The UK-listed mining company has spent over a year tweaking the technology it uses to process ore from its Magagascan mine and has now achieved purities of over 94% C on a consistent basis, allowing it to unlock premium sales prices from its offtake partner and focus on ramping up production.
StratMin Global Resources Plc has managed to produce graphite with an overall grade of 94.3% C from its Loharano graphite project in Madagascar – an achievement which managing director, Manoli Yannaghas, admits has been "a long time coming".
The UK-based miner revealed that it achieved the >94% grade consistently over an eight-day run rate, following a series of "performance improvements" to its processing plant, including the installation of new milling equipment in March this year.
StratMin, which restarted plant operations 14 months ago, said it increased the purity of its material without significantly reducing the number of large flakes in the final product, leaving more than 50% in the valuable jumbo flake category.
The announcement comes after nearly two years under the stewardship of Yannaghas, a former financial consultant, who took over the company in July 2013, tasked with making good StratMin’s promises to turn the past-producing Loharano mine into a viable new source of flake graphite.
As the only graphite miner listed on the UK’s AIM market, StratMin has faced intense scrutiny over its progress targets, many of which it has failed to meet by self-imposed deadlines over the last two years.
"We’re late and the market has punished us for that," Yannaghas told IM. "In June 2013, [the management] was talking about [a production rate of] 1,000 tpm (…) and now here we are in May 2015 with volumes in the 200s."
With the achievement of 94% C purity – the benchmark grade required in order to command premium prices from its undisclosed offtake partner – Yannaghas says that StratMin is now leading the pack of junior graphite companies by some margin.
"This puts us well ahead of the competition," he said. "It’s been hard getting to this point as it will be hard for everybody. Getting into production is the easy part."
StratMin is selling material at market prices, which currently stand at over $1,000/tonne for larger flakes, to its offtaker. Yannagas says that these yield a comfortable profit for its medium and large flake material, which comprises around 60% of Loharano’s output.
The company spent approximately $1.6m on its plant, according to Yannaghas, which is a hybrid of Chinese technology leftover from the mine’s former operation and bolt-ons from South Africa, the UK and Germany.
Yannaghas admits that the company has probably reached near peak purity using its existing technology and is now working to ramp up production to maximum capacity of 350 tpm. "Once we’re at that stage, we will add a second plant with capacity of around 1,000 tpm," he said.
He said StratMin is now "pushing hell for leather" for positive cash flow and expects to nudge into profit by late summer.
StratMin’s share price rose by 15% on the London Stock Exchange today following the news, reaching a peak of $0.55/share ($0.87/share*) in early morning trading before levelling out at just below £0.54/share.
