Northern Graphite secures mining lease for Bissett Creek

After a 10-month wait that Northern Graphite (TSXV: NGC; US-OTC: NGPHF) says should not have exceeded 45 days, the junior has been granted a mining lease for its wholly owned Bissett Creek graphite project in Ontario, 100 km east of North Bay.

With the permit the company can start construction at Bissett Creek, making Northern Graphite the only new, significant graphite company to complete a bankable feasibility study and be permitted for construction, the company says. The Ministry of Northern Development and Mines has also accepted Northern Graphite’s mine-closure plan for filing. But a number of other permits are needed before production can get underway, including those relating to air, noise and water.

Northern Graphite is working to update its bankable feasibility study after updating the project’s resource estimate in May, which upgraded a large portion of inferred resources to the measured and indicated categories. The deposit hosts measured and indicated resources of 69.8 million tonnes grading 1.74% graphitic carbon based on a 1.02% cut-off grade. Inferred resources stand at 24 million tonnes grading 1.65% graphitic carbon. The potential mine life exceeds 80 years, based on measured and indicated resources.

The economics in the bankable feasibility study will be revised based on the larger resource, lower graphite prices and changes to original capital- and operating-cost assumptions. Owner mining will replace contract mining, for instance, which the company says will trim operating costs by more than $100 per tonne of concentrate. It will also add $7 million in capital for mining equipment, but this is offset by other reductions, such as eliminating costs for detailed engineering, which is already underway, and modifying the semi-autogenous grinding mill drive and discharge, using a mobile crusher and removing a redundant mill circuit. The revised economics should be completed within the next few weeks.

Northern Graphite has started a preliminary economic assessment to show the economics of doubling production in three or four years at the large-flake, high-purity deposit. More than 50% of the graphite deposit is “jumbo” sized (+48 and + 32 mesh). The company says production can be expanded without a big increase in the stripping ratio, capital and operating costs because the deposit lies flat.

Bissett Creek is close to a natural gas pipeline, and just 15 km from the Trans-Canada Highway.

News of the permit on Aug. 26 sent shares of Northern Graphite up 24% to 87¢.

At press time the company was trading at 90¢ per share within a 52-week trading range of 58¢ to $1.52.