Dear Shareholder,
I am pleased to present you with the 2018 Annual Report for Metals Australia Limited (ASX: MLS). In what has been a busy year, the Company has successfully executed upon its exploration and development strategy at the Company‟s high-grade Lac Rainy Graphite Project, located in Quebec, Canada, as we position ourselves to become a producer of high-grade and high-purity graphite for the burgeoning lithium-ion battery sector.
The outlook for high-grade graphite is positive and we are encouraged by the early exploration that has been demonstrated at Lac Rainy. As China has begun closing down several major graphite producing mines as part of a crackdown on unsafe and environmentally damaging practices in the industry, it is likely to be a net importer of graphite for the first time in the wake of these closures and additional regulations.
The positive market outlook combined with our early exploration success provides the Company with the confidence it needs to continue the development at Lac Rainy.
We have established a strategic landholding of more than 46sq km (4,576 hectares) in the Fermont region of Quebec. Geological mapping and geophysics completed by the Company in 2017 has confirmed high-grade outcropping graphite mineralisation at the Project. We have recently completed the Phase I exploration program which consisted of channel sampling across the width of the mineralised horizons, with geological interpretation assisting final drill collar locations.
The assay results are pending with preliminary results proving to be encouraging. We are fully funded to complete our initial 1,500m diamond core drilling program at Lac Rainy and have identified a strike length of mineralisation at the project in excess of 2.5 km. The Company is keen to see what the initial drilling indicates.
The Lac Rainy project has the potential to deliver a high-grade, near-surface graphite
deposit. Our initial metallurgical testing indicates that Lac Rainy graphite mineralisation has the potential to produce a commercial graphite concentrate. The samples returned high head grades of 35.1% and 21.7% Graphitic Carbon (Cg) and achieved a graphite recovery of up to 91.0% using standard mineral processing technologies. The samples also achieved
combined concentrate grades of up to 96.7% Total Carbon (Ct), exceeding typical cut-off grades for commercial grade graphite concentrates of 95% Ct. Importantly, the total carbon grades were up to 98.8% Ct in large and jumbo flake size fractions with low levels of potentially deleterious elements. Lac Rainy also boasts excellent project infrastructure and access to low-cost hydro-power.
During the year, we negotiated a M0U with the diversified and battery-related downstream graphite products manufacturer, Weihai Nanhai Carbon Ltd (“ Nanhai Carbon ” . We consider this strategic alliance important to our development and look forward to working
with Nanhai Carbon as we continue to explore our Lac Rainy project. The MoU provides the Company with confidence for the continued exploration and development of the Lac Rainy Graphite Project. It also demonstrates the confidence of Nanhai Carbon in the grade, flake size and purity of the potential graphite concentrate from the Lac Rainy Graphite Project. Initial testing by Nanhai Carbon confirmed that the Lac Rainy graphite concentrate is a high-grade / high-purity product that upgrades with simple processing/ beneficiation techniques
implying a low-cost production profile.
As we look to the coming 12 months, it is shaping up to be a busy year for Metals Australia as we invest in exploration across our portfolio. We expect to provide regular news flows as we undertake this work, and we look forward to a successful year ahead.
. We consider this strategic alliance important to our development and look forward to working
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