North of 60 Mining News - The mining newspaper for Alaska and Canada's North

Will Alaska be home to a "gigamine" that fills explosive future graphite demand expected to be driven by Tesla Motors' lithium-ion battery Gigafactory and the larger market for battery-powered vehicles and devices?

Graphite One Resources hopes the answer is yes.

In early September Tesla announced that Nevada would be the home of the Gigafactory, a massive facility that aims to produce enough lithium ion batteries annually to power 500,000 electric vehicles. For perspective, only about 242,000 pure electric and plug-in hybrid electric vehicles were produced worldwide in 2013.

With this 10-million-square-foot facility, scheduled to begin production in 2017, Tesla hopes to boost the availability of lithium-ion batteries, an important requirement to achieving the innovative company's vision of accelerating the world's transition to electric cars, and drive down the cost of manufacturing the batteries, which will translate to more affordable vehicles for the masses.

"The Gigafactory is an important step in advancing the cause of sustainable transportation and will enable the mass production of compelling electric vehicles for decades to come. Together with Panasonic and other partners, we look forward to realizing the full potential of this project," said Tesla Motors Chairman and CEO Elon Musk.

While lithium gets top billing in the battery of choice for electric vehicles, there is 10-30 times more graphite than lithium in these power cells.

Experts estimate that when the Gigafactory reaches full capacity, expected by 2020, it will need the equivalent of 100,000 metric tons of mined flake graphite every year.

Roughly 51,000 metric tons of natural graphite was consumed in the United States in 2013, according to numbers published by the United States Geological Survey. Roughly half of which came from China; Mexico, Canada and Brazil round out the other major sources of graphite in recent years.

Tesla's consumption does not take into account the output of other automobile manufacturers that are expanding their EV and HEV lines; nor the plethora of other electrical products that rely on lithium-ion batteries for their operation.

"Clearly, there is a potential significant imbalance between current levels of supply and the projected future demand for graphite, if the Tesla Gigafactory comes on-stream," said Gareth Hatch, co-founder of Technology Metals Research.

With one facility set to require nearly twice this entire domestic use, a number of companies with graphite deposits in North America are bustling to position their projects to meet the anticipated explosive demand for this variety of carbon.

Graphite One believes the quantity and quality of graphite found at its project in western Alaska is on track to meet the needs of the battery powered vehicle industry and the growing demands of the graphite sector in the United States at large.

"The Graphite Creek Property hosts the largest known, high-grade, large flake graphite deposit in the United States and North America, and we look forward to continuing to develop marketable graphite products to meet the global graphite demand, which is growing rapidly," said Graphite One President Anthony Houston.

Proceed robustly

Situated roughly 40 miles (65 kilometers) north of Nome, Graphite Creek has long been suspected to host between 6 million and 20 million tons of crystalline-flake graphite. This assumption was based on a 100-meter-thick graphite-rich layer that outcrops to the surface for some three miles (five kilometers).

In 2012 and 2013, Graphite One drilled 28 widely spaced holes across this stretch of outcrop, culminating in an inferred resource of 186.9 million metric tons averaging 5.5 percent (10.35 million metric tons) graphite, using a cut-off grade of 3 percent.

This deposit also has near-surface higher grade regions. By increasing the cut-off to 7.0 percent graphitic carbon, an inferred resource of 37.7 million metric tons averaging 9.2 percent (3.47 million metric tons) graphite has been outlined at the project.

Following the publication of this resource, TRU Group Inc. - a consultant specializing in lithium, rare earths, graphite and other technology materials - laid out some options for developing Graphite Creek.

TRU has a graphite-graphene team with expertise along the entire supply chain, including environmentally sound and low-cost processing of natural graphite. One of its primary objectives for Graphite Creek is to match the resource to downstream applications.

Taking into account quality and size of the graphite drilled, the consultant suggested a number of downstream products that could be manufactured from Graphite Creek:

Uncoated spherical graphite for use in lithium batteries;

Jumbo flake graphite that can be sold to the refractory industry; and

Expanded graphite, exfoliated and micronized, for use in alkaline batteries.

TRU Group advised Graphite One to proceed "robustly with detailed geological evaluation, attendant test work and the engineering, technical and business studies" at its western Alaska graphite deposit.

"We are pleased to have this report completed by the TRU Group who are known for their industry-leading expertise and roster of experts. We look forward to progressing the Graphite Creek deposit to its full potential," Huston said.

Upgrading the resource

With drilling over the past two years proving that Graphite Creek indeed hosts a thick slab of graphite rich rock and growing demand for this product on the horizon, Graphite One is focused on outlining a project it can put into production as soon as possible.

To accomplish this objective, Graphite One is investing roughly C$4 million in a drill program aimed at upgrading a portion of the deposit's massive inferred resource to the higher confidence measured and indicated category. This will allow for the completion of a preliminary economic assessment, a key step in outlining a project for permitting.

"We are anticipating another campaign where we'll continue to develop our existing resource ahead of our PEA with our current drill program," said Huston.

One of the advantages of this deposit is that the majority of the highest grade graphite drilled in 2012 was encountered at the top of the deposit.

"What differentiates us from our peers is all of our high grades sit right at surface," Huston said.

Near-surface, high-grade intercepts include:

•12GC002 cut 14.3 meters of 10.1 percent graphite starting at a depth of 26.7 meters;

•12GC004 cut 17.6 meters of 9.36 percent graphite starting at a depth of 20.4 meters;

•12GCH003 cut 17.1 meters of 11.07 percent graphite starting at a depth of 3.9 meters;

•12GCH005 cut 54.9 meters of 10 percent graphite starting at a depth of 6.1 meters; and

•12GCH006 cut 31.7 meters of 10.1 percent graphite starting at a depth of 12.2 meters

The roughly 30 holes slated for this year is focusing on a portion of the deposit that has particularly high concentrations of graphite near the surface.

With an eye on jumping into the graphite market as early as possible, Graphite One has entered into a memorandum of understanding with the Alaska Department of Natural Resources, for engagement with the state's large mine permitting team.

"As we move towards our PEA (preliminary economic assessment) and BFS (bankable feasibility study), this is an integral part of the process as we strive to keep our aggressive timeline towards development," Huston commented on the engagement with DNR.

JDS Energy and Mining Inc. is working on high-level engineering and logistics studies for the Graphite Creek project. Results of the studies will be part of a PEA for Graphite Creek due to be published in the second quarter of 2015.

Huston believes the publication of this scoping level study that lays out the details of developing a mine at Graphite Creek will be a watershed moment for the company and the enormous graphite deposit in western Alaska.

"Over the next 12 months there are going to be a lot of changes at Graphite One, which are changes of moving the asset to the next level," Huston told Mining News.

Spherical graphite

Not all graphite makes a suitable ingredient for lithium-ion batteries. The anodes of these electricity storage cells need a higher form of the carbon known as spherical graphite. This requires that mined graphite be purified to essentially remove 100 percent of other materials and then that the naturally occurring flakes be turned into spheres, which increase the conductivity by increasing the surface area.

"Battery-grade graphite requires very high purity levels, typically (greater than) 99.9 percent carbon-as-graphite. This material also needs to be spheroidized using careful processes that convert the flat graphite flakes into potato-like shapes, which pack much more efficiently into a given space," explained Hatch of Technology Metals Research.

Much of the spherical graphite produced today comes from synthetic graphite, which is produced by superheating powdered petroleum coke, a by-product of oil refining.

Currently, synthetic graphite has beaten out the natural form in lithium-ion batteries due to its consistency and greater than 99.9 percent purity.

Synthetic graphite, however, is significantly more expensive to produce than mining and refining its naturally occurring counterpart. And, many believe that mining graphite is more environmentally sound than making it from petroleum coke.

"Vehicles 'fueled' by electricity, especially electricity generated via renewable means, need to be built using as sustainable and environmentally-friendly a supply chain as possible. In the case of batteries for EVs and the graphite required to make them, natural-flake sources are clearly the way to go," said Hatch.

With the goal of producing a product that can compete with the synthetic graphite market and meets the needs of potential end users, metallurgy has been a key focus of Graphite One.

"We are going to be metallurgical work right to bankable feasibility study; and we will be doing it with end-users as well," Huston explained.

In April, the company reported that metallurgical tests on samples from Graphite Creek have returned grades topping 99.9 percent carbon. SGS Canada, which completed the testing, achieved the nearly pure graphite in a two-step process of leaching a flotation concentrate containing 92 percent carbon.

Graphite One's 2014 field program includes the collection of mini-bulk samples from the surface and drill core, which can be used to continue the development and simplification of a process to produce graphite of the purity required for lithium-ion batteries.

"Achieving ultra-high purity carbon results is essential in the emerging graphite market." Huston said. "With accelerated global interest in graphite deposits and with Graphite Creek being the U.S.'s only advanced graphite deposit, we will continue to seek strategic partners, including graphite end-users."

N.A. graphite field

Despite it attributes, Graphite Creek has competition in being the graphite supplier of choice for Tesla.

"We are meeting with many graphite companies these days, both natural and synthetic," Kurt Kelty, the director of battery technology for Tesla Motors, told Mining News in mid-September.

The electric car maker, however, is not ready to divulge details about its search for suitable supplies of the 30,000-40,000 metric tons of spherical graphite experts estimate will be needed each year when the Gigafactory is running at full capacity.

It would take roughly 100,000-140,000 metric tons of natural flake graphite to make the beaded graphite used in these batteries.

Tesla, which has fostered the image of a Made in America, sustainable producer of electric vehicles is tasked with sourcing environmentally responsible materials for the all-important batteries. For this reason, Musk has already indicated that the graphite will sourced from North America.

Besides Graphite One, at least three other companies - Focus Graphite, Northern Graphite and Mason Graphite - have North American projects that could help supply the Gigafactory and the growing list of other graphite consumers.

Of these, Hatch believes Focus and Northern are best-positioned to meet the initial needs of the proposed Gigafactory.

Focus Graphite Inc. is advancing Lac Knife, a graphite project in Quebec with 9.6 million metric tons of measured and indicated resources averaging 14.77 percent graphitic carbon. A PEA published in November of last year envisions a mine that produces 44,200 metric tons of graphite per year.

Somewhere between 20,000 and 40,000 metric tons of this graphite is committed to an offtake agreement with a group from China.

"On December 19, 2013, Focus Graphite made graphite mining history by securing a 10-year offtake agreement with a Chinese industrial conglomerate for the purchase of up to 40,000 (metric tons) per year of Lac Knife's concentrate production," said Focus President and Chief Operating Officer Don Baxter. "Markets will understand this agreement introduces a new level of stability to our Lac Knife Project just as China announces a halt to graphite production in Shandong Province, effectively putting 20 percent of China's flake graphite production on hold."

Focus completed a feasibility study in August, making it one of the most advanced graphite projects in North America and a potential supplier of about 20 percent of the graphite needed at Tesla's coming battery factory.

Northern Graphite Corp. is studying the potential to develop a similar-size operation, in terms of graphite production, at its Bissett Creek project in Ontario.

In 2012, Northern Graphite published a feasibility study that evaluated a mine that would produce some 20,800 metric tons of graphite per year. The growing demand has prompted the company to study the economics of a mine about twice this size.

In June, Northern Graphite produced a PEA that shows positive economics for an expanded operation that would produce some 44,200 metric tons of graphite per year.

Referring to a list of the world's top graphite projects that includes Graphite Creek, Hatch said, "Any number of these projects potentially has what it takes to become successful graphite mines, especially given the pressure that demand from lithium-ion batteries and other applications might put on the overall supply chain."

Graphite One has its sights on developing its Alaska project into the first one graphite mine on United States soil.

"We intend to be the first graphite project to be in production in the U.S.," Huston said.

Author Bio

Shane Lasley, Publisher

Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.

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