Energizer Resources: Graphite Discovery of 2012
TSX:EGZ/OTCBB:ENZR/FRANKFURT:YE5
Share Price… $0.265
Shares Out… 157M
Market Cap… $40 Million
Fully diluted… 224M
Cash position… $4.5M
Warrant value… 43.2M @ $0.59 = $25.5M
Option value… 23.6M @ $0.29 = $7M
Ever since Energizer Resources announced they made a major discovery of a flake graphite camp in Madagascar, Green Giant has been an intriguing grassroots graphite discovery to watch develop. The company has drill-tested four discoveries, all which have the ‘right stuff’ to start a graphite mine. The company recently announced results of Molo, so good, no results from any graphite company to date compare. When Energizer invited me to Madagascar and take a peek at ‘THE GRAPHITE DISCOVERY OF 2012’… I had to take a look for myself at what is getting a lot of people excited in the graphite industry about Energizer Resources’ Green Giant and their emerging graphite camp in South Madagascar.
- Green Giant has the grade (7%-8%C)
- Green Giant has the product (jumbo flake and purity ~93%)
- Green Giant has the simplest processing in the industry - product be liberated in crushing
- Green Giant has multiple near surface bulk tonnage targets
Not only is Green Giant an emerging world class graphite discovery, the property holds a vanadium deposit rated among the top 3 vanadium projects in the world. It has a NI43-101compliant resource of 49.5Mt @ 0.693% vanadium indicated and another 9.7Mt @ 0.632% vanadium inferred, over $10B of insitu vanadium at current depressed vanadium prices of $26/kg.
Especially when you have a project with the qualities of the Molo.
Energizer’s Green Giant is an emerging GRAPHITE CAMP
The project includes 17 distinct graphite bearing zones with an aggregate 320km strike length. 7 zones have been drill tested/trenched to date. Green Giant’s cumulative exploration strike length is 10 times that of any new entrant in the field. The largest discovery to date, Molo measures over 300 meters at its widest point. The graphite in the area is clearly prolific with some of the biggest and highest grading graphite deposits anywhere in the world.
Within the 100% owned Green Giant property Energizer has identified 5 graphitic zones; Fondrana, Fotsy, Jaky, Manga, and Mainty. On the 75% joint venture claims EGZ has identified several more including 3 additional graphite zones of interest; Molo, Seta, and Besavoa. One thing I noticed when touring the property is the termite mounds in the area were also prolific. Normally these mounds were a rusty color indicating the regional soil, but whenever a graphite zone was near surface the termite mounds changed from a rusty color to a distinct steely dark grey. These dark termite mounds littered the property and continuously changed color from grey to rusty brown as we drove around the Green Giant property.
Within the 4 zones discussed briefly below, there is the potential to define at least 100Mt to 200Mt of near surface mineralization with this emerging graphite camp.
Within the 4 zones discussed briefly below, there is the potential to define at least 100Mt to 200Mt of near surface mineralization with this emerging graphite camp.
The Molo Zone: All the graphite the industry will ever need...
When the drill results came back from Molo, it was clear that Energizer’s quest for the perfect graphite deposit was over. EGZ recently announced that Molo would be the site of initial mine development and fast-tracking graphite production from. Molo is by far the biggest, most continuous, and high grading of the graphite discoveries drilled to date. It has all the metrics of a world class deposit and a future world class graphite mine possessing the best combination of mining width, grade, and metallurgy. Add the fact that Molo has turned in the highest grades to date of any of the deposits drill tested makes it an even more appealing site to start mining operations at. The tonnage potential from the one site at Molo is so immense it easily dwarfs anything else on the property and is double or even triple the tonnage of Bisset Creek at 3 to 5 times the grade.
The heart of the Molo deposit is truly massive. It is a near vertical structure that extends on strike for 850 meters and is close to 300 meters in width occurring within a much wider 2km long anomaly. 5 holes have been drilled along a 1.2km strike. Molo drill results consistently average greater than 100 meter intervals and all ended in mineralization not having tested the true width of the zone. The average aggregate intercept of the 5 intersections that have tested the main orebody is 82 meters. The average grade is 7.5%. The initial drill results do not reveal the true size of Molo. The trenches dug across the surface show the true width which is well over 300 meters at its widest point.
The deposit so big, that a mine will have a zero strip ratio for at least the first 100 to 150 meters of depth and 10 or 20 years of mining. The near zero strip ratio at Molo for the early years will have a huge impact on keeping mining costs low. The only rock the company will ever move is ore. That is a lot of fuel savings when compared to a company with a 4:1 or 5:1 strip ratio. There is no other graphite deposit in the world currently being explored today with the dimensions and grade of Energizer’s Molo deposit.
Undeniably Molo has best metrics of any graphite deposit in the world.
A deposit that measures 300 meters across by 300 meters deep by 850 meters in length will have approximately 200Mt within those dimensions assuming a density of 2.5. A back of the hand calculation would give that small portion of Green Giant 14Mt of graphite in the ground or $28B worth of graphite at $2,000 per tonne.
Look no further ladies and gentlemen, Energizer’s Green Giant is the graphite discovery of 2012.
 |
| A cross section of MOLO underneath the 325 meter trench |
| Target: | 50Mt to 100Mt @ 7.5%C |
| Average aggregate intercept: | 82 meters @ 7.5%(holes ended in mineralization) |
| Average trench width: | 250 meters to 325 meters |
| Dimensions: | Drilled 1.2km strike / >100 meter depth |
| EM anomaly: | 5 graphite horizons up to 2km strike |
| Mesh size: | +80 mesh to +20 mesh |
| Purity: | >90% purity |
Molo Drill Results Include…
- MOLO-01… 108m @ 8.80%C
- MOLO-02… 20m @ 6.94%C (drilled in the opposite direction of 01)
- MOLO-03… 87m @ 7.4%C
- MOLO-04… 72m @ 7.62%C
- MOLO-05… 88m @ 7.92%C
- MOLO-07…. 106 meters 8.44%C
- *MOLO-06… 27 meters 7.25% (parallel trend 1km west of Molo)*
The Fondrana Zone…
Fondrana is easily Energizer’s second largest target drill tested to date. Fondrana has two distinct 1km parallel trends within a 1,000 by 800 meter block. FOND-01 through 05 were drilled along an 800 meter strike length with impressive results and grades ranging between 6% to 7%C. The results were impressive by any graphite deposit standards, but lack the width and continuity and grade of Molo, the site of initial mine development by Energizer and DRA.| Target: | 25Mt to 50Mt @ ~6%C |
| Average aggregate intercept: | 73 meters @ 6.14%C |
| Average aggregate trench: | 82 meters @ 6.73%C |
| Dimensions: | Drilled: 800 meter strike / 120 meter depth |
| EM anomaly: | 3 graphite horizons / 1km strike |
| Mesh: | +80 mesh to +50 mesh |
| Purity: | >90% |
Fondrana Drill Results Include…
- FOND-01… 61.4m @ 7.46%C
- FOND-02… 12m @ 4.73%C and41.5m @ 7.01%C and5.9m @ 5.88%C
- FOND-03… 118.6m @ 6.24%C
- FOND-04… 25.5m @ 5.27%C and66m @ 5.63%C
- FOND-05… 24m @ 5.63%C and18m @ 5.18%C
- FOND-06… 5.95m @ 6.2%C
The Seta Zone…
The Seta deposit is one of the few deposits that is flat lying making it unique to most of Green Giant geology. This is generally the ideal geometry you want when dealing with 20 meter to 30 meter wide zones simply because you can scope more tonnage within a shallow open pit and have less of a strip ratio than a vertical deposit. Molo is vertical, but is so wide (300m vs. 30m) that how it lies does not matter. EGZ can only focus on developing one site, so developing these discoveries outside of Molo for more than geotechnical information is pointless. Molo is the priority now that the resource delineation program is underway, but describing a couple of these deposits gives you an idea of the size, scale and grade of these deposits in this emerging graphite camp in Madagascar.| Target: | 10Mt to 20Mt @ ~5.5% |
| Average intercept: | 34 meters @ 5.59%C |
| Average trench width: | |
| Dimensions: | Trenched along 1.2km strike |
| EM anomaly: | 1.6km strike / 2 graphite horizons |
Seta Drill Results Include…
- SETA-02… 41m @ 5.42%C
- SETA-03… 28.6m @ 5.77%C
The Fotsy Zone…
Fotsy was the company’s initial graphite discovery. It is situated right outside the town where Energizer’s camp is located. It is a large zone with 4 graphite horizons within a 6km strike. It is the smallest of the graphite deposits as far as mining widths. If you could call it small… it certainly wouldn’t be considered small in Canada with aggregate width of all drilling measuring almost 21 meters. The zone pinches and swells between 10 meters and 50 meters. FOTSY could be a potential site of specialty ore where large zones have been identified at surface with abundant +20 mesh superjumbo flake.
| Target: | 10Mt to 15Mt @ ~5.5%C |
| Average aggregate intercept: | 20.8 meters @ 5.62%C. |
| Average trench width: | 10.9 meters @ 6.33%C. |
| Dimensions: | Drilled: 115 meter depth along an 800 meter strike |
| EM anomaly: | 4 graphite horizons within a 6km strike |
| Mesh Size: | +80 mesh to +20 mesh confirmed |
| Purity: | >90% purity achieved from crushing alone |
Fotsy Drill Results Include…
- FOTSY-01… 2.5m @ 8.10%C and10.2m @ 4.41%C and6.7m @ 4.3%C
- FOTSY-02… 4.3m @ 6.22%C and10.77m @ 6.19%C
- FOTSY-03… 9.5m @ 5.27%C
- FOTSY-04… 1.6m @ 5.37%C and3.0m @ 7.91%C
- FOTSY-05… 9.8m @ 12.02%C and5.0m @ 4.28%C and9.0m @ 6.73%C and7.0m @ 6.8%C
- FOTSY-06… 26.0m @ 4.12%C
- FOTSY-07… 14.37m @ 5.27%C and12.26m @ 6.34%C
- FOTSY-10… 11m @ 4.39%C and15m @ 5.00%C and5m @ 5.18%C and8m @ 4.64%C
- FOTSY-11… 5.5m @2 5.74% and12.0m @ 6.91%C
- FOTSY-12… 5.07m @ 12.16%C and14.75m @ 5.49%C and6.65m @ 5.19%C
- FOTSY-13… 34m @ 5.19%C
Molo: Fast-tracking a World Class Deposit
The Green Giant graphite discoveries have the potential to supply all ranges of graphite from amorphous to high purity jumbo flake. It is an emerging graphite camp with several multimillion tonne deposits capable of sustaining production. It is clear Molo is the discovery of all discoveries within this graphite camp. It has all the qualities a graphite mine needs...
Molo is a MONSTER!
The resource delineation program underway will demonstrate that the heart of this very large graphite trend is the biggest discovery in graphite mining since they pencil invented. 200Mt all within 850 meter strike. Boisedale Hills, Graphite Creek and Uley are all potential 200Mt deposits within 5km to 10km strike lengths. Molo is a 200Mt deposit in less than a 1km strike.
The Green Giant graphite discoveries have the potential to supply all ranges of graphite from amorphous to high purity jumbo flake. It is an emerging graphite camp with several multimillion tonne deposits capable of sustaining production. It is clear Molo is the discovery of all discoveries within this graphite camp. It has all the qualities a graphite mine needs...
- It is high grade for low cost production
- It is high purity which is essential for premium pricing and
- It is HUGE, important for scalability.
Molo is a MONSTER!
The resource delineation program underway will demonstrate that the heart of this very large graphite trend is the biggest discovery in graphite mining since they pencil invented. 200Mt all within 850 meter strike. Boisedale Hills, Graphite Creek and Uley are all potential 200Mt deposits within 5km to 10km strike lengths. Molo is a 200Mt deposit in less than a 1km strike.
The potential at Green Giant is unlimited. At a minimum... 100Mt at Molo and another 100Mt within just a few of the satellite deposits at Green Giant. All at excellent grades between 5%-11%. More importantly, all within the same type of weathered gneiss that crumbles to dust in your hand. There is enough graphite and the scalability for Green Giant to be a reliable source of supply for all ranges of graphite for years. Molo is big enough to be scalable to the 500,000 tonne per year producer that the industry will eventually need. These tonnage targets are just scratching the surface at Green Giant where the mineralization has been confirmed to a 300 meter depth at Molo.
The Molo deposit has all the qualities of a mine on the fast-track lane with some of the best metrics of any graphite deposit. Of these metrics, the biggest fast tracking advantage Molo has is processing.
Energizer’s secret weapon… Inexpensive Processing
Many of Green Giant’s graphite deposits display similar characteristics with the high grade Canadian Shield deposits, especially when it comes to flake size and purity. One huge exception in the South Madagascar area is that the surface has been exposed to much more weathering resulting in a host rock that is extremely friable. The near surface deposits in the Canadian Shield have been exposed to a recent ice age meaning the rocks are much more competent and less oxidized at surface while the last ice age to cover Madagascar was 100's of millions of years ago. Mining graphite in South Madagascar may be extremely lucrative simply because grinding the ore turns the rock into dust while maintaining the integrity of the graphite.
Simple and inexpensive processing is hands down the reason DRA has made an investment in Energizer and subsequently laying the ground work to fast-track Molo. EGZ can theoretically be in small scale production of 5,000 to 7,000 tonnes of graphite in months by just simply setting up a crusher on site. The fact that Energizer is yielding the majority of the graphite in the form of large flake with purities averaging 93% with only simple crushing and no flotation opens up the door to countless opportunities and scenarios when going into production. They have a saleable product with what most would consider only half of a mining operation. Considering all graphite mines use some sort of flotation process, Energizer has the option to by-pass this process resulting in a large reduction of capital costs, operating costs and a reduction in time to production.
Studies will be undertaken if flotation will maximize the product at Green Giant enough to justify adding the process. An air process has also been suggested by some people. What is key to the whole plan is that Energizer can have a product to the market with a relatively small capital investment and an inexpensive process. While others are still looking for money to build a mine, Energizer will be in production self-funding a much larger expansion. Inexpensive processing is the biggest factor to why this project is on the fast-track lane. Energizer has an abundance of large flake within the ore and has already demonstrated a high purity product with simple crushing, essential for Energizer in fast –tracking low cost operations.
I picked up a high grading sample and ground out 2.8 grams of +80 mesh large flake from a 27.5 gram sample just like in the video below.
It is just that easy.
Shipping?!??! Il n'est problème pas mon amie
There are already Labrodorite operations shipping five 20 tonne trucks to the coast in Toliara. Simply doubling the size of those operations to ten 20 tonne trucks gives Energizer the capacity to ship approximately 7,000 tonne per year; the same amount of graphite Flinders plans to initially produce at Kringel in 2013 at similar grades. Cost to ship by truck for a 7,000 tonne operation would not exceed much more than $100/tonne making Green Giant independent of any infrastructure requirements. Flinder’s market cap is double that of Energizer. If Energizer can demonstrate a similar production date and output comparable to Flinder’s Kringel. Production of 5,000 to 7,000 tonnes of large flake graphite with limited initial cap-ex investment and cheap processing should help eliminate any pricing disparity between Energizer Resources and Flinders Resources.
Grade is King
One of the biggest factors any mine can have to contributing to being a low cost producer is grade. Grade is and will always be king in mining. Some deposits don’t need grade because they are concentrating on producing a value added product such as spherical graphite like Northern Graphite’s Bisset Creek, but generally grade is king and is number one on the checklist that a well-rounded graphite mine should possess. Molo has a grade of a minimum of 7% and substantial intervals of 11%. Again the grade is similar to Flinders Resource’s Kringel Mine @ 8.8% in Sweden and Mega Graphite’s Uley Mine a ~7% in Australia. Both those fast track graphite mines have the advantage of pre-existing infrastructure, but Molo has elements that neither Kringel nor Uley have… primarily the scalability to be the top producing graphite mine in the world. Uley lacks large flake and is challenged with purity while Kringel has a good product, but does not have the tonnage or scale in size to easily ramp up mining operations. Neither mine have the potential that Green Giant has, especially if you have plans to produce more than 100,000 tonnes of graphite per year.
Scalable
One thing that is a must for a new industry demanding a new product is that there has to be enough of it to reasonably supply a large market at a reasonable price. This is why flake graphite is attractive for lithium ion batteries; it will replace a product that is 3 to 5 times more expensive. There are plenty of available resources in the ground throughout the world to do this, but few deposits provide the scale that Molo provides. The whole industry can rest at ease knowing that Energizer’s Green Giant graphite camp has the capacity to supply a large portion of the future lithium ion battery market. In fact a 25,000tpd mill at Green Giant would produce 1.5 times the current flake graphite market. What is vitally important for a critical element is security of supply. A deposit that can easily be ramped up to a 300,000 to 500,000 tonne per year producer like Energizer’s Molo deposit provides that security of supply. Green Giant will be a go to source for the industry for a large portion of their natural flake graphite over the next 30 to 40 years. If EV demand takes off into the 2020’s and goes parabolic, having a source that can easily ramp up supply in a timely and cost –efficient manner like Energizer’s Molo is essential for cost assurance in the industry. The industry will need this type of mine supply if graphite demand does indeed go to 2.5Mt by 2020.
Product
As vital as grade is to be a low cost producer, processing and scalability combine to keep costs low as well. We have all heard of ‘economies of scale’, but processing gives you the final product and can be quite intensive like in the rare earth industry. What is important in graphite is processing is tied to purity which will affect the price of the product. Unlike rare earths, it is not the cost of processing in the industry that is prohibitive, it is the pricing received for your product. Receiving a premium product for as little cost as possible is the goal with graphite. In graphite, prices range from $800/tonne for amorphous/fine flake to $6,000/tonne for 99.9% jumbo flake. Having the right product will ensure a highly profitable mine with such variable pricing. With the current information provided by Energizer, it is estimated that at minimum, 93% large flake would give Energizer a $2,200 to $2,400 per tonne product which is a great base to work of off for only half a mining operation. By no means will EGZ stop there, but for time to production and capital costs, it makes sense to start production with just the simplest process to at least attain positive cash flows.
More importantly than theoretically having a saleable product, is having real interest for your product from the graphite guys. Stephen Riddle of Asbury Carbons in an interview with The Critical Metals Report states…
“From experience, I know the quality of graphite that comes out of Madagascar has been extremely good, so I’d like a company that can mine it cost –effectively and set up a production plant there. Energizer Resources has found some good deposits in Madagascar. It’s not an easy place to operate in, but that could be one good area for graphite in the future. “
Stephen Riddle is the 4th generation Riddle to run the 118 year old company that bills itself as “the world’s carbon and graphite solution”.
Comparable preproduction graphite companies…
| Company | Project | Tonnage* | Grade* | Insitu graphite | Insitu Value | Market Cap* | Est. cash flow per year* |
| Northern Graphite | Bisset Creek | 60Mt to 80Mt | 2% | 1.5Mt | $4B | $80M | $30 to $40M |
| Flinders Resources | Kringel | 10Mt to 20Mt | 7% to 10% | 1Mt | $2.5B | $80M | $40M to $50M |
| Focus Metals | Lac Knife | 8Mt to 15Mt | 15% | 1.5Mt | $4B | $72M | $50M to $60M |
| Energizer Resources | Green Giant | 100Mt to 200Mt | 6% to 8% | 8Mt* | $20B | $40M | $100M to $150M |
*When stating tonnage and grades it is all relative considering cut-offs, estimates and probabilities. The above are just approximates and are meant as a rough guide. Market caps do not consider fully diluted valuation. Rightly or wrongly, these are the assumptions I used to arrive at my figures. Northern Graphite is at 2,500tpd per tonne @ $6,000, Flinders is at 750tpd @ $2500, Focus is at 750tpd @ $2000, and Energizer is at 2,500tpd @ $2500. Cost assumptions are $40 to $45 for FMS, EGZ, FDR while NGC assumes $80 per tonne to get $6,000 product.
High NPV / Cash Flow Potential / Low Cap-EX Mine
At 250tpd (mom and pop) or 25,000tpd (world's biggest graphite mine)… Green Giant is a high value graphite project
Below is a simple flow sheet of hypothetical graphite mines and different theoretical options for Energizer Resources. Each option; 250tpd, 2,500tpd or 25,000tpd would be practical at Molo under a certain demand scenarios over the next 10 to 15 years. Below are projections for costs and pricing under these different scenarios and can only be considered rough estimates at best. They are only used as guidelines for making investment decisions. The Molo discovery and surrounding satellite deposits are capable of supporting all three types of operations. A 250tpd operation would help satisfy growing demand over the next 3 years while a full flotation processing facility built for 2014/2015 to satisfy demand past 2015. The 25,000tpd operation might be considered by 2020 if graphite demand does indeed take off and mass produced applications from the graphene market start to materialize.
Revenues from starting small and building big could also help self-fund expansion. The impact of dilution on the share price could be be mitigated by self-funding out of cash flow. What is important to note is that once in production with a crusher, Green Giant could be an entirely self-funding operation. Strategic capital injections could maximize and increase production targets, but EGZ could theoretically generate $30M to $50M in revenue towards the full capital cost of a 2,000 to 2,500 tonne per day flotation set-up similar and size to Bisset Creek within 2 to 3 years with just a crusher. Something that is easily within Energizer's current financing options. The fast-track option will help increase financing options with near term cash flow coming in the meantime and speeding up production by at least 24 months of cash flow. It also helps demonstrate that Molo will be a profitable operation on a small scale. At current prices payback periods are extraordinarily short promising of paying back in less than 1 year for a $100M capex project.
Just like the unlimited production scenarios EGZ has, a fast-track crushing only option increases Energizer financing options. These options include a combination of internal cash flow, equity and debt. EGZ could heavily weight towards debt which is a tough sell for most mining projects where paybacks of 3 to 5 years are common. The debt option will go a long way to maximizing shareholder value through minimal equity financings. With many companies already interested in Green Giant's product, EGZ also has the option of selling off-takes until the cows come.
EGZ is well funded with $4.5M in the bank for the resource delineation program on Molo. The company also has $32M in warrants and options giving Energizer a nice cushion of pre-existing equity if and when the company needs it. $32M will go a long way to develop full scale 2,000tpd production facilities at Green Giant. Ideally Energizer Resources could start out as a 250tpd operation and move up to a 25,000tpd operation over the next 15 years self-financing a lot of the costs. Building the world’s biggest graphite mine all depends on the demand curve for graphite, but if 2.5Mtpa demand plays out… the industry will eventually need a 500,000 tonne per year producer like Molo to keep graphite prices from escalating out of control if and when graphite demand goes parabolic.
Molo is just that good, at 250tpd or 25,000tpd… Energizer’s Green Giant is the graphite camp holding ‘the graphite deposit’ that capable of supplying the majority of the world’s need for natural flake graphite for years to come.
| Operation Type | Fast-track (crushing only) | Typical Full Floatation Mill | World’s Biggest Graphite Mine |
| Grade | 10% | 8% | 7% |
| Recovery | 80% | 90% | 95% |
| Mill size (tpd) | 250tpd | 2,500tpd | 25,000tpd |
| Days in operation/yr | 350 | 350 | 350 |
| Annual graphite production (tonnes per year) | 7,000tpa | 63,000tpa | 580,000tpa |
| Assumed large flake purity | 94% | 97% | Broad range |
| Assumed Revenue | $2,500 | $3,000 | $1,500 |
| Operating Costs | $25 | $45 | $30 |
| Capital Costs | ($20M) | ($100M) | ($1B) |
| Annual Net Cash Flow | $15M | $150M | $610M |
| Payback | 1.3 years | 8 months | <2 years |
| 10 year NPV @ 10% | $70M | $750M | $3.3B |
| 20 year NPV @ 10% | $100M | $1.1B | $3.8B |
EGZ if plays their cards right could fully finance themselves to 2,500tpd production with less than 300M shares outstanding which leaves the potential for $2 to $3 dollar share price once in full production and receiving cash flows in excess of $100M per year. Of note is that the biggest factor that makes the numbers in this cash flow statement change more than anything is price. You could mine graphite ate $100 per tonne price and it wouldn’t matter for most graphite mines. If the price drops in half, the potential cash flows diminish as opposed to cost doubling at current graphite prices.
Molo is the Graphite discovery of 2012
Green Giant is…
- Fast-trackable
- Easily scalable - >100,000 tonnes of graphite per year
- Low capital cost – High NPV/High IRR/Fast Payback
- Low cost mining operations
- Wide range of product - large flake to fines
- Simple processing
- High purity product – simple crushing averages 93%C
The discovery of a potential economic graphite resource at Green Giant with the qualities to mine within 18 to 24 months and take advantage of high graphite prices has made EGZ a very unique investment opportunity. The lucrative potential near term cash flows that a low cost graphite mine brings will turn Energizer into the star of the industry. They will become the industry leader as far as mining graphite goes over the next 2 to 3 years. Mining graphite from Molo is easy money and profitable at industry sustaining prices. Something you need from a potential large source for lithium ion batteries. A source that the lithium ion battery industry needs, but it does not have. There needs to be a balance between profitability and allowing car manufacturers to make an affordable electric vehicle. Prices at which consumers can afford to buy electric vehicles. Right now the biggest barrier is the cost in the battery. If prices remain 50% to 100% above comparable internal combustion vehicles, consumers will not adopt. Get the battery price down to $3k to $5k and give out $10k subsidies... consumers will adopt.
Just as the internal combustion engine revolutionized the 20th century and changed the way humans lived. The lithium ion battery is as revolutionary in changing the way we power those vehicles. A revolution that will eventually lead to huge cost savings for the consumer. High purity natural flake graphite will be essential in the mass production of ‘Lithium Ion Batteries’ in electric vehicles. It is the product that is a solution to making these batteries more affordable. Pricing will also be essential in the production of graphene which could see exponential demand over the next 25 years. For graphene it is more about finding an inexpensive process. You look at Green Giant and say, yup, here is an area in the world that can and probably will supply a lot of the world’s cheap graphite.
Throw on top of that the 3rd rated vanadium project in the world… that is one big insurance card for EGZ controlling a large area in Madagascar that holds two strategic elements critical for an electric future. You have the graphite discovery of the year, possibly even the decade. You have near term low capex/low cost cash flows that a graphite mine will bring and Africa’s leading mine builder in DRA heading up the mining operations at Green Giant. DRA liked the project so much they bought into the company which the rarely do and have an option to buy another 3.4%. You have top investment from Dundee, Investor's Group, Cliffs, Mackenzie and now DRA with a mandate to buy another 5 million shares on the open market. You have one of the top exploration geologists in Craig Sherba who helped discover Nevsun's world class Bisha Mine. With EGZ, everything from the project to the people involved to investment potential make this one of the most exciting discoveries in graphite. Fast-tracking this world class graphite discovery will eventually lead Energizer to be the market leader when it comes to graphite production.
Energizer Resources is positioned as an emerging leading critical metals company with clearly enough mineralization of both minerals to be a secure supply source for the next century. Green Giant is something special, once in production this site will have the capacity to produce graphite for the next 100 years. Green Giant has the potential to put Madagascar on the map as far as graphite goes. Current production out of Madagascar is 5,000 tonnes. Green Giant could eventually produce 100 times the nations current output. A discovery like this to a country like Madagascar is comparable to the iron ore discoveries in the mid-20th century and developing Australia's mineral wealth. Graphite is far from the market iron ore is, but if graphene applications are commercialized, it is a market that will see growth well into the 21st century long after the 'Commodities Super Bull Cycle' is over. It is a material where the only limitations on its applications are subject to the limitations of the human mind.
Energizer Resource’s Green Giant Graphite Project is undeniably the graphite discovery of 2012.
Christopher Skidmore
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