Stewart Lake aims at special graphite market

Graphite may not be as easily marketed as gold, but Stewart Lake Resources (TSE) is confident it will have no trouble selling the product from its graphite deposit near Kingston, Ont., at a price that will allow a quick payback and generate significant earnings. While graphite is found just about everywhere in the world, high quality material is more scarce. In fact, there are no significant sources of commercial graphite in North America.

That could soon change, however. Stewart Lake and another company, Cal Graphite (VSE) which owns a graphite deposit near Huntsville, Ont., are racing to be the first to fill what they see is a growing demand for the industrial mineral.

Graphite has a variety of uses including the lead in pencils, but the more lucrative markets are in high-quality steel making and in the manufacture of refractory brick and crucibles. In order to meet those needs, the graphite flake must be fairly large — greater than 150 microns (a micron is one ten- thousandth of a centimetre) — and of at least 90% purity.

The Northern Miner has not had the opportunity to view Cal Graphite’s property, but during a recent visit to Stewart Lake’s Kirkham property about 25 miles north of Kingston, it seemed apparent that its product fits the bill for those high specification uses.

What’s more, Stewart Lake President Richard Scratch says the graphite concentrate, which reaches greater than 90% purity through simple flotation, can be upgraded to as high as 97.6% purity. At that purity, the material could command a price of about $2,000 per ton. At a purity of 99%, which has not been attained in testing of the Stewart Lake product, the material is in demand for such high-tech uses as semi-conductors and commands a price of up to $4,000 a ton.

However, there is no open market for graphite and prices vary widely with suppliers and buyers negotiating on a contract basis. The world market for graphite is not huge, either. The federal department of Energy, Mines and Resources estimates that total world production in 1984, the latest year for which figures are available, amounted to 562,330 tons of all types.

As for the size of flake, Scratch says 70% of the material measures greater than 150 microns. Material underground and stockpiled on surface appears to have a high carbon content and is very friable, so the size of the flake could easily be over 150 microns.

After drilling 140 holes from surface into three zones, Stewart Lake has drill-indicated reserves in its Main zone alone of five million tons averaging 7.6% graphitic carbon. According to a U.S. Bureau of Mines standard, that would be considered a medium grade deposit. High grade is 16-30% graphitic carbon, and Scratch says there are areas in the deposit that meet that high grade specification. Low grade is 6% or less.

The Main zone is open along strike in both directions and at depth. All reserves are calculated above the 500-ft horizon.

There are two other zones that have been partially traced and 12 geophysically detected zones still to be tested.

Stewart Lake’s underground operation appears fairly straightforward. A 10×12 ft underground ramp has been put down to about a vertical depth of 100 ft. The Main zone has been reached at the 50-ft level while the ramp was about five rounds or 2-3 days work from reaching the zone at the 100-ft level.

At the 50-ft level the zone is almost vertical although it appears to dip slightly to the west at the 100-ft level. The ground in the ore zone itself seems very competent — there was virtually no roof bolting along the 50-ft of drifting in the zone. The host rock, calcium carbonate, is less competent and some ground control is necessary in sections of the ramp.

There is a very clear distinction between the graphite, which is black and clearly mineralized, and the country rock which is white marble. That makes it very easy to follow the zone.

Drifting in ore at the 50-ft level is along a 6×8 ft heading. The material is hauled out by a single small load-haul-dump (LHD) vehicle to a station at the junction of the drift and the ramp where one of two larger LHDs on the project haul the material to surface. There is very little water flow in the mine.

Metallurgically, the company says the material is very simple to process. The material is very friable, so little crushing is required. In fact, because the larger size of the flake commands a premium price, less grinding is desirable.

Simple flotation provides a greater than 90% carbon concentrate. Impurities such as silica, chlorite and carbonate are not infused in the carbon itself but adhere to the surface of the flake, says Scratch. A nitric acid wash can therefore easily liberate the impurities. Small bench-scale testing shows that the acid wash can increase purity to the 97.6% level.

The company is now at the stage where end-users have seen results of the bench-testing and now want a bulk sample to see if it meets their specifications. The company has several hundred tons of material on surface and plans to begin bulk testing it soon at the Ontario Research Foundation facilities in Mississauga, Ont., at a rate of 25 tons per day.

It predicts a capital cost of less than $5 million to establish a 500-ton-per-day mining and milling operation which could be in operation by the second half of 1989. A prefeasibility study is expected to be complete within two months, and a bankable feasibility completed by the end of 1988.

Because the capital cost is relatively modest, it is considering debt-financing further work. That would avoid diluting the 4.3 million shares currently outstanding.

The Kirkham deposit has been known since the turn of the century and was explored by Falconbridge in the 1950s. Stewart Lake optioned the property in 1986 and now holds 59 claims covering 2,600 acres in the cottage area about 25 miles north of Kingston.

While some residents in the area have expressed concerns about the environmental impact of the operation, Scratch is confident it will exceed all environmental standards imposed on it.

There is a 12 net profits royalty on the claims covering the deposit.