when graphite occurs in highly concentrated veins and pods, drill results are likely to be ‘hit or miss’, with mostly ‘miss’.

This is one reason why the identification of graphite occurrences starts with electromagnetic and other geophysical surveying tools, followed by on-the-ground trenching; given the thickness of the initial veins and pods trenched, there should be little trouble in finding significant quantities of graphite on the project. Without a way to properly quantify that graphite however, within the wider project space, how does one move the project forward into a preliminary economic assessment or pre-feasibility study, which will comply with the requirements of NI 43-101? Just as important, how do potential future off-take partners develop a comfort level that the graphite will be there, in the years to come?

I put these questions to Mr. Duncan, who acknowledged the challenges right away. He commented that the unique nature of the deposit has already generated significant interested from end users, who are not only interested in the graphite for its potential nuclear applications, but also for other end uses where very high purity and / or crystallinity is an absolute requirement. He said that such end users are used to acquiring materials from Sri Lanka, where mining is conducting on a rolling basis; resources are identified and then put into a mining campaign with a one-to-two year horizon. As the known occurrences are depleted, new resources are identified by drilling and put into the queue for subsequent mining. Many airborne EM anomalies were found out over the Miller Property. An IP survey on anomaly E1 revealed many different conductive and chargeability anomalies. It appears that the Miller Property could contain sufficient newly discovered graphite occurrences to develop a model based on exploring and mining the discoveries as they are made, without developing a resource model for the property as a whole.

This approach does not necessarily lend itself well to traditional mine financing of course, but Mr. Duncan indicated confidence that the project could be bootstrapped into operation, with a combination of advances on future off-takes from strategic partners, and other non-traditional sources of financing, that do not necessarily require placements in the open market (and which would require greater detail in terms of mineral resource estimates and the like).

While SGS continues to process the initial 480 t of material from the Miller stockpile, Mr. Duncan said that the company will also continue with characterization and purity tests of the graphite material, provide samples for potential end users as well as advancing further exploration of the Miller property. Although he would not comment on capital expenditure estimates – due to regulatory compliance – the cost of mining graphite at the Miller property holds the potential to be comparatively low, versus a conventional open-pit graphite mine in a more remote location. Given the accessibility of the graphite veins, and their apparent thickness and shallow depth (and, in many instances, their location at surface), Canada Carbon’s extraction costs may be particularly low. If the thickness of the initial veins and pods trenched to date, is found elsewhere on the property, then significant quantities of graphite may be present.

Since my visit to the project, Canada Carbon has released additional test results that indicate that certain properties of the Miller lump / vein graphite match or even exceed those found in synthetic graphite. Both tap (bulk / unprocessed) and skeletal (actual) densities were shown to be close to that of synthetic graphite; the specific surface area and porosity levels of the Miller graphite were found to be significantly lower than for synthetic graphite, which is particularly desirable in the production of anodes for lithium-ion batteries. This combination of properties means that once commercially available, graphite produced from the Miller property may be able to command prices as high as $10,000-20,000 / tonne, based on recent cost estimates from the likes of Industrial Minerals and others for synthetic graphite.

The Miller property is clearly an unusual and possibly unique graphite project; and given the indications that lump / vein graphite sources in Sri Lanka are diminishing, a hydrothermal lump / vein deposit in North America would be highly attractive to numerous end users. The key challenge for the project will be to be able to put in place a financing structure that will allow the project to go into commercialization, without the benefit of establishing a minimum level of confidence in the size of the resource present, using the usual means of reporting. Nevertheless, if strategic and other partners can be persuaded to work with Canada Carbon on the basis of the excellent metallurgical results obtained to date, the project has a good chance of going into operation.

My thanks go to Mr. Duncan, Mr. Lauzier and Mr. Charbonneau for hosting my visit, and for numerous useful discussions.

Disclosure: at the time of writing, Gareth Hatch is neither a shareholder of, nor a consultant to, Canada Carbon Inc. He did not receive compensation from Canada Carbon or from anyone else, in return for the writing of this article.

I recently updated the TMR Advanced Graphite Projects Index, to reflect one new addition since the last update. The effective date of the latest edition is July 18, 2014. The specifics:

• On February 25, 2014, Buxton Resources Ltd. (ASX:BUX) announced a maiden JORC-compliant resource estimate for its Yalbra graphite project in Australia. According to the associated news release, 2.3 Mt of the resource is at the Inferred level @ 20.1% Cg, at a 0% Cg cut-off grade. The project is partially owned by Montezuma Mining Company Ltd (ASX:MZM).

You can access the updated details via the Index page.

The Index currently consists of 29 graphite mineral resources, associated with 26 advanced graphite projects, 21 companies and located in 8 countries. Including the projects on the Index, TMR is currently monitoring a total of 306 graphite projects under development associated with 138 companies in 27 countries.

Disclosure: at the time of writing, Gareth Hatch holds no shares or stock options in any of the companies mentioned in this article, or in any publicly traded rare-earth company, nor is he doing paid consulting for any such company.

I recently updated the TMR Advanced Graphite Projects Index, to reflect the addition of a mineral-resource estimate since the last update. The effective date of the updates is June 14, 2014. The specifics:

• On August 26, 2013, Monax Mining Limited (ASX:MOX) announced a maiden JORC-compliant resource estimate for its Wilclo South graphite deposit, part of the Waddikee Graphite Project in Australia. According to the associated news release, 6.8 Mt of the resource is at the Inferred level @ 8.8% Cg, at a 5% Cg cut-off grade. On May 21, 2014, Archer Exploration Limited (ASX:AXE) announced the purchase of the Waddikee project from Monax, including the Wilclo deposit.

You can access the updated details via the Index page.

The Index currently consists of 28 graphite mineral resources, associated with 25 advanced graphite projects, 19 companies and located within 8 countries. Including the projects on the Index, TMR is currently monitoring a total of 303 graphite projects under development associated with 137 companies in 27 countries.

Disclosure: at the time of writing, Gareth Hatch holds no shares or stock options in any of the companies mentioned in this article, or in any publicly traded graphite company, nor is he doing paid consulting for any such company.

I recently updated the TMR Advanced Graphite Projects Index, to reflect three new and two updated mineral-resource estimates, announced since the last update. The effective date of the updates is April 1, 2014. The specifics:

• A September 2012 report prepared for a subsidiary of StratMin Global Resources plc (AIM:STGR), details a JORC-compliant resource estimate for its Loharano graphite project in Madagascar. According to the report, 421.0 kt of the resource is at the Indicated level @ 5.2% Cg and 5.3 Mt is at the Inferred level @ 4.0% Cg (each at a 2% Cg cut-off grade);
• On July 16, 2013, Alabama Graphite Corp. (CNSX:ALP, OTC:ABGPF) announced a maiden NI 43-101-compliant resource estimate for its Coosa graphite project in the USA. According to the associated news release, 34.6 Mt of the resource is at Indicated level @ 2.60% Cg and 24.5 Mt is at the Inferred level @ 2.87% Cg (each at 2.0% Cg cut-off grade and with quantities converted here into metric tonnes from the originally stated US tons);
• On January 20, 2014, Lamboo Resources Limited (ASX:LMB) announced an updated JORC-compliant resource estimate for Target 1 of its McIntosh graphite project in Australia. According to the associated news release, 2.7 Mt of the resource is at the Indicated level @ 4.8% Cg and 4.5 Mt is at the Inferred level @ 4.7% Cg (each at a 2% Cg cut-off grade).
• On February 26, 2014, Triton Minerals Limited (ASX:TON) announced a maiden JORC-compliant resource estimate for the Cobra Plains zone of its Balama North graphite project in Mozambique. According to the associated news release, 2.7 Mt of the resource is at the Indicated level @ 4.8% Cg and 4.5 Mt is at the Inferred level @ 4.7% Cg (each at a 2% Cg cut-off grade; and
• On March 25, 2014, Syrah Resources Ltd. (ASX:SYR) announced an updated JORC-compliant resource estimate for its Balama East graphite project in Mozambique. According to the associated news release, 26.0 Mt of the resource is at the Measured level @ 16.5% Cg, 28.4 Mt is at the Indicated level @ 15.9% Cg and 160.0 Mt is at the Inferred level @ 16.0% Cg (each at a 13% Cg cut-off grade).

You can access the updated details via the Index page.

The Index currently consists of 27 graphite mineral resources, associated with 24 advanced graphite projects, 19 companies and located within 8 countries. Including the projects on the Index, TMR is currently monitoring a total of 296 graphite projects under development associated with 137 companies in 27 countries.

Disclosure: at the time of writing, Gareth Hatch holds no shares or stock options in any of the companies mentioned in this article, or in any publicly traded graphite company, nor is he doing paid consulting for any such company.

On February 26, 2014, Tesla Motors Inc. (NDQ:TSLA) announced details of its long-awaited “gigafactory”, an ambitious plan to build a facility to manufacture lithium-ion batteries in large-enough quantities to meet the needs of the 500,000 electric vehicles (EVs) that the company plans to produce in 2020. Tesla proposes to build this facility somewhere in the southwest United States, in reasonable proximity to its California-based vehicle assembly plant.

Tesla’s plans call for the creation of 35 GWh/year of production capacity for its third-generation Model E vehicle, implying an average 70 kWh of storage capacity per vehicle. The plan calls for an additional 15 GWh/year of production capacity, presumably to meet the needs of additional ventures with which Tesla founder and CEO Elon Musk is involved.

In addition to the significant quantities of lithium, cobalt and other metals that the batteries from this proposed facility will require, even greater quantities of graphite will be needed to produce the anodes that are used in these batteries.

It is obviously early days for the gigafactory initiative, and a number of important details have yet to emerge. There is certainly no guarantee that Tesla will actually move forward with the project, or that it might not morph into some other form. Nonetheless, it is important that the supply chain gets itself ready to participate.

Bloomberg picked up on the use of graphite in lithium-ion batteries in a March 14, 2014 article. Titled “Teslas in California Help Bring Dirty Rain to China“, Bloomberg linked the future Tesla facility to the significant pollution generated by China’s natural-graphite industry, which has “fouled air and water, damaged crops and raised health concerns“. Of particular concern is the use of acids by the Chinese industry to purify mined graphite so that it can be used in battery anodes.

Tesla’s battery supplier is Panasonic Corporation (TYO:6752), providing battery packs for the Tesla Model S vehicle that contain more than 7,100 individual 18650-model cells. It is unclear if Panasonic uses synthetic or natural graphite in these batteries, or how such materials are processed. Mr. Musk did use his Twitter account on the same day that the Bloomberg article was published, to describe the accusations as “[b]eyond ridiculous“.

Nonetheless, synthetic graphite is twice the cost of battery-grade natural-flake graphite, and is typically derived from petroleum coke, which relies on crude oil as its source. Tesla has a stated goal of reducing the unit cost of battery production by a minimum of 30% between now and the initial ramp-up of the Model E in 2017. Natural flake graphite stands to play a significant role in reducing the unit costs of battery production and in reducing the environmental footprint associated with production, if acid-based purification steps can be avoided.

The present flake-graphite market is dominated by China; aside from the issues of pollution, there is increasing evidence that the country’s flake-graphite resources are becoming depleted. Fortunately, there are a number of promising flake-graphite projects under development outside of China.

Producing battery-grade flake graphite
As with any natural resource, the quantity and grade of any given graphite deposit is important, but the type and distribution of the flake size, their purity and their amenability to processing dictate the quality of any given project.

The graphite ore is mined from the deposit and is subject to standard beneficiation processes, such as crushing, milling and flotation. The higher the initial head grade, the cheaper this process will generally be, all other things being equal. The resulting graphite concentrate, known as run-of-mine, or ROM concentrate, is typically sold directly to end-users in a number of sectors. Some junior mining companies are planning to upgrade a portion of that ROM concentrate internally for specific applications, such as the high-purity graphite used in the production of battery anodes.

Battery-grade graphite requires very high purity levels, typically >99.9% carbon-as-graphite (Cg). This material also needs to be spheroidized using careful processes that convert the flat graphite flakes into potato-like shapes, which pack much more efficiently into a given space. The high purity levels and the enhanced “tapping” density (to >0.9 kg/m³) are important for producing the high electrical conductivity that is required during anode operation.

Spheroidizing the graphite flakes also reduces their size, a process known as micronization. Standard battery-grade materials require an average diameter of approximately 10-30 μm, so in theory, feedstock materials with flake sizes greater than 30 μm (+400 mesh) could be used. However, starting purity levels tend to decrease with flake size, so flake material with an average diameter of 150 μm (+150 mesh) or greater is typically used. This is, of course, a double-edged sword, since the larger the flakes used, the more energy will be required to reduce the average size of the flakes to the desired 10-30 μm. Smaller particles are preferred, as this makes it easier for the lithium ions in the electrolyte to diffuse between graphite particles.

It should be noted that it is the tendency for purity levels to increase with flake size that is the real reason for the common ‘mantra’ that for battery-grade materials, the bigger the flake size, the better. In fact, the ideal precursor material would have small flake size if it had sufficient purity levels for the subsequent processing to be cost-effective.

One other important factor in the production of battery-grade materials is that of wastage. The standard spheroidizing and micronizing processes used in China waste up to 60-70% of the mass of total graphite flakes present during processing. Therefore, for every one tonne of spheroidal graphite produced in China, approximately three tonnes of feedstock materials might be required (though the waste materials can be used for other purposes).

The graphite may be purified before or after spheroidizing and micronizing, depending on the manufacturer. As mentioned earlier, the low-cost approach typically used in China is to leach the impurities from the graphite with acid, with the associated environmental concerns that that brings. Alternatively (and far more acceptable in Western jurisdictions), a thermal process can be applied. This typically involves the use of halogen gases to cause chemical reactions at high temperatures with the impurities, which covert the resulting compounds into gases too and eliminate them from the bulk graphite material. The higher the starting purity levels of the graphite after initial concentration at the mine site, the lower the cost will be for purification, and this can make a substantial difference when comparing concentrate feedstocks with different starting purity levels. TMR estimates that the cost difference in purifying a 95% Cg concentrate to >99.9% Cg, versus taking a 98% Cg concentrate to >99.9% Cg could be as much as $2-3,000/t of concentrate, using thermal processes.

The final step for preparing spheroidal graphite for anode production is the application of a coating to the particles to reduce their specific surface area. This is important, as reducing the specific surface area will increase the long-term capacity of the battery cell. Intercalation of the electrolyte solvent into the graphite and its reaction with it causes expansion of the graphite, with the potential for delamination and a lowering of the life expectancy.

During the first charge of the battery cell, an initial, irreversible chemical reaction occurs between the electrolyte and the graphite in the anode, resulting in the formation of a so-called surface electrolyte interphase (SEI) layer. Once formed, this layer reduces further decomposition of the electrolyte and actually protects the graphite anode from exfoliating.

With too large a specific surface area, the formation of the SEI layer can reduce the graphite’s ability to subsequently hold and to release the lithium ions in the electrolyte, thus reducing lifetime capacity for the battery. Coating the graphite prior to anode production reduces this effect and helps to maintain the maximum capacity possible for the battery. The coating can also reduce the chances of a runaway chemical reaction in the battery.

Such coatings are typically carbon- (not graphite-) based; uncoated spheroidal graphite typically sells for $3-4,000/metric tonne (t); coated spheroidal graphite sells for $9-10,000/t. The battery manufacturers typically apply these coatings, though some traders will buy uncoated materials and apply coatings before selling the finished product to the battery manufacturers.

How much battery-grade graphite will Tesla need?
Let’s return now to Tesla and its proposed gigafactory. We know that the 500,000 EVs that Tesla has planned for 2020 will require a total of 35 GWh of energy storage. We now need to determine how much graphite will be contained in those batteries.

The Department of Energy estimates that graphite constitutes approximately 16% by weight of a typical lithium-ion battery. The Panasonic spec sheet for its 18650 batteries indicates that each cell weighs 45 g, which means that the 7,104 cells in the 85 kWh battery pack for the 2013 Tesla Model S weigh approximately 320 kg. We can therefore estimate that these batteries use approximately 0.62 kg of graphite/kWh storage capacity – over 54 kg of graphite per 85 kWh vehicle. Note that the battery pack for a Tesla Model S is approximately four times the capacity of a “standard” battery EV.

This translates into approximately 21,600 t of graphite required for the 500,000 batteries (each with 70 kWh capacity) needed in 2020. However, we need to account for the relatively low (30%) yield of battery-grade graphite, using current processing methods. This means that some 72,050 t of graphite feedstock would actually be required for these batteries at those yields.

Using today’s prices for synthetic (~$20,000/t) and coated spheroidal natural graphite (~$10,000/t), all other things being equal, a switch from all-synthetic to all-natural-graphite anodes for those 500,000 EVs/year would save $216M in material costs, which translates to over $6/kWh, or over $430 per vehicle. Not a bad start.

On top of the batteries for its EVs, Tesla will need a further 9,250 t of graphite for the additional 15 GWh/year of non-EV capacity at the gigafactory, which in turn, would require 30,900 t of graphite feedstocks for the production of battery-grade materials, at current yield levels.

This is a total of just under 30,900 t of graphite in the batteries, requiring 102,900 t of feedstocks using current processing methods and yields. This is over 125% of the global natural flake graphite market, currently at 80-85,000 t/year!

Who can supply this battery-grade graphite?
Clearly, there is a potential significant imbalance between current levels of supply and the projected future demand for graphite, if the Tesla gigafactory comes on-stream.

TMR tracks graphite projects under development via the TMR Advanced Graphite Projects Index. The minimum requirement for a project’s inclusion on the Index is for it to have an NI 43-101- or JORC Code-compliant mineral resource estimate. At present, there are 23 such mineral resources on the Index associated with 20 graphite projects being developed by 16 different companies in 8 countries. Those resources are:

Projects on the TMR Advanced Graphite Projects Index (March 2014)

Project	Location	Owner	Ticker Symbol(s)	Resource
Albany	CAN	Zenyatta Ventures Ltd.	TSX.V:ZEN	NI 43-101
Balama East	MOZ	Syrah Resources Ltd.	ASX:SYR	JORC
Balama West	MOZ	Syrah Resources Ltd.	ASX:SYR	JORC
Bissett Creek	CAN	Northern Graphite Corporation	TSX.V:NGC, OTCBB:NGPHF	NI 43-101
Campoona	AUS	Archer Exploration Ltd.	ASX:AXE	JORC
Epanko	TZA	Kibaran Resources Limited	ASX:KNL	JORC
Geuman	KOR	Lamboo Resources Ltd.	ASX:LMB	JORC
Graphite Creek	USA	Graphite One Resources, Inc.	TSX.V:GPH, OTCQX:GPHOF	NI 43-101
Kearney	CAN	Ontario Graphite Co.	N/A	NI 43-101
Kookaburra Gully	AUS	Lincoln Minerals Limited	ASX:LML	JORC
Koppio	AUS	Lincoln Minerals Limited	ASX:LML	JORC
Kringel	SWE	Flinders Resources Ltd.	TSX.V:FDR	NI 43-101
Lac Guéret	CAN	Mason Graphite Corp	TSX.V:LLG	NI 43-101
Lac Knife	CAN	Focus Graphite Inc.	TSX.V:FMS, OTXQX:FCSMF, F:FKC	NI 43-101
McIntosh	AUS	Lamboo Resources Ltd.	ASX.LMB	JORC
Mousseau West	CAN	Graniz Mondal Inc.	TSX.V:GRA.H	NI 43-101
Molo	MDG	Energizer Resources Inc.	TSX:EGZ, OTCBB:ENZR	NI 43-101
Nunasvaara	SWE	Talga Resources Limited	ASX:TLG	JORC
Raitajärvi	SWE	Talga Resources Limited	ASX:TLG	JORC
Samcheok	KOR	Lamboo Resources Ltd.	ASX:LMB	JORC
Taehwa	KOR	Lamboo Resources Ltd.	ASX:LMB	JORC
Uley Main Road	AUS	Valence Industries Limited	ASX:VXL	JORC

Any number of these projects potentially has what it takes to become successful graphite mines, especially given the pressure that demand from lithium-ion batteries and other applications might put on the overall supply chain. However, to be in a position to be able to produce battery-grade graphite by 2017, when Tesla says that it will commence production ramp up of the Model E, only projects that are far enough along are likely to have the opportunity to capitalize on the demand from the gigafactory. One can argue as to how to define “far enough along,” but my suggested requirements would include:

• The project should have as a minimum, Demonstrated mineral resources (i.e. Measured + Indicated);
• The project should have a completed Feasibility Study *FS), or have one underway;
• A purification process for getting to battery-grade (>99.9% Cg) should have been defined and successfully tested (preferably without using the wet acid method); and
• A spheroidization and micronization process should have been defined and tested.

Additional considerations relate specifically to potential costs of production, and include:

• Initial grade of in-situ graphite (relates to beneficiation costs);
• The resulting purity levels of the resulting run-of-mine (ROM) concentrates after beneficiation (relates to subsequent purification costs);
• The proportion of smaller flake materials with higher purity levels after beneficiation (related to subsequent spheroidization and micronization costs and yield levels);
• Whether or not a coating process has been developed and tested for the spheroidal graphite; and
• Proximity of the project to the southwest US, proposed home of the Tesla gigafactory.

I acknowledge that there can be no ‘definitive’ list of criteria for assessing projects for this exercise, but nevertheless, the above are what I’ve chosen to use. I re-iterate that I am looking here only at the potential ability of graphite projects to service the needs of the Tesla gigafactory within the announced time frame for its development. There are plenty of other future opportunities for companies and projects that might not quite be ready for the gigafactory.

Applying the initial set of criteria to the projects on the TMR Index results in the following three companies (in alphabetical order) and their projects:

• Focus Graphite Inc. with the Lac Knife project in Quebec, Canada;
• Northern Graphite Corp. with the Bissett Creek project in Ontario, Canada; and
• Syrah Resources Ltd. with the Balama project in Mozambique.

It should be noted that additional companies may be developing high-purity, spheroidized and micronized battery-grade graphite, but to my knowledge, these are the only three that have discussed such developments and their achievements in the public domain, and which meet the other primary criteria.

Focus Graphite Inc.
Focus announced the completion of a Preliminary Economic Assessment (PEA) in October 2012 on its Lac Knife project in Quebec, Canada. In November 2013, the company updated the economics for the PEA, which put the capex requirement for going into production at $126M (including a $24M contingency). It also announced commencement of a definitive FS for Lac Knife, which is slated for completion by late spring or early summer this year.

Lac Knife has total Demonstrated mineral resources of 9.6 Mt @ an average 14.8% Cg. Focus plans to produce 44,300 t/year of graphite from the future mine, with a mine life of 20 years. Metallurgical work to date indicates that the ROM concentrate will have a purity level of >96.6% Cg and will cost a total of $458/t to produce.

The flake graphite in the Lac Knife ROM concentrate is distributed as follows:

The >98% Cg purity levels of the Lac Knife flake above 75 μm (constituting almost 80% of the content) is particularly high. The company recently indicated that this is a result of most of the impurities being found at the surface of the flakes, instead of being “ingrained” in the layers.

In November 2013, Focus announced that it was working on the production of spheroidal graphite from Lac Knife concentrates and the development of purification processes for producing battery-grade graphite. During this month’s PDAC Convention in Toronto, Focus showed samples of 99.95% Cg battery-grade, spheroidal graphite. Company management has subsequently indicated that coatings for this battery-grade material are currently being tested, the results of which should be announced in the near future.

In an industry first, Focus announced a significant off-take agreement in December 2013 with a Chinese industrial conglomerate for up to 40,000 t/year of its concentrates. A clarification earlier this month indicated that this agreement calls for a minimum purchase of 20,000 t/year by this Chinese group.

Northern Graphite Corp.
Northern announced the completion of a definitive FS in July 2012 on its Bissett Creek project in Ontario, Canada. In August 2013, the company received final approval for the project and was granted a mining lease, allowing it to begin construction subject to financing. In September 2013, the company updated the economics for the FS, which put the capex requirement for producing 20,800 t/year, with a mine life of 28 years, at $101.6M (including a $9.3M contingency). Operating costs were estimated at $795/t ROM concentrate.

In October 2013, Northern announced the completion of an “Expansion Case” PEA for the Bissett Creek project, which would see an increase in the production rate to 33,183 t, an initial capex of 146.8M and reduced operating costs of $695/t.

Bissett Creek has Probable mineral reserves of 28.3 Mt @ 2.1% Cg. Total Demonstrated mineral resources are an estimated 69.8 Mt @ an average 1.7% Cg. Metallurgical work to date indicates that the ROM concentrate will have a purity level of >96% Cg.

The flake graphite in the Bissett Creek ROM concentrate is distributed as follows:

In October 2012, Northern announced that it had successfully produced spheroidal graphite from Bissett Creek concentrates, with up to 70% yields when starting with so-called large (180-300 μm or -50 / +80 mesh) flake. In September 2013, the company announced the development of a proprietary method for the purification of concentrates and spheroidized graphite to 99.95% Cg. The company claims that the cost of this purification process will be less than $1,000/t. Company management indicates that this is a “low-temperature thermal process” that uses no acids, in which a mixture of gases, tailored to the impurities and mineralogy of the Bissett Creek deposit, is used.

In November 2013, Northern announced that it had partnered with Coulometrics to develop coatings for their spheroidal graphite, and earlier this month, the company announced the completion and successful testing of this work.

Syrah Resources Ltd.
Syrah announced the completion of a Scoping Study (SS) for its Balama West deposit in June 2013, one of a number of endeavors associated with its Balama project. However, because the study was based on an Inferred mineral resource only, the company was required to clarify that the SS did not demonstrate economic viability. I have been unable to find many more details or numbers in an announcement on the SS itself. Balama West was subsequently upgraded, with reported total Demonstrated mineral resources of 13.6Mt @ 19.8% Cg.

A statement in December 2013 indicated that the company was in the process of undertaking an FS to be completed by Q1 2014.

In January 2014, Syrah announced that it had purified ROM concentrate to >99.9% Cg using a “chemical wash” containing acids. Earlier this month, the company announced that it had produced spheroidal graphite with an average diameter of 4.7 μm, from a 100 μm feedstock. It is unclear as to why the graphite was micronized to below the standard 10-30 μm range typically used for battery anodes.

The flake graphite in Balama East ROM concentrate is distributed as follows [per the same announcement made earlier this month]:

It should be noted that the published flake size ranges are for Balama East (which does not have Demonstrated mineral resources), as opposed to the Balama West deposit.

In March 2014, Syrah announced the completion of a Memorandum of Understanding (MOU) with a subsidiary of Chinalco Group of China for an off-take of 80-100,000 t of graphite over an unspecified time period. The MOU required the two parties to negotiate a binding off-take agreement within three months of execution.

Discussion
From their public announcements, it is clear that these three companies are well on their way to achieving the technical milestones required for the production of battery-grade graphite.

In terms of other parameters, however, it may be a little early to determine if Syrah Resources will be able to provide such materials in time for the launch of the proposed Tesla gigafactory. The lack of a detailed, published SS summary or other quantitative analysis makes it difficult to evaluate the applicability of the Balama project to the gigafactory at this time. Completing a binding off-take agreement with the Chinalco subsidiary could go some way to assuaging such uncertainty; however, the larger issue probably relates to the location of the deposit in Mozambique – a long way from southwest United States. This distance puts Balama at a disadvantage in terms of transportation costs when compared to the other two projects, and potential access to infrastructure.

In terms of technical progress, the results announced by Northern Graphite to date indicate that it has a product that is ready to go for the battery market, with similar definitive results expected from Focus Graphite in the very near future. Based on the Bissett Creek Expansion Case PEA and the Lac Knife PEA (and subsequent updates), Focus appears to have significantly lower operating costs to produce its ROM concentrate, and the resulting concentrate has higher Cg purity levels across the various flake-size ranges.

The projects of both of these companies are located in Canada, which presents relatively inexpensive transportation costs for getting materials to the southwest United States.

It is always hard to compare ‘apples to apples’ when it comes to graphite project flake size, as each company has its own mesh size ranges that it uses to report. However, it appears that the Lac Knife ROM concentrate has a significantly higher proportion of flake, at higher purity levels after beneficiation than that for Bissett Creek. Northern states that the cost to get to high-purity battery grade with its proprietary process is less than $1,000/t; how much less will determine the overall costs required to get from the lower purity levels in the ROM concentrate to 99.9% Cg. Starting at levels above 98% Cg, as Lac Knife does, is a distinct advantage.

The completion of a definitive FS for Northern’s project means that the costs of production of ROM concentrate that result from the study have a higher degree of certainty at this point than those detailed in the Lac Knife PEA (and subsequent updates) for Focus Graphite. Relying on the Expansion Case PEA lowers the production-cost estimates for Bissett Creek, but decreases the accuracy of those numbers compared to the original FS.

It remains to be seen if there will be any increase in anticipated product costs in the forthcoming Lac Knife FS. The costs would have to increase by more than 50%, however, to reach those estimated in the Bissett Creek Expansion Case PEA. The Lac Knife cost advantage is likely a result of the significantly higher grade to be found at Lac Knife (14.8% Cg for Demonstrated resources vs. 1.7% Cg at Bissett Creek), and the proposed larger annual production rate, which naturally gives economies of scale. One might question why the estimated cost differential is not actually higher, given the distinct baseline differences, but it likely indicates that the cost of physical comminution (crushing and grinding) of the graphite ore is a relatively small fraction of the overall mining and processing costs.

Finally, there can be no mine without the financing to construct and to operate the mine. While Northern is no doubt negotiating with third-parties on future off-take agreements and other arrangements, the fact that Focus was the first company in the sector to complete such an agreement, and for such a substantial proportion of its planned output, is significant.

Based on the above criteria, I believe that both Northern and Focus have the potential to take advantage of the Tesla gigafactory, if it comes to fruition. Given the volumes of material required, it is entirely possible that both could service the supply chain requirements. I believe, however, that Focus may well stand to gain greater benefit from the opportunity that the gigafactory presents. Its lower ROM concentrate operating costs, likely lower battery-grade purification costs and the fact that it has already secured a significant off-take agreement (making it that much easier to finance the eventual construction of the mine) are key factors.

I wish both companies well, and I make one last observation. Even if the Tesla gigafactory does not come to pass, there will undoubtedly be opportunities for these and other graphite companies to service the needs of the wider EV market in the years to come. Doing so does not need to come at the expense of the environment either, as appears to be the case in the Chinese graphite sector.

Vehicles ‘fueled’ by electricity, especially electricity generated via renewable means, need to be built using as sustainable and environmentally-friendly a supply chain as possible. In the case of batteries for EVs and the graphite required to make them, natural-flake sources are clearly the way to go.

Disclosure: at the time of writing, Gareth Hatch is neither a shareholder of, nor a consultant to any of the companies mentioned in this article.