Graphite One wins US$37.5 million grant, shares rally

VANCOUVER – Graphite One Resources Inc. (TSXV: GPH, GPHOF-OTCQX) said Monday its Alaskan subsidiary has been awarded a US$37.5 million Department of Defense (DoD) grant.

The DoD grant to Graphite One follows the designation of graphite as one of the battery metals deemed under the Defense Production Act (DPA) to be “essential to the national defense.’’ At present, the U.S. is 100% import-dependent for graphite, with China being the world’s leading producer.

“The DPA funding allows [nxtlink id="269117"]Graphite One[/nxtlink] to accelerate its feasibility study covering its flagship Graphite Creek project, located 50 kilometres north of Nome, Alaska,” the company said in a press release.

“Graphite Creek was recently confirmed by the U.S. Geological Survey to be the country’s largest known graphite resource, and among the largest in the world,” the company said.

Graphite One shares advanced on the news, rising 18.2% or 25 cents to $1.62, The shares are currently trading in a 52-week range of  $1.97 and 93 cents.

Graphite One aims to become a vertically integrated American supplier, capable of mining graphite from its Graphite Creek Property. In keeping with that goal, the company has announced a parallel strategy to simultaneously develop a commercial scale battery anode materials manufacturing facility in Washington State and the Graphite Creek Mine.

The aim is to emerge as an integrated business operation producing lithium-ion battery grade materials and other graphite products for the U.S. domestic market on a commercial scale using primarily natural graphite from Alaska.

On average over its life, the manufacturing facility would produce 75,00 tonnes per year of products, including 49,000 tonnes annually of anode materials, 7,400 tonnes of purified graphite products and 18,000 tonnes of unpurified graphite products.

“Manufacturing would begin with purchased materials until Alaska production is available,’’ the company said in a press release.

A pre-feasibility study for Graphite Creek envisages an operational life of 26 years, (a mine life of 23 years) producing 51,813 tonnes of graphite concentrate annually.

The initial capital cost, including a US$170 million contingency is pegged at $1.24 billion. The study forsees an average production price of US$7,301 per tonnes.

According to an updated resource estimate, the project is now estimated to host a measured and indicated resource of 32.5 million tonnes of 5.25% Cg (graphitic carbon).

The mine is planned as a conventional open pit operation, using drilling, blasting, loading and hauling. Over its 23-year life, the mine is expected to produce 22.4 million tonnes of ore with an average grade of 5.6% Cg, at a 2.2:1 strip ratio.

Peak production is expected to be approximately 11,000 tonnes per day.

Graphite is the anode material in a lithium-ion battery and is the single largest component by weight. There are no substitutes, and almost all of it comes from China So, if electric vehicle manufacturers like Tesla Motors Ltd. [TSLA-NASDAQ] and Volkswagon succeed in meeting just a fraction of their widely publicized sales targets, more graphite mines will be needed to support the required lithium-ion battery production.

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