With the ASX awash with graphite hopefuls but very few producers, this week’s announcement by MRL Corporation (ASX: MRF) that it is just months away from churning out the material of the moment caught the eye of industry watchers.
And not only is MRL about to start mining, but it will be one of the highest-grade graphite producers in the world.
MRL revealed it was entering the final phase of preparations for the start of high-grade graphite production at its Aluketiya project in Sri Lanka, with the civil works underway for the installation of headframes.
This ensures MRL is on track to start production from early next calendar year.
MRL’s vein graphite boasts spectacular grades of up to 93 per cent total graphitic carbon. This means the waste-to-ore ratio is low and the mined product requires very little processing. These factors reduce both capital and operating costs.
Graphite of this grade and quality currently sells for around US$1750 (A$2400) a tonne.
The grade of the MRL vein graphite is three to four times greater than that contained in typical flake and jumbo flake graphite projects around the world, highlighting the immense commercial potential of MRL’s graphite.
MRL’s graphite has also been found to be highly suitable for producing premium-priced graphene. Tests conducted by the University of Adelaide found the quality of the prepared graphene from MRL’s graphite was outstanding and comparable with the quality of graphene prepared by synthetic routes.
They showed that MRL’s graphite has very high crystalline carbon content not observed in any other previously tested graphite materials.
As MRL makes the final preparations for the start of production at Aluketiya, it is also awaiting final environmental approval for its second project, Pandeniya.
This will pave the way for the issue of a full Industrial Mining Licence, with Pandeniya scheduled for first production early in 2016.
Aluketiya and Pandeniya are both typical Sri Lankan graphite projects which will be mined using shafts and airleg miners.
MRL aims to establish up to 20 such mines producing a total of 5000 tonnes a year of high-grade graphite over the next production.
MRL Managing Director Craig McGuckin said the Company would be producing some of the highest-grade graphite in the world by early next year.
"Half of the graphite mined in the world has a grade of less than 6 per cent,” Mr McGuckin said. “Our graphite grades are more than 90 per cent.
“We will be mining graphite from 25m below the surface, using low-cost airleg mining methods to selectively mine the best grades.
”Each shaft costs about $200,000 to rehabilitate and bring back into production and there is virtually no above-ground processing cost.
“We are confident that this strategy will see MRL become one of the highest-grade graphite producers in the world by early 2016.
”We will also have a strong growth profile, with about 20 mines earmarked for production over the next two years or so.”
Broker Far East Capital says “historical records and economic assessments show sound profits are possible from long life small scale mining in the first instance, offering excellent returns on minimal capital outlays”.
“MRL is the most recent, genuine graphene stock to emerge. It can use the one-step electrochemical exfoliation production method to produce high quality, low cost graphene.
“MRL sits in contrast with (fellow graphite company) Talga Resources due to its extremely high grade ore, with ROM grades of 90-99% compared to Talga’s expected grade of around 25%.
“The benefits of this super grade are compounded by the yield to graphene which has been demonstrated to be 50-80%, whereas Talga has released figures of 2-10%.
“Put simply, MRF has to move much less ore to achieve sizeable quantities of graphene. This minimises both capital expenditure outlays and operating costs.”
Far East said the market had already re-rated Talga, which has a market capitalisation of $53 million, in recognition of its exciting potential. But MRL, which is capitalised at just $14 million, has not yet seen its share price appreciate in the same way.
“It is time that it did so,” the broker said. “Both companies have an exciting future but the spread between their market capitalisations is currently too great.”
