Energizer Resources’ Discovery of Graphite and Vanadium Leads to Agreement with Africa’s Leading Mining Project Development Manager, DRA Mineral Projects, to Develop the Green Giant Project in Madagascar
With confirmation of the discovery of two strategic minerals, vanadium and graphite, Energizer Resources Inc. (TSX: EGZ) (OTCBB: ENZR) (FWB: YE5) (“Energizer” or the “Company”) is now well positioned to move forward to mine development. This confirmation of the significant discovery of graphite, coupled with the Company’s NI 43-101 compliant resource of vanadium, and their respective roles in Green Energy and new cutting-edge products, has now become the catalyst for development.
Energizer’s discoveries place it in a unique position within the industrial minerals arena – the ability to provide two strategic minerals from one source. The Company also believes that its graphite discovery is the first new discovery globally of this important industrial mineral. The significance of graphite is now being recognized as a result of its use in multiple new applications and outside of China, companies have been focused on reopening past-producing graphite projects to meet anticipated demand.
Graphite is well established as an essential industrial mineral. However, it is graphite’s new applications in electric vehicles, high-tech consumer electronics and nuclear power, in conjunction with its new label as the wonder substance in its single-layer form, called graphene, that is changing the demand curve for graphite.
While graphite and vanadium are forecasted to have strong growth in their traditional applications (primarily steel related) for the next decade, it is these new applications and developments, and their resulting projected demand, that are the drivers for the development of the Green Giant Project (the “Project”).
The other important issue relating to graphite and vanadium is the China factor. Despite traditionally producing 75% of the world’s graphite, it would appear China’s raw materials supply is both rapidly diminishing and lower in quality. Once the biggest exporter of graphite, China is now the biggest importer. They have imposed a 20% export duty plus a 17% Value Added Tax and have closed state-owned enterprises this year to preserve its graphite resources.
Energizer has been at the forefront of outlining the applications for vanadium, such as its proven role as a battery “supercharger” when combined with lithium and the ongoing advancements in, and the deployment of, Vanadium Redox Flow Batteries (VFBs) by such notable companies as the United States’ Ashlawn Energy and Germany’s Cellstrom GmbH.
We have witnessed the evolution of VFB’s going from a cost of 22 cents per kilowatt-hour (kWh) per-cycle over a year ago to approximately 11 cents per kWh per cycle today with government subsidies.
Ashlawn Energy, who is on target to install North America’s largest VFB (at 8 megawatt-hours) in Painesville, Ohio this year, has been a pioneer in the cost reduction of VFBs. Ashlawn Energy expects to be less than 9 cents per kWh per cycle within the next 18 months. Achieving less than a 9-cent cost per kWh would match the current cost of today’s legacy backup power systems, shortens the payback period and would be the economic catalyst to commercialize the VFB.
Formal Agreement Signed with Leading Mining Project Development Firm – DRA Mineral Projects
Given this background, Energizer believes that the timing to move forward with its Project is excellent. To this end, the Company is pleased to announce it has signed a formal agreement with South Africa’s DRA Mineral Projects, a world-leading process engineering and mining project development management firm, for the development of Industrial Mineral Projects in Madagascar. Specific focus will be on the development of vanadium and graphite minerals on Energizer’s Green Giant and Malagasy Minerals JV properties.
From Design to Operational Mine
DRA will be appointed as the technical partner of Energizer. As a provider of full Engineering, Procurement and Construction Management (EPCM) services, DRA offers Energizer the ability to both build and then operate a mining operation, thus providing a complete solution.
With this expertise, key DRA personnel will have direct roles in the development of the Project in Madagascar and will be responsible for facilitating discussions and interfaces with the Madagascar Government and key stakeholders in the Sakoa Coal project regarding infrastructure development and the identification of any synergistic opportunities.
Johann de Bruin, Director of DRA Mineral Projects, stated, “DRA has been following the development of the minerals industry in Madagascar with keen interest over the past six years whilst completing a series of feasibility studies for various potential projects on the island. It is evident that Madagascar has a lot to offer the global minerals industry and the resolution of political uncertainty, commitment to infrastructure development along with the continued global demand for its minerals are expected to mobilize a number of projects. DRA views the presence of these minerals, and future breakaway materials like graphene, as essential in applications for electric vehicles, energy storage, and high-tech as promising and is therefore very excited about the relationship with Energizer Resources.”
Kirk McKinnon, CEO of Energizer commented, “This arrangement with DRA is significant as it provides Energizer with experts that have all the skill-sets required to advance our Project to mine development, while interfacing with the Government, and leveraging their knowledge on infrastructure through insight into the Sakoa Coal project. We are also pleased that Energizer’s continuing project development will bring employment and substantial expansion of infrastructure to the people of Madagascar in this region. The Company uses well over 100 local people through its exploration programs and have found them to be highly industrious. DRA will be able to leverage this skill-set as the Project grows and continues to add more resources and infrastructure enhancements to the region. Energizer’s primary focus will now be the interface with and procurement of, key strategic partners and project financing. Currently the Company is well financed to reach key project milestones, including the completion of the Preliminary Economic Assessment (PEA Study)”.
Key Components of Agreement
- Exclusivity with DRA for the development of vanadium and graphite mineral projects in the geographical region of Madagascar
- Manage and monitor the development of required metallurgical testing and to ascertain the feasibility via Preliminary Economic Assessment (PEA), Prefeasibility Study (PFS) or Bankable Feasibility Study (BFS) of potential mine projects
- Preparation of presentations for the Energizer board, potential investors and partners to update such stakeholders on project development progress, either during the study or implementation phases of the project
Key Appointments to Organizational Structure
Effective February 1, 2012, Energizer’s Board of Directors will implement the following appointments to further position the Company as it moves to mine development.
Johann de Bruin, Pr.Eng – Project Leader
Johann de Bruin, Pr. Eng, will be appointed to the Company’s Board of Directors as the Project Leader and key interface for mine development. Mr. de Bruin is a Director of DRA with a 15-year track record of bringing numerous greenfield mining projects throughout Africa to feasibility. He currently leads the initiative of business development into Africa for the DRA Group and has acted as the primary liaison between DRA and Energizer for the past 3 years.
Mr. de Bruin brings considerable insight and skill into evolving the infrastructure components associated with new projects in developing countries and is highly committed to the advancement of Energizer’s Project. Mr. de Bruin will be involved in the Project on a day-to-day basis as required.
Special Advisory Committee Appointments
Robin Borley, Pr.Eng – Capital Projects and Mine Development
Robin Borley will be appointed to the Company’s Special Advisory Committee in the capacity of Capital Projects and Mine Development. Mr. Borley is a Director of DRA and a Graduate Mining Engineer and Certified Mine Manager with over 25 years of International Mining experience across a range of commodities.
Mr. Borley brings considerable knowledge and experience to the technical and operational aspects of mine development. As the former Chief Operating Officer with Red Island Minerals, one of the property owners of a significant coal resource in the Sakoa Coal Field Project, his experience gained as well as the contacts and interface made with key Government officials will be invaluable to the Company as it looks to develop its projects in Madagascar. Mr. Borley will also be involved in the Project on a day-to-day-basis as required.
Marc Hein – Special Mauritian Counsel to Energizer
Mr. Hein will be appointed to the Special Advisory Committee in the capacity of Energizer Mauritian Counsel to oversee and manage the interface with both the Madagascar and Mauritian Governments.
Mr. Hein is a qualified Mauritian, English and French lawyer, specializing in business law. He is the Head of Practice of Juristconsult Chambers and has practised law in Mauritius and Madagascar since 1980. As a provider of legal services to Energizer for the past 4 years, Mr. Hein has spent considerable time in Madagascar and maintains excellent relations with key government officials in both Mauritius and Madagascar. He is a former Member of Parliament in Mauritius and a former Chairman of the Mauritius Bar Council.
Mr. Hein sits on the board of several multinational companies and is a Fellow of the Mauritius Institute of Directors. The key business and government relationships he has cultivated over the years will be instrumental to Energizer.
Mr. Hein is based in Mauritius, a small island due east of Madagascar that is recognized as the wealthiest, best-governed country in Africa by The World Bank and the Economist Intelligence Unit’s Democracy Index.
They will both join Brian Tobin, Peter Harder and Anthony Toldo on the Special Advisory Committee.
Craig Scherba – P.Geol., Senior Vice President, Madagascar Operations
Craig Scherba will be appointed to 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 will assume the primary responsibility of managing the Madagascar operations, including direct oversight of DRA and all exploration and development activity.
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.
About DRA Mineral Projects
- DRA is a world leader in process engineering and metallurgy and has been a provider of full EPCM services (Engineering, Procurement and Construction Management) since 1984
- With a primary focus on managing the development of mining projects in the African Continent
- Employ over 1,100 people with operating offices in Southern and Central Africa, Australia, India, China, Canada and the UK.
- A well-qualified team of over 350 professional engineers and project management professionals specializing in large capital projects in the minerals processing fields of coal, vanadium, diamonds, gold, platinum, ferrous metals, base metals and heavy mineral sands
- They are a leader and specialist in the field of outsourced operations and maintenance of minerals processing plants. They currently operate 22 mineral processing facilities in Africa and Indonesia, including:
|Kroondal 1||PGM’s & Cr||Current AQPSA||Republic of South Africa (RSA)|
|Kroondal 2-PSA||PGM’s & Cr||Current AQPSA||Republic of South Africa (RSA)|
|Marikana||PGM’s & Cr||Current AQPSA||Republic of South Africa (RSA)|
|Elands||PGM’s & Cr||Current XTRATA||Republic of South Africa (RSA)|
|Everest South||PGM’s||Current AQPSA||Republic of South Africa (RSA)|
|Vaalkrantz||Coal||Current Leeuw mining||Republic of South Africa (RSA)|
|Letseng||Diamonds||Current Gem Diamonds||Lesotho|
|Khumani||Iron Ore||Current Assmang||Republic of South Africa (RSA)|
|Nkomati Nickel 2||Nickel||Current Norilsk||Republic of South Africa (RSA)|
|Pilanesberg||Platinum||Current Boynton Invest||Republic of South Africa (RSA)|
|Blue Ridge||Platinum||Current AQPSA||Republic of South Africa (RSA)|
|Phola||Coal||Current ACSA / BECSA||Republic of South Africa (RSA)|
|Smokey Hills||PGM’s||Current Platinum Australia||Republic of South Africa (RSA)|
|Volclay||Chromite||Current Amcol||Republic of South Africa (RSA)|
|Umothombo Resources||Coal||Current Umthombo Res||Republic of South Africa (RSA)|
|Mothae||Diamonds||Current Lucara Diamonds||Lesotho|
|Keaton 5 seam||Coal||Current Keaton Energy||Republic of South Africa (RSA)|
|Keaton 2+4 seam||Coal||Current Keaton energy||Republic of South Africa (RSA)|
|Tongon||Gold||Current Randgold Res||Ghana|
|Riversdale||Coal||Current Rio Tinto||Mozambique|
|AK6||Diamonds||Current Lucara Diamonds||Botswanna|
|Storm Mountain||Diamonds||Current Namaq Diamonds||Lesotho|
Graphite and diamonds are the only two naturally formed polymers of carbon – graphite is a two-dimensional crystal structure, whereas diamonds are a three dimensional structure.
Graphite is an excellent conductor of heat and electricity, and has the highest natural strength and stiffness of any material. It maintains its strength and stability to temperatures in excess of 3,600°C and is very resistant to chemical attack. At the same time it is one of the lightest of all reinforcing agents and has high natural lubricity.
The U.S., who is a 100% importer of graphite, has joined China and the European Union in classifying graphite as a critical strategic material.
New & Emerging Uses for Graphite
- Consumer Electronic Goods:
Millions of flexible graphite “heat spreaders” are used in consumer electronics such as flat panel displays, notebook computers, laptops, tablets, LED lighting and smart phones such as Apple’s iPhone®. This provides excellent cooling for the electronic components as it reduces “hot spot” temperatures while boosting power which results in extended product life and improved performance
- Lithium-ion Batteries:
Graphite is an essential component in these batteries, which typically require 11 to 13 times more graphite than lithium. Since these batteries are smaller, lighter and more powerful than traditional batteries there is currently a large shift to Li-ion batteries for consumer electronics and hand-held tools. This is also the product of choice for both hybrid electric vehicles (HEVs) and full electric vehicles (EVs) where the batteries are much larger and the potential demand is substantial
- Green Energy Storage:
Significantly more graphite is used as a component in fuel cells and Vanadium Redox Flow Batteries (VRFBs), which are utilized to store energy, derived from green initiatives such as solar and wind
- Pebble Bed Nuclear Reactors (“PBNR’s”):
Graphite is now being used in PBNR’s which are small, modular nuclear reactors. The fuel is uranium dioxide, which is encapsulated with graphite and forms pebbles the size of tennis balls. They have significantly lower capital and operating costs and cool naturally when shut down thus greatly improving the operating safety factor
This new miracle material is beginning to gain worldwide attention and many in the scientific community speculate that it could revolutionize the world we live in. It has remarkable optical, mechanical and electrical properties, which make it substantially stronger than steel and at the same time is highly elastic. One research report in Science Daily simply stated that graphene is, “ the thinnest and strongest material ever discovered”
- Infrared defence and stealth bomber technology
Traditional Uses for Graphite
- Steel Industry: Primary demand is tied to the steel industry where it is used as a liner for ladles and crucibles, as a refractory material and as an additive to the steel making process
- Automotive Sector: Graphite is used in brake linings, gaskets, and clutch materials
- General: Graphite is used in lubricants, fire retardants and as a reinforcement in plastics
- World production of graphite is about 1.1 million tonnes per year (Mtpy), which is almost as large as the nickel market (1.3 Mtpy), and more than 50 times the size of the lithium or rare earth markets
- 60%-70% of the world’s graphite supply is amorphous (fine or powder) and is used for traditional purposes such as automotive and steel making
- 30%-40% is flake, which is essential for producing batteries, specifically lithium-ion, and for use in consumer electronics
- China currently produces around 75% of the world’s graphite or about 800,000 tonnes of the estimated 1.1Mt produced in calendar 2010
- This year, the British Geological Survey listed graphite, along with antimony and rare earths, as most at risk of global supply disruption. Graphite had a relative supply risk index of 7, compared with 8.5 for antimony, the highest value on the index
The China Factor
- Despite producing 75% of the world’s graphite, most of its resources are lower grade amorphous
- China is now the biggest importer of graphite and has closed state-owned enterprises this year to preserve its graphite resources
- It has imposed a 20% export duty plus a 17% VAT, and instituted an export licensing system to ensure supply to China’s domestic economy
- Annual graphite demand is expected to increase by over 50% from 1.1 million tonnes to 1.5 million tonnes by 2020 based on the steel market alone
- Demand from batteries and high-tech applications are projected to be dramatic. Lithium-ion batteries are projected to more than double the demand for graphite to about 2.6 million tonnes by 2020
- Industry analysts predict the discovery of Graphene will be a major driver of graphite demand
- Graphite pricing is determined by two factors – flake size and purity – with the premium product being large flake (+80 mesh), high carbon (+94%) graphite
- Like uranium and vanadium, there is a spot price for graphite that provides an indication of longer-term trends but transactions are primarily based on a direct and intimate relationship between the buyer and seller
The Bottom Line
- China’s is creating serious supply concerns for the rest of the world
- New graphite sources will be needed for both traditional and high-tech/clean tech applications
Vanadium is well established as a strategic metal that strengthens and hardens alloys like steel and is positioned to play a significant role in emerging battery technologies such as batteries for electric cars and for large-scale energy storage. While there are some opportunities for substitution in steel production, the same is not true for other markets, including the emerging energy (battery) storage markets, the military and particularly in the aerospace industry, where vanadium is irreplaceable.
The Battery Supercharger
Vanadium has begun to play a pivotal role in the advancement of battery technology, namely in automotive (mobile) applications for electric and hybrid vehicles and in stationary energy storage applications for both renewable and conventional energy. Similar to its contribution to steel, Vanadium acts as a supercharger to batteries and improves the performance of whatever it is added to.
In the case of the car batteries (lithium-ion), vanadium increases the energy density and voltage of the battery. This is important for the performance in electric and hybrid vehicles, as energy density equates to distance/range, while voltage equates to available torque.
In the case of energy storage systems, the VFB is a leading energy storage system given its virtually unlimited storage capacity, long battery life, low maintenance requirements, adaptability and nominal environmental footprint.
Vanadium: The Holy Grail of Energy Storage
The VFB is regarded as a leading energy storage system, which requires large amounts of high purity (>98.4%), battery-grade vanadium. This type of vanadium is not readily available today.
The continual cost reductions and technological advancements being made by VFB manufacturers are providing the catalyst for commercializing applications of vanadium-based battery technologies, thus resulting in an increase in demand and a corresponding shortage in supply of vanadium.
A great opportunity exists for vanadium producers who can provide the necessary high purity (>98.4%), battery-grade vanadium required by the VFBs. Energizer is uniquely positioning itself to meet the new anticipated demand for high purity (>98.4%), battery-grade vanadium with its Green Giant Project.
About Energizer Resources
Energizer Resources Inc. is a mineral exploration and development company based in Toronto, Canada, which is developing its 100%-owned Green Giant Vanadium and Graphite Project in conjunction with its Madagascar-ERG Joint Venture (Mauritius) Ltd (“JV Co”) property. Energizer owns 75% of the industrial minerals rights on the Malagasy Minerals (ASX: MGY) property as outlined in the December 15, 2011 press release. The Green Giant Vanadium deposit in addition with the JV grounds, is one of the largest known vanadium deposits in the world.
In addition to the Toronto Stock Exchange (TSX: EGZ), the Company’s common shares trade on the U.S. Over-The-Counter Bulletin Board under the symbol, ENZR, and on the Frankfurt Exchange under the symbol, YE5.
For more information, please visit our website at www.energizerresources.com, or contact:
Brent Nykoliation, Vice President of Corporate Development
Toll Free: 800.818.5442 or 416.364.4911
or Kirk McKinnon, Chairman and CEO