We usually don’t comment on hyped commodities such as Rare Earth Elements a few years ago and graphite right now, but we would like to draw your attention to a company standing out from the crowd.
There are currently over seventy companies claiming to be exploring for or nearing the development stage on a graphite project. Obviously only a few of these seventy companies will make it to production.
We think Graphite One (GPH.V) will be one of those companies as not only are they currently defining a large deposit, they are also the only successful graphite explorer in the USA. Their project is located close to tide water in Alaska so it’ll be easy for them to supply the Asian markets with their graphite.
The company is currently calculating an NI43-compliant resource estimate which should be announced to the market early next year. We think this maiden resource estimate will surprise the market, as we’re targeting an inferred resource estimate of over 75 million tonnes at an average grade of 4-5% graphite and this is only based on a small portion of their projected strike length. This obviously doesn’t guarantee the viability of the project, but a resource estimate of this size will surely put the company on more radar screens.
The biggest deal in Alaska will be infrastructure, as the company will have to deal with irregular road access and deep-water ports, but all these issues will obviously be dealt with in the PEA which is expected by the summer of 2013.
Although Graphite one is a little bit lower on the development curve than other decent graphite companies like Energizer Resources (EGZ.TO) which also expects an updated resource estimate shortly, Focus Graphite (FMS.V) and Flinders Resources (FDR.V), we expect the project to advance substantially in 2013.
We will keep an eye on Graphite One and see how this story develops, as 2013 should be an exciting year for them.
Disclosure: We don’t own a position in Graphite One yet but might buy shares in the near future. We do not hold shares in Focus Graphite and Flinders Resources. We do own shares in Energizer Resources Inc. Please see our disclaimer for current positions.
