Bass heads straight for Madagascan Graphite Dec 14, Paydirt...

Bass heads straight for Madagascan Graphite
Dec 14, Paydirt Magazine

Former Tasmanian miner Bass Metals has entered the graphite outfit with producing outfit Stratmin Global Resources.
Bass 25% interest in Lohorani mine comes as Stratmin ventured beyond the realms of AIM exchange to garner support for its graphite operations in Madagascar.

Australian graphite companies have managed to woo ASX investors however peers in London are struggling to extract any real value from the market. The lack of graphite activity on AIM means there are no parameters for graphite investors to consider, Stratmin CEO Brett Boynton told Paydirt.

"We looked at a dual listing in Australia because there is a lack of following for graphite in London," Boynton said.

"We are the only listed graphite company in London and it's hard to find investors, there is some retail interest and general investors but we are trying to build a more considered investment base and immediately we are finding a reasonably sophisticated register at the top end in Australia."

For $4.3 million Bass can claim a quarter (with an option to increase to 35%, subject to additional funding conditions) of the Lohorano natural graphite mine, 100km from Madagascar primary shipping port Tamatave.

The Lohorano plant was successfully modified and optimized in mid 2015, meaning commercial operations are now running 24hrs a day, six days a week. However there remains further improvement to be made.

The goal of optimization process was to replicate pilot phase operations where 94% purity flake graphite was produced at a sustainable rate of 6-8000 tpa.

"We have produced volume and grade and now we have to demonstrate consistent production of volume and grade together," Boynton said.

Bedding down Lohorano operations, where mining of soft clay type rock means less energy demands and minimal degradation in flake through processing and producing cash flow are also part of Stratmins plan to expand its graphite business.

"The next stage is a 12.000 tpa operation which will come 12 months on from pulling the trigger on funding, with 2017 being the time when we will be looking at operations of 20.000 tpa graphite.", Boynton said.

Next project on line for Stratmin is the 12.000 tpa Mahefadok mine. With the expertise and knowledge gained from Lohorano, Boynton said Stratmin was well positioned to tackle Mahefadok.

But perhaps the biggest enhancement made in recent times has been alignment with private Indian-based graphite miner Tirupati Carbons & Chrmicals Group.

Tirupati, a noted local graphite producer, is aiming to expand beyond local borders and has acquired the 10 year Vatamoina project, 20km from Lohorano.

A 12.000 tpa mine and processing facility will be jointly funded by Tirupati and Stratmin, with the former bringing highly valuable graphite expertise and the latter providing in country knowledge to the JV.

An estimated $US 4 million will be required to build Vatamoina, with a similar amount needed to bring Mahefadok to fruition.

It is planned that Tirupati and StratMin operations will be centralised, with reporting made to Tirupati's Shishir Poddar who has over 20 years experience in the graphite industry.

"We won't be large producers but we need to have a plan of where our product is going and Tirupati has been instrumental, technically and commercially, having made sure that we are introduced to the right people," Boynton said.

Currently, Tirupati is locked in to take all StratMins sub 94% carbon-in-graphite finished product.

Boynton said StratMin would look to extend its off-take arrangements with Tirupati, however, diversifying revenue streams with other customers was also on the cards.

Stratmin's projects are not large in scale but there remains exploration upside.

"We haven't drilled anything out but we will on the back of cash flow. However, we know we have the quality of flake and flake size distribution. We have de-risked our development which puts us ahead of some of our competitors, Boynton said. The approach taken by some others (graphite hopefuls) has been on scale and some might get a reality check when it comes to proving the operation to get funding," Boynton said.

"There is lack of technical skill in the graphite market and we've had to go out and get that skill from a private Indian company. Other companies and industry will benefit from further investment in the graphite sector for sure."

It remains to be seen how much room there is in the market for the throng of graphite players emerging in Africa, but it is fair to say with a producing asset and off-take secured, Stratmin is ahead of the pack.

Despite a lack of domestic energy generation proving a sticking point for some investors, the graphite, gold, base metals, exotic and peculiar stones may compel people to look at Madagascar as a fertile investment destination.