Zenyatta Ventures (TSXV: ZEN) has published its first resource estimate on its 100% Albany vein-type graphite deposit in the Arc of Fire region within northern Ontario’s Porcupine Mining district, sending its shares sliding.
The resource, prepared by Roscoe Postle Associates, estimates 25.1 million indicated tonnes averaging 3.89% graphitic carbon containing 977,000 tonnes graphitic carbon, plus another 20.1 million inferred tonnes grading 2.2% for 441,000 tonnes graphitic carbon.
The estimate is based on 60 diamond drill holes totaling 24,600 metres that the company drilled from March to mid-November to define the size and grade of its flagship asset. The resource is contained within a pit shell that uses a cut-off grade of 0.6% graphitic carbon and a long-term price of US$8,500 per tonne graphitic carbon.
The Thunder Bay-based junior’s CEO Aubrey Eveleigh notes the initial resource demonstrates a “very robust graphite deposit.” He adds the mineralization extends below the pit shell and is open at depth, suggesting potential for additional resources. But investors appeared unimpressed, sending the company’s shares down 32% to $2.10 per share.
With the resource estimate completed, Zenyatta plans to publish a preliminary economic assessment by mid-2014, while continuing its market studies.
The junior claims that Albany, similar to the sole vein-type graphite mine in Sri Lanka, is the “only new vein-type graphite deposit being developed in the world.”
Despite being rare these types of graphite deposits benefit from having high levels of carbon, making it easier to upgrade to synthetic graphite products, which tend to fetch the best market prices, the junior outlines in a presentation.
Metallurgical testing of Albany’s core samples by SGS Inc. earlier this year showed that a graphite product containing 99.99% carbon could be produced using a caustic bake method.
Zenyatta notes Albany’s end product could be sold in the US$13-billion synthetic graphite market. Last year the market price for high-quality synthetic graphite ranged between US$7,000 and US$20,000 per tonne. In comparison, natural graphite products grading 70 to 95% carbon went for US$500 to US$1,500 per tonne, according to Zenyatta.
Graphite, a natural form of carbon, is now being used in many new applications, including high-technology manufacturing and electric vehicle components due to its chemical properties. It has a high melting point, is very resistant to chemical corrosion and contains high lubricating and reinforcing abilities.
Zenyatta recently agreed to acquire the remaining 20% interest in the deposit from a subsidiary of Cliff Natural Resources (NYSE: CLF) in late November. Under that contract, the junior will issue half a million Zenyatta shares upon signing, plus 25,000 shares when it completes a prefeasibility study and another half a million shares following a feasibility study. Cliffs will retain a 0.75% net smelter return royalty on the Albany claim block, dubbed 4F, which the junior can buy at any time for $500,000.
The junior previously earned an 80% interest in Cliff’s block 4F claims by spending $10 million on exploration over the last two years at Albany.
Zenyatta has a $116 million market capitalization and 55.4 million shares outstanding.
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