Graphite One buys production royalties
NSR purchase will improve economics of future graphite mine North of 60 Mining News – June 16, 2023
Last updated 6/15/2023 at 3:10pm
Graphite One Inc. June 13 announced that it is acquiring a 1% net smelter production royalty interest against 133 state mining claims that make up a portion of the company's Graphite Creek project in Alaska. In exchange for the royalty, Graphite One will issue Alaska pilot and explorer Ronald Sheardown 456,500 company shares.
"This purchase of a 1% NSR brings our total purchases to 3% NSR," said Graphite One CEO Anthony Huston. "We anticipate the purchase of the NSR will have a positive impact on our internal rate of return and net present value, which will be reflected in the financial projections in our feasibility study."
The feasibility study is expected to consider a significantly larger mine and graphite processing facility than was outlined in a prefeasibility study completed last year for Graphite Creek.
The 2022 prefeasibility study envisioned a mine that would produce an average of 51,813 metric tons of graphite concentrate per year and a processing and recycling facility in Washington that would upgrade the concentrates into 49,600 metric tons of spherical coated graphite that serves as the anode material in lithium-ion batteries and 25,400 metric tons of other advanced graphite products per year.
North American automakers, however, are requiring much larger quantities of graphite for EV batteries.
In a 2022 report, S&P Global Platts forecast that more than 5 million metric tons of graphite per year will be needed for EVs alone by 2030. This compares to roughly 1.3 million metric tons of graphite mined globally during 2022, according to the U.S. Geological Survey.
Graphite Creek host the largest known graphite deposit in the U.S., a country that is currently 100% dependent on imports for its graphite needs.
According to a calculation completed earlier this year, Graphite Creek hosts 37.6 million metric tons of measured and indicated resources averaging 5.15% (1.9 million metric tons) graphite; plus 243.7 million metric tons of inferred resource averaging 5.14% (12.3 million metric tons) graphite.
This marks a 13% expansion of graphite in the measured and indicated categories, when compared to the resource at the time of the prefeasibility study, and leaves an enormous quantity of inferred resources that could be upgraded in support of the feasibility study.
"(T)he continued expansion of our Graphite Creek resource will support our plan to quadruple the annual production from our PFS study," said Graphite One Senior Vice President of Mining Mike Schaffner.
Two NSRs on the Graphite Creek property remain outstanding – a 5% and a 2.5% NSR applicable to certain Alaska state claims. Graphite One has the option to acquire 2% of each of these royalties for US$4 million, leaving a 3% and 0.5% NSR on their respective claims.