PEA finds proposed graphite mine viable

According to a Preliminary Economic Assessment on the proposed Graphite One graphite mine near Teller, the project was deemed economically viable with a net present value after taxes at $616 million.
The assumed profitability led Graphite One leadership to visit Nome and Teller to present their Preliminary Economic Assessment findings in community meetings.
A meeting in Brevig Mission was planned but bad weather hampered travel and the meeting was canceled.
The financial results are mostly of interest to far-flung investors looking to invest in a profitable enterprise.
Currently, Graphite One Resources’ stock is traded as a penny stock at CD $0.08 per share on the Canadian stock market.
Graphite One Resources is based in Vancouver, Canada.
For people closer to the project, a different currency is of interest: the environmental impact of a graphite mine near Imuruk Basin, the “breadbasket” for Teller and Brevig, an important subsistence area and also the potential of jobs for an area starved for employment opportunities.
On Feb. 10, Graphite One representatives ended their week of planned meetings in Teller and Brevig in Nome with presentation of the preliminary economic assessment.
The PEA is one of the first steps to evaluate if a project is economically viable and if it will go forward, explained Graphite One Executive Chairman Doug Smith. It is a document prepared by an independent consultant that estimates the quantity and quality of resources. The PEA is used by the company to present to investors and to get more investors on board to raise money to finance the project.
According to Graphite One officials, they need another $25 million for the next four to five years to get though further studies and into permitting and construction phases. More studies are to follow before decisions are made whether to go forward with the project, Smith said. Next comes a pre-feasibility study, then a feasibility study before permitting can begin. “We look at a production decision four to five years from now.” Smith said.
The project at current assumptions:
The inferred and indicated resources are 46 million tons of resource with 7 percent of graphite in the ground. Smith said that the assumption is that there are four million tons of resource in the ground, that contain 1 million ton of graphite.
Full production would be reached in the sixth year of the estimated 40-year project. Then, the company estimates to produce 55,350 metric tons of coated spherical graphite per year.
The current plan is use open pit mining techniques. A mill would be built near the mine to extract a concentrate out of the dirt that would be 95 percent pure graphitic carbon. This concentrate then would be trucked to Nome and shipped for further processing to a plant to create 99.95 percent pure graphite, which is needed for lithium-ion batteries. Infrastructure needed would include surface mining facilities, the on-site process plant near the mine, site roads, power generation, tailings ponds, a 22-mile long access road from the mine to the Nome-Teller Highway, a water treatment facility, sewage treatment facilities, storage facilities, a camp with administrative offices and communication towers. In terms of jobs, Smith said there need to be 269 people at the plant and the mine. This includes 14 management positions, 160 mine employees at the mine, and 15 managers and 80 workers at the onsite plant.
Smith said further studies will include a social community study, how many skilled workers there are and how to tackle a work force development program here in the region.
Where the product manufacturing plant would be built is still up in the air. “The cost of electricity is the driver in that decision,” Smith said. In Washington, for example, the cost is four cents per kilowatt hour.
To that end, Graphite One Resources and the Alaska Industrial Development and Export Authority, AIDEA for short, have last week signed a Memorandum of Understanding to “explore opportunities to collaborate on facilities siting, funding options, economic impacts, community engagement and project permitting.” This may result in the decision to build the plant in Alaska.
According to a press release, Graphite One has commenced preliminary discussions with State of Alaska officials from the Department of Commerce, Community and Economic Development, AIDEA and the Alaska Department of Natural Resources to begin evaluating potential sites, within Alaska but away from the Graphite Creek property, at which facilities might be developed for further processing of Graphite Creek graphite. Criteria relevant to deciding on the location of such facilities in Alaska include power cost and supply, availability of industrial zoned land, proximity to tidewater and port facilities, and infrastructure that allows easy access for the work force. The MOU also addresses work force development, state agency collaboration, permitting and AIDEA infrastructure funding. According to the release, AIDEA’s purpose is to promote, develop, and advance the general prosperity and economic welfare of the people of Alaska. “One of the ways AIDEA fulfills this purpose is by supporting development of natural resources in Alaska. AIDEA has the statutory authority to finance, develop and own and operate facilities and improvements, including roads intended for use in connection with the extraction, production, and transportation of minerals and materials,” the release reads.
For this year, Graphite One plans to continue baseline sampling, do desktop environmental and archeology studies and form a subsistence advisory committee – funding pending. In the field, this summer, they will conduct mapping of the project area, drill some more, continue hydrological studies, environmental baseline studies and conduct wetland surveys for access roads.
The total cost at this point to build the mine would be $363 million.
The end product to be sold would be coated spherical graphite to make anodes of lithium-ion batteries used in lap top computers and cell phones but the idea is to cater to the electrical car market for car batteries and a product called purified graphite powder that can be used in alkaline batteries.