Graphite at Mach 3
Writing about junior mining companies for the last 18 months has pretty much been a waste of my time since no one seems inclined to ever invest. I spend over half my life traveling all over the world and I may as well stay home and go out on a kayak for all the effect I have. I guess that’s a good thing, things are darkest just before the dawn.
The graphite sphere has attracted over 75 new “graphite” companies and I suspect most will end up like the 450 “uranium” companies that never developed an ounce of uranium as a resource before they went quietly into the night. I can’t see much action out of the group though I know some are going to succeed.
I was invited up to Alabama last week to see a company and they have it so together that I had to go and I had to write them up. The company is the Alabama Graphite Company and they are going at Mach 3.
The company went to look at an outcrop in Alabama in May of 2012, that’s right, six short months ago. They took samples. The samples showed about 4.25% of graphite, mostly the highly desired large flake material. In August of 2012 the company signed a 70-year lease on 14,000 acres of land and added an additional 28,000 acres on November 6, 2012. The deposit has 2.5 miles of strike and about 1800 feet true width and starts at surface.
Before I continue, I need to explain why Alabama is so attractive. From 1910 until 1953, Alabama was the world’s largest producer of graphite, mostly in the eastern counties of the state in a Schist belt. There were 43 producing mines with some 30 processing plants. In the 40 some year period, over 100 million tons of graphite was produced and most US production came from these three graphite rich counties. Mining stopped in 1953 due to a lack of demand and overseas competition.
The demand for graphite is large and still growing. It totaled 1.1 million tons in 2011 compared to 1.3 million tons for nickel. Currently China supplies 75% of the world market but is shrinking their export market. The US imports 100% of their natural graphite. That was some 79,000 tons in 2011. The Coosa Graphite project of ALP could supply 40% of total US demand the first year of production.
ALP has completed 22 holes in a Phase-1 fence-drilling program. Results from that program will start to be released within 3 weeks. They have started a Phase-2 drill program of 80 resource infill grid-holes to be completed by the end of December and a 43-101-resource estimate to be released by the end of the 1st quarter of 2013. They could be making a production decision early in 2013.
I love Mach 3. I’ve seen Mach 2 in the F-4B many years ago but until my visit to this project, I had never seen Mach 3. These guys are not wasting any time at all. It’s obvious from what they see, they have a minable resource. They need to know the quality of the graphite so they can put a dollar value on a ton of rock but it looks good. The production in the past was all the desired large flake graphite.
I don’t own shares and Alabama Graphite is not yet an advertiser but they may be. To the extent everyone is biased, I am biased and you need to be responsible for your own investment decisions.
The stock is up 50% in the last month but it still seems pretty cheap with an $11 million dollar market cap.
Alabama Graphite Company