Craig McGuckin said....., page-7

Reflecting some more on your question @mytime ....


MRL Corporation secures graphite project with production potential

http://www.*.com.au/companies/news/...-project-with-production-potential-57010.html

Tuesday, August 19, 2014 by Proactive Investors

http://www.*.com.au/genera//img/companies/news/sri_lanka_358_53f2a70e23e53.jpg

Historical records indicate that the graphite was of such high grade that the material would be direct shipping quality.

MRL Corporation's (ASX:MRF) shares are set to lift at the open after the company secured a new high-grade graphite project with a mining licence, providing the potential for a path to production and early cashflow.

Historical records indicate that the graphite was of such high grade that the material would be direct shipping quality.

MRL has signed a Heads of Agreement to acquire the lease covering the high-grade Aluketiya Graphite Mine in Meegahatenna, Sri Lanka.

Aluketiya produced high-grade graphite for several decades until the operation was stopped in the 1960s.

Extensive veins of high-grade graphite are visible from surface but the area has not been subjected to any modern exploration techniques.

The area is considered to be the richest graphite-bearing area in the country, and is a significant addition to the company's existing high-grade projects.

Historical records indicate the veins are steeply-dipping (approximately 70 degrees to the east) with a north-south strike direction and with “very good” quality crystalline – vein graphite.


Consideration

MRL will pay a lease fee of US$3500 a month during the exploration phase. Upon the start of production, MRL will pay a 10% royalty which will be based on sales.

The royalty will be paid quarterly in arrears within 20 days of each quarter’s end.

The transaction is subject to MRL completing due diligence and execution of a formal lease agreement.

Craig McGuckin, managing director, commented:

"We are aiming to develop a high-grade, low-cost mining operation in the shortest timeframe possible.

"Based on what we know, the cost of getting into production will be extremely low and therefore there will be no need to spend the time and money establishing a JORC-compliant resource.

"The fact that Aluketiya is already covered by a Mining Licence is immensely valuable because not only will it enable us to start production quickly, it will also underpin our applications for other approvals such as transport and export licences."


Drilling of Aluketiya

MRL will seek to establish the extent of this high-grade graphite mineralisation as part of a drilling program due to start in late 2014.

However, MRL does not intend to drill Aluketiya to the point of being able to calculate a JORC-compliant resource estimate and will instead aim to begin production as soon as possible.


The importance of vein graphite

Vein (crystalline) graphite is the purest form of graphite with TGC grades typically >90%, with some grade as high as 99.5% TGC.

Mining vein graphite may be considered analogous to high-grade gold vein mining, requiring considerably less capital expenditure when compared to large-scale open pit mining.

Operating unit costs will also be lower than those for typical large-scale open pit mining.


Nature of vein graphite

Sri Lankan graphite deposition model is best described from the ‘bottom up’: tension fractures formed in the metamorphic sediments, caused by the folding of the sediments, creating ‘conduits’ for the hydrothermal deposition of high quality vein graphite.

Historically, mining of these veins has found the veins generally increase in thickness and grade quality with increasing depth. Graphite veins generally dip steeply at –70° to near vertical, enabling ‘narrow vein’ extraction mining techniques similar to those used on narrow vein, high-grade gold deposits.

The method commonly used is an overhead retreat stoping technique where the high-grade vein graphite is mined and hauled to surface without contamination.

The graphite selvages, in contact with the surrounding waste, is hauled to surface and stockpiled for upgrading. The balance of the waste is used to fill the floor of the stope.


Across at Pandeniya - Priority 1 Area

In other MRL Corporation news, drilling is continuing at the company's Pandeniya - Priority 1 Area within the Warakopola Area in central Sri Lanka, where extremely high-grade graphite intersections have been returned.

These include assays showing 99.2% Total Carbon.


Analysis

The acquisition complements and expands MRL’s extensive portfolio of high-grade vein graphite licences in Sri Lanka, where it is aiming to develop multiple small-scale production hubs.

Aluketiya produced high-grade graphite for several decades until the operation was stopped in the 1960s, and historical records indicate that the graphite was of such high grade that the material would be direct shipping quality.

Due to the nature of the vein graphite, it is anticipated vein widths of ~25cm, using narrow vein mining techniques can be economically extracted from underground operations.

With a potentially relatively low capital expenditure likely for the new project and replete with a Mining License to allow transport and export, this could just be a game changer for MRF.

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It has been almost a year to the day from this acquisition and I think the seeds of an answer may be here....


Interesting isn't it? What does everyone think?


Almost a year !!!!




Kind Regards

DYOR !!!