Quantum extends SA land grab for flake graphite project

Quantum Graphite has extended its land grab at the Uley project in South Australia, increasing the ground area to 117 square kilometres at the site near the State’s historic fishing town of Port Lincoln.

The company is on the hunt for deposits of flake graphite to supply the critical mineral into its Sunlands Power joint venture (JV) for conversion into thermal energy storage (TES) cells.

Management says the new ground lies west of its existing 75sq-km holding that makes up the Uley graphite project, which it says contains one of the biggest high-grade natural flake deposits globally. The additional 42sq-km land parcel has been granted by the SA Department of Energy and Mining, with the new ground adjacent to a 1sq-km anomalous zone identified in a recent helicopter-borne electromagnetic survey.

The 1sq-km zone sits between Quantum’s previously discovered Salt Lake anomaly and the newly-granted ground. The company believes it has the potential, when combined with the Salt Lake anomalous zone and previously-identified Salt Lake mineralisation, to significantly increase resources at the site.

The Uley 2 deposit consists of 6.3 million tonnes of total graphitic carbon (TGC) at 11.1 per cent and Uley 3 contains 900,000 tonnes of TGC going 6.6 per cent, combining for a mineral resource of 7.2 million tonnes grading 10.5 per cent TGC.

Management says Uley 2 represents the next stage of development of the century-old mine and will be the focus of its exploration targeting. It expects to have completed its interpretation of the geophysical survey program by the end of this month.

Once its interpretive work is complete, Quantum will finalise its near-term exploration plan for Uley, including a phase-one drill program. It will mobilise its drill crew to site upon completion of the near-term plan and will soon begin to work on its district exploration plan.

The company adds that the drilling program is fully permitted and together with recently-completed exploration activities, including the geophysical campaign, it is designed to bolster the Uley resource estimate.

In early 2023, we recognised the reality of the structural deficit for high-quality flake beyond 2025. This was suggested by the massive Chinese expansion in Li-ion battery anode manufacturing capacity during the pandemic. But what settled the matter was the unprecedented investment being made in the USA following the introduction of the IRA. Our response was the December 2023 DFS update that included a doubling of capacity to 100,000tpa.

The company recently revealed the renaming of its JV with Sunlands Energy, now known as Sunlands Power.

The JV has acquired full original equipment manufacturer (OEM) rights to produce long duration energy storage (LDES) TES graphite cells. The OEM rights extend to the thermal graphite cells being manufactured from both Quantum-supplied graphite and material from other providers.

Management believes the financial returns generated from the JV graphite energy storage and sale of the TES graphite cells could potentially produce revenue significantly greater than the sale of Uley graphite material alone.

The Sunlands Power JV partnership recently confirmed it had received a letter of interest from the Export-Import Bank of the United States (EXIM) in Washington regarding the significant financing commitment required to develop its high-tech operation. If concluded, EXIM’s financing of the project would be structured to support a complete end-to-end supply chain for graphite to the east coast of the US.

The proposed funding would be allocated to mining and production of flake graphite concentrate at Uley 2 and the production of high-purity graphite at a Sunlands Energy facility planned for South Carolina. Additionally, it would apply to other logistics infrastructure in SA and in the US.

The operation to be named “Project Utile” involves sourcing graphite from Quantum’s Uley 2 resource in SA and then purifying the material using Sunlands’ state-of-the-art technology.

The JV is expected to deliver up to 100,000 tonnes per annum of high-purity graphite with the potential for further growth and provide a platform for US domestic production of purified graphite.

Quantum’s two-pronged attack on the graphite market, with mining at Uley and its JV producing downstream stored energy solutions using the critical mineral, could well provide it with a win-win outcome.

Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au