Understanding graphite demand, page-18

@tuts in reference to the tag in the other thread, I will see how I am going on Monday but certainly will have a read and post later on. Quick summary - not enough drilling done here for this interim JORC IMO to provide any form of road to mining, as more drilling is required here to firm up a Measured and Indicated Resource (i.e. the quick summary is Section 3 below). Finally, the word finally releasing an initial JORC is an understatement here given how long things have taken here, so hopefully it is good. I haven't read Anns here in a while, or my memory is shot, but had a quick read of a few to formulate some comments below.

1. Battery types and graphite demand - recap why graphite plays are interesting
Just as a refresher, you might recall I created an Understanding Graphite thread a while ago here hence why I am posting in it again, and since I last posted here I have come to the view that IMO the main EV battery going forward for at least the next 10 years to 15 years will be NCM 8:1:1 or NCA 8:1:1.

Why is that important for yourselves, well it means a continued role for graphite definately in EVs, i.e. obviously graphite main use is in other applications like steel, given graphite is in the anode of EVs, and as a general rule of thumb you need 1kg of graphite for each Kwh of installed battery capacity. Some estimates how this translates to demand is in a post further up in this thread. The relevant graph on battery types is in this embedded post - Post #: 44500594 - but for yourselves the key one to look at is the line item SSB in the graph embedded in this post as these batteries don't have graphite, but they are not significant going forward btw, around battery types IMO. Why am I talking batteries - well they need high end graphite is the point, and this does provide prospective mines with high quality resources another market target of focus.

So below is another nice little graph on graphite needs, and that means you probably need a few new graphite plays to meet that demand, given the share of synthetic graphite to spherical graphite ratio, and in a general sense, is likely to be a 50/50 share (and spherical graphite requires your good quality natural graphite flakes which is what you hope you have here) - noting of course I would also be expecting significant growth in other graphite applications, i.e. the traditional uses, such as in steel making, so the graph is not all encompassing btw, an obvious point:



Graphite for EVs is going to have to be good quality, and furthermore obviously graphite itself is heavily used in steel btw, which from recollection remains its principal use, but the EV market is one in particular where good quality graphite deposits are hard to come by (hence why synthetic graphite is starting to increase).

2. Focus Minerals
In the other thread lots of comments made around Focus Minerals. To be frank, I had a look at this deposit some time ago, and my own view was a bit like here with MLS management- they could achieve more with more focused management, so the name itself to me is an 'irony' too me. My specific views on Focus Minerals were in this post from eons ago (in the middle of this post) - Post #: 34565510:

Having said this, and to put some paameters around your JORC answer and how I have looked at it, in the link in the embedded post above, this is Focus Minerals JORC equivalent:



From this link - http://www.focusgraphite.com/lac-knife -, it would suggest that the resource above would be sufficient for "a concentrator production line rate of 44,300 tonnes of concentrate annually at an average mill feed rate of 323,670 tonnes per year of Mineral Reserves over a 25-year mine life."

The study essentially works IMO on the premise IMO that the majority of the Measured and Indicated Resource finds its way to the proven and probable category and is mineable commercially. My calcs: 323,670 * 25 = 8.1mt of the resource. 8.1/(0.4+9.6) = 81% of Measured and Indicated Resource is mined commercially - what ends up in Proven and Probable. This Table is also in the above link and confirms my thinking:


Assuming a grade of 15.13% Cg, what they are really saying is they need 7.3 tonnes of ore to produce saleable sypherical grade graphite product - the lower teh grade the more ore required is the point and hence more opex cost involved. Anyway, providing the information to assess the upcoming JORC.

By way of reference, in a post above dated October 2019 in this thread, with that table duplicated below, I give some estimates on EV demand. The 44,300 tonnes of annual product assumed in the PFS here for Focus, which I presume is graphite flake btw, equates to about 600,000 - 900,000 EVs btw on a 50/50 split, so that gives you a guide as to how many graphite mines are required if EV takeup happens, before we talk increase in demand in its own traditional used applications, noting the main use for graphite is in refactory applications, steel making etc etc, with EVs an emerging market, so can see shortfalls in this product going forward, which opens up opportunities for good graphite plays.



And why Focus Minerals itself have been slow in moving the project along is difficult to ascertain, because a PFS/DFS is just that, it shows viability or not, but at the end of the day the documents are irrelevant if they do not translate to Offtakes and finance. My current view is the takeup of EVs has been slower than expected to date for the period 2018-2020, and current mines have been able to deal with graphite demand, but it is what happens going forward that is the key - certainly if gigawatt capacity for EVs reaches 2000 GWh in 2030 as forecast, up from about 300 GWh today- well that will translate to significant demand across the EV minerals required, including graphite itself. Also with the current Chinese stimulus packages, probably that will also provide added impetus for the graphite industry IMO, but where natural graphite flake of good quality is in shortfall, well you might just look at synthetic graphite (hence the substitution issue herein as well). It is what happens in growth in high end markets that I think will be important to MLS (and Focus) is my point, noting obviously you both are separate companies.

3. MLS JORC
Lots of waffle above, to get to the point.

Fundamentally, the key for MLS is to identify sufficient Measured and Indicated Resource, because you can only do feasibility studies (i.e. PFS/DFS) on only that resource. If you don't have that Measured and Indicated resource, then more infill drilling is required to do, and the best you can do is maybe a Scoping Study. You cannot mine an Inferred Resource is my point, and to be frank, I don't think enough drilling has happened here to be able to appropriately identify a Measured and Indicated Resource, so suspect the bulk of the resource will be in the Inferred Category IMO IMO IMO.

From recollection less than 20 drills have gone down, and from recollection they haven't gone too deep as well, meaning there is a lot of holes that are 'open at depth'. I suspect, the JORC here will be in the Inferred bucket and if the results are good, which I suspect they will be fine, further exploration would be required to hit the appropriate levels for a JORC estimation IMO. To tell the truth, with drilling starting back in late 2018, or scheduled to be done back then???, from recollection surprised its taken almost two years in these circumstances of not many drill holes to arrve at an interim JORC.

This pic below provides the basis of how the Measured and Indicated Resource moves to the Proven and Probable Category that underpins feasibility studies, and what it means of teh bulk of your resource is in the Inferred category.



The second thing to look out for is grade. You would be hoping for high graphitic carbon content (GCC) of probably 8%- 10% needed here minimum as China has enough of the low quality stuff btw. If the JORC comes at this or above then can get excited. If get that, shows the resource is thereand optimisim can grow, so becomes a question of studies etc. The historical data around the area suggests GCC is greater than 10%, especially looking at Focus, and a number of the assays I read a while ago are promising. Hopefully on that front you do as well as your neighbour. I talked about this aspect, importance of grade, some time ago too herein this post if interested, and what grade you are hoping for here in much greater detail than this paragraph: Post #: 34546638

The 3rd element to look at in the commentary to the JORC is comments such as open at depth and width etc (which I suspect will be said because further drilling IMO is definately required here for reasons stated above, given in typically getting a Measured and Indicated resource your drill spacings are about 30 metres to 50 metres apart, depending on what you are drilling for. If I get my head together, I will try to come to terms around the extent of resource required to achieve a level entry graphite mine, but looking at Focus is a start IMO.

All IMO IMO IMO, and hope this helps you looking at those results on Monday.

Can't believe the SP this is trading at btw, but slowness in drilling, and obviously the drill bit decides one's fate at the end of the day, doesn't help, albeit some of the drill results at Lac here were quite good. So I would have thought they would have done the interim JORC with the plan for go forward drilling already done, and done last year btw.

All IMO IMO