Gearing up to restart production at its Uley mine early next year, Strategic Graphite Limited is looking to raise up to $10 million in a rights issue and share placement.
The Adelaide based company is aiming to launch production at the historic Uley graphite mine in the Lower Eyre Peninsula region of South Australia at the start of 2014, a move which will make it Australia’s only operating graphite mine.
Launching production at the site will create about 50 jobs, including 40 at the mine site.
“Over the past two years, approximately $3 million has been spent refurbishing the existing road, electricity, and water infrastructure at site,” managing director and chief executive Christopher Darby said.
He explained with mining licences and processing infrastructure already in place, the company is in a position to begin the process to restart graphite production.
The Uley graphite mine, located 23 kilometres from Port Lincoln, was discovered in the early 1800’s and has been in intermittent production since the late 1920s.
When in operation, the plant was capable of producing up to 14,000 tonnes of graphite concentrate each year.
The mine has been is care and maintenance mode since 1993.
The project has a JORC compliant indicated and inferred resource of 6.4 million tonnes at an average grade of 7.1% graphitic carbon with a low strip ratio of 3:1.
The company explained ramping up production at the site will be a two part operation.
Phase one will see existing stockpiles processed which are estimated to contain more than 7,500 tonnes of graphite and is expected to generate immediate revenues of $12 million over the next year.
Later in 2014 phase two will see plant production increase to 50,000 tonnes of graphite per annum, a move expected to be funded by revenues generated in phase one as well as offtake, royalty and debt finance.
Strategic Graphite’s recent scoping study indicates the sites mining and processing costs will be about $AU550 per tonne.
A Bankable Feasibility study is expected to be completed in the first quarter of 2014.
“The graphite price has grown at a steady rate of about 15 per cent since the early 2000s,” Darby said.
“Despite the dramatic price increase in recent years, it continues on this strong growth path, which bodes well for Strategic Graphite and our production forecasts.”
The company said it expects to list on the Australian Securities Exchange by the end of 2013 and estimates it will have a market capitalisation of approximately $34 million on the offer price of 20 cents per share.
The company will also change its name to Valence Industries.