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

Graphite One Inc. Sept. 9 announced it has secured the funding to finalize a prefeasibility study for its Graphite Creek project in western Alaska.

Taiga Mining Company Inc., an Alaska-based company that is a major Graphite One shareholder, has agreed to loan Graphite One US$4.8 million for the advanced engineering and economic study for developing a graphite mine and processing facility.

"In our current challenging capital markets, a commitment of US$4.8 million – which is expected to fund us through completion of our Graphite Creek pre-feasibility study – is a strong vote of confidence," said Graphite One CEO Anthony Huston. "It reflects the critical need for new domestic U.S. graphite supply in all its forms, as recognized by the fact the U.S. government includes graphite on its critical minerals list."

According to Mineral Commodity Summaries 2019, an annual report published by the U.S. Geological Survey, America is 100 percent import-dependent for its natural graphite supply. China was the largest supplier of the 52,000 metric tons of graphite imported during 2018, followed by Mexico, Canada and Brazil.

This complete reliance on foreign sources, coupled with the growing demand for graphite in the lithium-ion batteries that power electric vehicles, are among the reasons the USGS listed graphite on its list of 35 critical minerals.

The World Bank projects that the electric vehicle batteries and green energy storage systems will drive graphite demand 383 percent by 2050.

Graphite One is advancing its enormous deposits of graphite in western Alaska towards being a domestic source of this critical battery material.

A 2017 preliminary economic assessment provided an outline for a roughly 2,800-metric-ton-per-day mining operation at Graphite Creek and an advanced material processing facility capable of producing 41,850 metric tons of the coated spherical graphite used in lithium-ion rechargeable batteries and 13,500 metric tons of purified graphite powders annually.

Graphite One has expanded and upgraded the resource since this PEA was completed.

According to a resource calculated early in 2019, Graphite Creek hosts 10.95 million metric tons of measured and indicated resources averaging 7.8 percent (850,534 metric tons) graphite; plus 91.89 million metric tons of inferred resource averaging 8 percent (7.34 million metric tons) graphite.

The company is planning to further expand the measured and indicated resource with a 2,000-meter drill program being carried out this year.

The increased and upgraded resource at Graphite Creek will form the basis for a prefeasibility study expected to be completed early next year.

Graphite One Inc.

Sen. Lisa Murkowski and Anthony Huston at Graphite One's warehouse in Nome, Alaska.

The loan from Taiga Mining is expected to provide Graphite One the funding needed to complete this PFS, which is slated for the second quarter 2020.

"The PFS is a major milestone for Graphite One," said Graphite One COO Stan Foo. "With funding in place, we can maintain our momentum through the final quarter of 2019 and stay on track for our 2020 target."

This loan from Taiga, which includes an immediate payment of US$2.5 million, is repayable in two years. Graphite One has the option to extend this payback by 12 months with a 30-day notice.

Interest on the loan will accrue on the outstanding balance at a rate of 12 percent per annum, compounded annually. For up to 90 days after the loan is repaid in full, Taiga will have the right to participate in any financing arrangement of Graphite One in order to maintain at least a 25 percent interest in the company.

–SHANE LASLEY