ASX-listed graphite producer Bass Metals is looking to establish itself as mid-tier producer of industrial mineral concentrates within the next few years.This strategy of Bass Metals entails increasing production volumes at its Graphmada operation in east Madagascar to 6 000 tpa, thereafter tripling production to 20 000 tpa by 2019.
The advancement of its Millie’s Reward lithium project, also in Madagascar, will undeniably secure the company’s ambitions, CEO Tim McManus tells Laura Cornish.
Bass Metals has made quick work of establishing the foundations upon which to fulfil its strategy.
It fully acquired the highly prospective Graphmada mine from AIM-listed Stratmin Global Resources in August 2016 and entered into a purchase agreement to acquire the potentially high-grade spodumene hosted lithium project; Millie’s Reward in April of this year.
These two assets comfortably position the company towards becoming a mid-tier industrial minerals miner.
“Not only were we attracted to the operating Graphmada mine because of its high quality resource and installed infrastructure, we also saw the acquisition of this premium asset as well timed to purchase at an inflection point in the market,” says McManus.
When Bass Metals announced that it had successfully renegotiated with Stratmin to significantly decrease the acquisition value from A$15.25 million to $5.39 million in January this year, the company was able to preserve substantial future cash flow and subsequently secure major value for its shareholders.
“Graphmada is the first key asset that will enable us to produce positive cash flow to use as a financial platform to grow our graphite production and invest in other industrial minerals projects and opportunities such as Andapa and Millie’s Reward.”
Investing in a world-class asset
Bass Metals is underway with a US$3.1 million mine and process plant optimisation project at Graphmada which is due for completion towards the end of the year.
Once complete it will ensure the mine is capable of delivering 6 000 tpa of graphite at a higher quality (>75% recovery and >94% fixed carbon) than was produced in previous years.
The mine, which delivered 1 500 t of graphite for Stratmin in 2015 and 2016, has now ceased operations in order to accommodate the work required for the optimisation project. The company is however still generating some revenue from sales stock.
Bass Metals is on track to see its flagship graphite asset Graphmada reach its optimised production capacity of 6 000 tpa by year-end, with the aim of expanding to 20 000 tpa by 2019.
The construction of a new, modular drying and packaging plant (DP plant) in South Africa has been completed and is in transit to site.
In parallel a material expansion of the concentrate storage facility is also being undertaken, in order to accommodate for larger output volumes of saleable graphite concentrates. Installation will proceed to time with the re-commissioning and ramp-up of the refurbished process plant.
In parallel with the final stages of construction of the DP plant, the existing rotary drying plant has been de-commissioned, while maintaining screening and graphite concentrate sales capability.
Part of the optimisation programme entails training the local workforce as well as investing in the local community.
“We have approximately 100 on-site employees who remain employed and are focused on delivering the refurbished mine,” McManus notes.
Graphmada is situated just off the main national highway in Madagascar, 110 km from the country’s main export port at Toamasina, where the company exports graphite concentrate to India, Europe and the US.
In addition to the mine’s infrastructure/logistical benefits, its geological composition and quality constitute its ‘star-quality’ features.
“Graphmada is a saprolitic mine, which means the graphite mineralisation is hosted in very soft, easily mineable material close to surface which is cost effective to mine and process. Saprolite ores are also consistent in grade and distribution,” McManus explains.
“Our graphite also has a very high purity, with 91% of the total material (in-situ) large to jumbo flakes.”
This equates to 60 - 70%% large flake graphite in concentrate after processing following completion of the optimisation project.
This high value quality has significant downstream benefits – not only is the mine’s graphite concentrate relevant to the typical refractories and crucibles markets, it is also suitable for the expandable and lithium battery markets – two growing market sectors which will deliver a price premium for the product.
“Our concentrates are well suited to every market segment, making our operation quite unique.”
Tripling production by 2019
While the majority of graphite produced from Graphmada has been mined from the 5.7 Mt Loharano deposit, Bass Metals is looking to mine the adjacent Mahefedok deposit which has the potential to see the company increase production to 20 000 tpa of graphite by 2019.
A 2 300 m drilling programme at Mahefedok has just been completed, uncovering significant intercepts of soft, easily mineable saprolite mineralisation along the entire 2.8 km strike length.
All drill holes in fact demonstrated graphite mineralisation and a large number of holes returned significant mineralised intercepts above recent trial mining head grades.
“With 40 year mining permits and a number of licences in place, we can comfortably deliver a 20 000 tpa production rate for between 10 and 20 years and generate very good free cash flows.”
McManus highlights a third leg to the company’s growth strategy – the Andapa discovery – a deposit situated closer to the port which to date has revealed three significant large graphite targets at surface, between 1.3 km and 2.1 km in extent.
They are hosted in soft easily mineable, weathered mineralisation, which indicates significant potential for low cost mining. The main target, known as Unit 2, has revealed graphite carbon grades of up to 7.7% at surface.
The company plans to conduct a systematic exploration programme over the project area, including a mapping and sampling programme aimed at identifying targets for a follow up drilling programme.
Millie’s Reward deal secures strategy for Bass Metals
In April this year Bass Metals entered into a binding term sheet with Ruby-Red Madagascar to acquire Millie’s Reward, which comprises two contiguous mining permits and the lithium mining rights for a third mining permit in Madagascar that are prospective for pegmatite-hosted lithium mineralisation.
The deal, subject to a successful due diligence over a three-month exclusivity period, was completed at the end of May.
Millie’s Reward is a highly prospective, conventional spodumene hosted Li2O (lithium oxide) deposit. Preliminary geological mapping has demonstrated that the majority of the pegmatite dykes in the area have sub-horizontal to horizontal orientations over significant strike lengths.
A majority of the pegmatitic dykes and sills within the mining permits are over 10 m in thickness, with swells in areas of up to 50 m in thickness, while being up to several hundred metres in length.
Most of the large dykes have been subject to very little modern geological assessment, as all the mining activity performed in the past occurred at an artisanal scale, operated by the local miners working for gemstones.
The completed due diligence fieldwork identified significant spodumene mineralisation (7.08% Li2O) across an 8 km strike length. Up to 55 different locations for pegmatite occurrences were recorded, with 14 rock chip samples selected to confirm vendor sample results.
South Africa’s SGS laboratories conducted a multi-element analysis of the rock chip samples for which very high Li2O grades, as well as background mineralisation were recorded.
“With the due diligence now complete we are looking to finalise the transaction after which we will immediately conduct a systematic exploration programme over the project area, including mapping and sampling aimed at identifying targets for a follow up drilling programme in 2018,” McManus outlines.
“With an existing mining licence in place, and attractive high grade results, we believe this is an exciting opportunity for the company.”
It is also located adjacent to a Holcim-owned talc mine, which has a sealed road for product transport and grid power installed. It also has access to extensive water supplies, accommodation and an available workforce.
Like graphite, the lithium market is expected to grow substantially over the coming years as the demand for the lithium ion battery market gains momentum.
This positions Bass Metals to take advantage as it advances this project forward with a look to ultimately developing a mine.
Caring for the community
Since taking control of the Graphmada mine some nine months ago, Bass Metals has shown significant interest in improving the livelihoods for members of its surrounding communities.
The company has delivered five water wells which have immediately improved health-related conditions.
“We also recently completed, for the first time in Madagascar, a full landholder survey which entailed surveying 1 900 different plots of land inside our tenure. We are now in the process of organising a certificate ceremony with the government to hand out land ownership certificates to the rightful owners and thereafter assist them to register those with the titles office.
This has given our community members a sense of comfort that Bass Metals is here to work with them and grow together,” says McManus.
A strong investment case
- Bass Metals is building an international industrial minerals business utilising cash flow from the Graphmada mine as a platform for growth
- Bass Metals is the only ASX-listed graphite producer, optimising and expanding production to 6 000 tpa initially, and shortly thereafter 20 000 tpa
- These plans will accelerate the establishment of the company as a mid-tier producer and supplier of industrial mineral concentrates; and
- Bass Metals continues to materially grow its resource inventory, aggressively explore its permits and strategically assess acquisitions
All images courtesy of Bass Metals