Bass Metals was originally established on a gold and base metals asset in Tasmania, however last year it made the strategic decision to purchase an operating graphite mine with established cash flows in Madagascar. After securing an initial 6.25% interest, Bass paid AUS$1.5 million and $750,000 in shares as a first tranche in a total deal worth $15.25 million to assume full control of the graphite-producing mine. The remaining tranches are based on production milestones. The move makes Bass the only ASX-listed graphite producer.
The Graphmada project has been producing at an ever-increasing rate since 2013, last year it produced 1,500 tonnes of large flake graphite – an amount to keep the mine ticking over but not profit-making – however it has the capacity to produce at levels of 6,000 tonnes per annum (tpa), with Bass planning to take this to over 20,000tpa.
Graphite has strong demand markets across the world. The traditional graphite market stems from its primary use in refractories, crucibles, lubricants and other industrial uses. Bass Metals already has established sales with consumers in the US and India and it occasionally delves into the European market.
“As Australia’s only current producer, Bass can dominate not only the supply of high grade large flake concentrates into traditional high value markets, such as crucibles and refractories, but also seek to be the first to reliably supply new markets such as the expandable graphite and lithium-ion battery markets, without exposing its shareholders to single market sales risks.,” says Bass Metals CEO Tim McManus, the man who has championed Bass’ move into the graphite sector.
Madagascar is a well-recognised jurisdiction when it comes to graphite. The African island has an established history as a producer and exporter of the mineral since 1907 and, according to Bass Metals, ‘sets the world standard due to its high proportion of high quality, large flake graphite’.
So, it’s clear the key attributes of the Graphmada project lie on the mining and processing side. There is established low-cost mining with potential to reduce costs further, an existing and under-utilised 6,000tpa processing plant, the mine produces premium-priced concentrate for market (>60% in the large to jumbo flake category) and it has all the necessary existing on-site infrastructure to support the 130-strong workforce and complete operations.
McManus is in the process of implementing both an operational optimisation programme to be completed Q2 2017 and an expansion project, of which drilling has commenced. With a strategy of making low capital investments to optimise an operating asset, combined with material increases in resource inventories of soft, easily mineable saprolitic ore, the Company sees Graphmada as having a series of major competitive advantages to that of its peers who are over capitalising hard-rock deposits, and who are heavily leveraged to single market sales strategies.
In order to complete the two objectives Bass Metals needed a chest of available capital. The company recently completed an oversubscribed capital raising for AUS$7 million and will use a chunk of that to complete some of the fundamental work.
The funds will be used to upgrade the throughput on the ore preparation, increase processing plant availability and utilisation and improve product handling to minimise losses and inefficiencies.
“The important thing is not just to lift the recoveries and the throughput at the plant but also to increase the grade of the final concentrate,” notes McManus. “then we can see more premium pricing for the large flake, higher grade concentrate.”
The upgrades to the processing plant will prove to be a catalyst for Graphmada reaching the 6,000tpa benchmark McManus has set. The plant work is expected to be completed by the end of 2017 in time for the full ramp up and production in Q1 2018.
While the existing processing plant and the associated infrastructure is in place it has been held back by basic functions such as unreliable generators. The proposed plant improvements include: improving ore preparation, adding better regrind capacity through the installation of additional regrind milling, modifying flotation cells to optimise maximum flake recovery, installing new slurry pumps and improving the drying of final concentrates.
“That’s enough to see us profitable. From there we will expand on the knowledge base of having done the refurbishment and drilled out the resource and can confidently install a second plant to get us up to 20,000tpa.”
The second branch of the work Bass Metals is completing at Graphmada is the expansion project. The available capital Bass has in the bank means it can expand with drilling that the capital-constrained previous owners were unable to. McManus recently commissioned a drilling programme of 50 holes for about 2500m at the Mahefedok deposit. With the drilling programme currently underway, McManus hopes it will lead to an overall expansion of the resource.
Secondly the company has entered a phase of trial mining at the Mahefedok deposit adjacent to Loharano and the infrastructure. This trial has demonstrated a saleable product with some already sold, McManus says this is very positive for the project.
“There’s enough graphite in Mahefedok and Loharano to see out the 40-year mining permits we have in place. Right now, we are trying to drill the 1.8km strike of Mahefedok and we are seeing some excellent grades coming out of Loharano – much better grades than the published resource so there is a lot of upside.”
McManus stresses that the market for graphite is strong and growing, “We can see us growing our supply into the market and the market absorbing it. Already we are being asked to supply more than we can currently produce, particularly for high quality, large flake product.
“If anything large flake production is becoming rarer and rarer and we have picked up a great asset.”
Looking forward Bass Metals has a clear timeline on how it will progress Graphmada. Firstly, McManus is targeting achieving a cashflow positive position by completing the optimisation programme and plant upgrades by mid-2017 and entering 20,000tpa production in late 2018.
The team at Bass Metals are led by an experienced CEO and with the low risk entry into the exciting Graphmada asset already proving successful, the company is now positioning itself for sustained success through the next decade and more.