Oar Resources Ltd (ASX:OAR) has identified an opportunity to put its Oakdale Graphite Project back on the map following a detailed assessment of the Eyre Peninsula, South Australia based project.
The assessment included a review of the 2015 scoping study and JORC Resource completed at the project and a recent site visit, which incorporated an assessment of drill core from the previous drilling conducted by Oar.
Oar’s review has been highly positive, and, in conjunction with the bullish prevailing supply and demand metrics in the graphite market, and considerable potential to grow the scale of the resources, has provided the company with the confidence to re-commence exploration and other project enhancing work at the project.
The company’s shares have doubled over the last week and were trading 25% higher intra-day following the announcement, despite a 1.86% drop for the benchmark S&P/ASX 200 index.
Robust economics
The Oakdale Graphite Project is listed as a ‘critical minerals project’ by the Federal Government and has been subject to previous extensive drilling by Oar, totalling 330 air core and 11 diamond drill holes over a total of 19,124 metres.
This drilling delivered significant results and resulted in the definition of an initial combined Indicated and Inferred JORC Resource of 13.47 million tonnes at 3.3% Total Graphite Content (TGC) including 6.31 million tonnes at 4.7% TGC, which formed the basis of the previous Oakdale Scoping Study.
Indicated and inferred mineral resource table.
The original Scoping Study showed an estimated flotation concentrate grade of >90% TGC, and amongst other outcomes, ‘highlights the robust economic nature of the Oakdale Graphite Project’.
Oar’s previous work at the project also established that the oxidised soft graphitic clays within the existing resource may be amenable to being cheaply and readily mined within a shallow open-pit without drilling and blasting.
Graphite price at historic highs
The demand for battery-grade graphite was much lower at the time of the original Scoping Study than it is currently, as was the graphite price.
Other inputs to the original study have also changed significantly.
The graphite price is now at historic highs and demand is set to continue to remain strong, with electric vehicles and other high growth sectors relying heavily upon graphite in the production of lithium-ion batteries.
At present, graphite is the dominant anode material utilised in batteries, regardless of the battery chemistry.
Given these highly favourable market conditions and a positive long-term outlook for battery-grade graphite, Oar has taken the decision to extend the previous Scoping Study with a focus on a staged approach to potentially produce purified spherical graphite, for the future supply to the battery-grade graphite market, where spherical graphite is critical to the production of the anode utilised in lithium-ion batteries.
“Ideal environment for Oar to renew its focus”
Oar managing director Justin Richard said: “The graphite market has improved substantially since the initial Oakdale Graphite Scoping Study was undertaken in 2015.
“Most significant is the demand for battery-grade graphite and the rapid uptake of electric vehicles and other battery-powered technology.
“This has contributed to sustained demand growth for graphite and higher graphite prices, and provides the ideal environment for Oar to renew its focus on the Oakdale Graphite Project, and expand upon the solid body of work already completed by the company.”
Next steps
Oar is engaging with CSIRO and other technical experts to conduct further processing and metallurgical test work, aimed at initially producing a graphite concentrate of >95% TGC, as a first step in assessing the potential to produce a higher margin Purified Spherical Graphite (PSG).
Based on the results of this work, further targeted drilling to increase the current Oakdale JORC Resource base will be initiated.
The existing Oakdale resource remains open along strike to the southwest and down dip, offering great potential for expansion of the project scale.
Richard added: “If the test work we are undertaking supports the case for a high-grade graphite product, we’ll be on our way to getting the Oakdale Graphite Project back on track towards becoming a battery mineral producer.”
Oakdale Graphite Project location map.
It has been noted that graphite is where lithium appeared to be five years ago.
Currently, anode production made from graphite is entirely processed in China, and governments around the world are seeking to broaden graphite supply chains.
This provides a significant potential opportunity for companies like Oar to develop new sources of supply, and such efforts are being supported by the Australian government through initiatives such as the A$2 billion Critical Minerals Facility.