Energizer Resources Inc. (TSX:EGZ,OTCBB:ENZR,FBW:YE5) is a mineral exploration and development company based in Toronto, Canada, actively developing the Molo flake graphite deposit in Fotodrevo, southern Madagascar. The Molo deposit is located in the Green Giant Graphite project, and is part of the joint venture property with Malagasy Minerals Limited in Madagascar. Energizer has a 75% ownership interest and is the operator of the Project.
- Preliminary Economic Assessment for Molo: Pre-tax NPV of $421,464,000, average mill recovery 89%, average annual production of 84,000 tonnes per annum, and a mine life of 20 years.
- NI 43-101 compliant resource on the Molo deposit in November 2012: Targeting a deposit size between 80 to 120 million tonnes grading between 6-8% carbon
- Strategic alliance with Africa’s leading mining project development manager, DRA Mineral Projects, who is fast-tracking Energizer to production
- The Green Giant project is the only known new graphite discovery – current graphite companies are recycling past-producing and/or existing projects
- At 100 million tonnes, the Green Giant project will be the largest known graphite deposit in the world
The Molo Graphite Deposit
The Molo deposit is located in the Green Giant Graphite project in southern Madagascar, and is part of the joint venture (JV) property with Malagasy Minerals Limited in Madagascar.
Based on drill and trench data received to date, as well as mapping, prospecting, and geophysical surveying, graphite mineralization is confirmed at surface and over an area of at least 250,000 m2. Drilling has confirmed that the mineralization is open at depth in excess of 300 metres.
The Molo has a potential deposit size between 80-120 million tonnes*, at a grade range between 5 and 8% carbon (C). The Company anticipates the Molo will be the world’s largest known single source deposit of high-grade graphite. Molo’s size and scalability will be a barrier to entry for other producers.
*The potential quantity and grade of the Molo deposit is conceptual in nature and there has been insufficient assay data to adequately define a mineral resource in accordance with NI 43-101 requirements at this time. The potential quantity and grade of the Molo has been determined through the progression of exploration methodology. This included airborne geophysical surveys, ground geophysics, mapping, drilling and trenching. The deposit target range is based on drilling and trenching results obtained to date.
Energizer’s Molo deposit possesses four key attributes that set it apart from other deposits in the world and position it to be a potential low-cost production model for the industry. These include:
- An excellent topographical setting. The Molo deposit rests in a flat and semi-arid environment, with no environmental issues. With the deposit immediately at surface, operations can be optimized through little to no stripping requirements and easy access to site.
- An ideal geographic location. The Molo deposit is uniquely located in the centre of the hub of key graphite demand markets of China, India, South Korea and Japan. Furthermore, the Molo deposit is in close proximity to specialty-finishing battery producers in both Korea and Japan. Currently, China must send almost all of it’s spherical cut graphite (required for batteries) to both Korea and Japan for specialty coating, which is the final, and very complex, process to produce battery-grade graphite.
- At 100 million tonnes and an average grade greater than 6% carbon, the Molo would be the world’s largest known single source deposit of high-grade graphite, , In addition, the Molo deposit possesses a unique metallurgical characteristic that allows simple mechanical separation of the graphite up to 93% without flotation.
- Current in-place and serviceable infrastructure for transportation water and power. Confirmed by the PanaAlpina Group, one of the world’s leading intercontinental air and ocean freight supply chain and logistics companies, the in-place infrastructure at Molo will allow for immediate production. Utilizing a now serviceable road structure from site to port, 160km away, there are existing water sources proximal to the Project. Over-the-fence power will be required initially and will be satisfactory until the nearby Sakoa Coal Field (35km away) will upgrade the now serviceable infrastructure to world-class status. Targeted to produce 5 million tonnes of coal on an annualized basis, the Sakoa Coal Field will require significant upgrades to road infrastructure, port infrastructure, and on-sight power plants that Energizer expects to tap into. It is the Company’s understanding that the Sakoa Coal Field is targeting operation between 2015 and 2016.
Energizer secured a partnership in 2012 with DRA Mineral Projects (DRA), Africa’s leading mine engineering, construction and operations company. With over 30 years of operating experience in Africa, DRA has built over 200 mines and currently operates 23, with clients such as Xstrata, Rio Tinto, Anglo American and Vale. This is a significant advantage for Energizer as it advances to production as it gives the Company a complete ‘turn key’ solution for mine development. Another coup for Energizer is the appointment of two senior directors of DRA – one to Energizer’s Board of Directors and the other to its Mine Development Committee.
Summary of the PEA Study Results (Economic parameters refer to real numbers with the exception of the post-tax NPV and post-tax IRR; $USD)
|Pre-tax NPV (10% Discounted, real)||$421,464,000|
|Pre-tax IRR (Real)||48%|
|Post-tax NPV (10$ Discounted, real)||$341,803,000|
|Post-tax IRR (Real)||41%|
|Mine life||20 years|
|Graphite sale price||$1564 per tonne|
|Average Head Grade||8.50%|
|Average annual ore mined||1,169,749 tonnes per annum|
|Average stripping ratio||1.65|
|Average mill recovery||89%|
|Average annual production||84,000 tonnes per annum|
|Mining cost||$4.76 per tonne mined (Initial LOM)|
|Processing cost||$22.29 per tonne milled|
|Transportation cost (FOB port)||$105.00 per tonne concentrate|
Note: DRA is working towards meeting the requirements of a Preliminary Economic Assessment as defined in National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101″). The economic analysis relevant to the optimal pit model contained in the technical report is based on Indicated Resources (as defined in NI 43-101), and is preliminary in nature. Inferred Resources are considered too geologically speculative to have mining and economic considerations applied to them and to be categorized as Mineral Reserves (as defined in NI 43-101). Mineral resources that are not mineral reserves do not have demonstrated economic viability. There is no certainty that the reserves development, production, and economic forecasts on which the PEA is based will be realized. The capital expenditure estimate is based on a +/- 25% cost accuracy and does not include any ancillary costs outside of actual production of possible investment in infrastructure related assets. According to the Ontario Securities Commission, a PEA is held to be accurate to +/- 50% accuracy.
Mineral Resource Estimate
The mineral resource estimate for Molo is summarized below. The mineral resources are classified in the Indicated and Inferred categories according to the Canadian Institute of Mining Definition Standards. Resources within the “low grade” domain are stated at a 2% C cut-off, and resources within the “high grade” domains are stated at a 4% C cut-off. The total Indicated Resource is estimated at 83.99 Mt, grading at 6.36% C, with an additional Inferred Resource of 40.32 Mt, grading at 6.3% C.
|Classification||Material Type||Tonnes (Mt)||Grade (C%)|
|Indicated – Total||83.99||6.36|
|Inferred – Total||40.32||6.3|
The Green Giant Graphite Project
The 100% owned Green Giant Project, located 145 km southeast of Toliara in the Tulear Region of South Central Madagascar. The project has the potential to become a flake graphite camp however the Company’s immediate focus is on the Molo graphite deposit located on the JV property.
Exploration to Date
The identification of graphite as a potential credit to the NI 43-101 compliant vanadium resource led geologists to conduct a reconnaissance exploration program on the property with the goal of delineating new graphitic trends, and comparing them to those associated with the vanadium mineralization.
During the course of the Phase I program, surficial graphitic trends were identified on the Green Giant Property. These graphite trends were visually determined to be of both higher carbon content, and larger flake size than those associated with the NI 43-101 compliant vanadium resource mineralization. Based on the promising results of the Phase I program, the Phase II exploration program was launched in November 2011.
In March 26, 2012, Energizer Resources announced that graphite ore samples from the Fotsy and Molo zones were submitted to the North Carolina State University (NCSU) Minerals Research Laboratory in Asheville, North Carolina for preliminary evaluations to define potential for recovery of commercial products. Simple mechanical crushing with no flotation yielded flake sizes of +50 mesh, which, according to Tom Burkett, Vice President of Graphite Materials & Systems at SGL Carbon Group – the world’s largest carbon company – is regarded by the industry as jumbo flake. Both ores have produced graphite concentrates at purities of +90%.
In the Fondrana Zone, the average aggregate graphite intersection from drilling is 73 metres with a weighted average carbon assay of 6.14 percent C, while the average aggregate trench intersection is 82.5 metres with a weighted average of 6.73 percent C. The Fondrana zone is found at surface and extends to a vertical depth of at least 120 metres. The zone is confirmed to extend for at least 800 metres in strike length with mineralization open along strike and at depth.
In the Fotsy Main Zone, the average aggregate graphite intersection from drilling is 20.8 metres with a weighted average carbon assay of 5.62% C, while the average aggregate trench intersection is 10.9 metres with a weighted average of 6.33 percent C. The Fotsy zone is found at surface, extends to a vertical depth of at least 115 metres, and is open along strike and at depth. The zone is confirmed to extend for at least 800 metres in strike length. Mapping and prospecting have indicated that this zone extends for over 6 kilometres in length.
Energizer has put its exploration activities on hold while it focuses its efforts on developing the Molo graphite deposit.
In January 2012, there were 9 junior exploration companies involved in graphite exploration on the ASX, AIM and TSX Venture exchanges. Today, there are over 82 companies managing 150 graphite projects in 13 countries. Of those 82, 9 have a compliant resource (NI 43-101 or JORC), 3 have a PEA, 1 has a Bankable Feasibility Study, and none have an off-take arrangement.
Energizer’s Molo deposit possesses four key attributes that set it apart from other deposits in the world and position it to be a potential low-cost production model for the industry. These include: an excellent topographical setting, an ideal geographic location, current in-place and serviceable infrastructure for transportation water and power, and at 100 million tonnes and an average grade greater than 6% carbon, the Molo would be the world’s largest known single source deposit of high-grade graphite.
Kirk McKinnon - CEO & Chairman, Director
J.A. Kirk McKinnon has served as Chief Executive Officer and a director since April 2006. He brings over 25 years of senior management experience to the Company. Mr. McKinnon is currently President and CEO of MacDonald Mines Exploration Ltd. and Red Pine Exploration Inc., both of which are resource exploration companies headquartered in Toronto, Canada. Previously, Mr. McKinnon held senior management positions with several high profile Canadian corporations, including Nestle Canada.
Richard Schler - Vice President & CFO, Director
Richard E. Schler, MBA, has been our Vice President, Chief Financial Officer and a director since April 2006. He is also currently serving as Vice President and Chief Financial Officer of both MacDonald Mines Exploration Ltd. and Red Pine Exploration Inc., both of which are resource exploration companies headquartered in Toronto, Canada. Before joining these companies, Mr. Schler held various senior management positions with noted corporations. He also has over 25 years of experience in the manufacturing sector.
Craig Scherba, P.Geol. - Senior Vice President of Operations, Vice President of Exploration, Director
Craig Scherba has now been appointed Senior Vice President for the Company’s Operations in Madagascar. Over the past 5 years, he served as a geological consultant and then as Energizer’s Vice President of Exploration and is primarily responsible for the discovery and development of the Project to-date in Madagascar. Reporting to Senior Management of Energizer, Mr. Scherba’s primary responsibility is that of managing the Madagascar operations, including direct oversight of DRA and all exploration and development activity.
Brent Nykoliation - Vice President of Business Development
Brent Nykoliation brings significant skills and experience to the Company. With a career that has spanned 15 years in various senior management roles in Marketing and Business Development (Nestle), Retail Sales and Merchandising (Home Depot) and Merchandising Operations (Whirlpool), Brent is well positioned to market Energizer Resources’ exploration initiatives.
Peter Liabotis - Vice President, Finance
Mr. Liabotis is a Canadian Chartered Accountant with over 13 years of post-qualification experience, having qualified in Ontario during 1997. Mr. Liabotis articled for both KPMG in Mississauga, Ontario where he audited mainly retail and manufacturing organizations and PriceWaterhouseCoopers in Hamilton, Bermuda where he audited investment funds, insurance companies and local retail clients. From 1998 to 2008, Mr. Liabotis worked for Olympia Capital, a hedge fund administrator where he served as Senior Vice President – Chief Financial Officer. Upon returning to Canada in July 2008, he was employed first as a consultant and then as a salaried employee for EFG Canada.
Jacob McKinnon - Vice President of Operations
Over the last 6 years, Mr. McKinnon has been exposed to all levels of the mining industry which has given him the necessary experience to take on the role as director of Operations. He is currently the VP of Operations for three TSX Venture Exchange listed companies: MacDonald Mines Exploration Ltd., Red Pine Exploration Inc. and Honey Badger Exploration Inc.
Joseph Heng, CA - Controller
Joseph Heng is a Chartered Accountant with over 36 years of industry experience in public accounting.
Roland Fok Seung - Chartered Accountant and Country Manager
Mr. Fok Seung is a Chartered Accountant of the Institute of England and Wales and the Association of Chartered Certified Accountants. Employed as Energizer’s Madagascar Country Manager for the past 5 years, Mr. Fok Seung is based full time in Madagascar and will continue to act in this capacity with a focus on financial related business activity.