MEGA Graphite and Strategic Energy Resources (SER) have agreed on the timetable for acquisition of the Uley graphite mine in South Australia which is currently owned by SER subsidiary Tarcoola Gold. Negotiations have been under way for several months to implement the scheme of arrangement under the merger deed.
The new terms of the arrangement include a 50% transfer of the issued capital of MEGA to SER shareholders. Property payments totalling Can$3 million, payable in tranches, will also be made to SER, while specific terms including the number of shares to be issued and the share price are still being determined.
MEGA’s Asia Pacific managing director Christopher Darby says, “With the assets, management and operations group we now have in place the company has the potential to deliver significant and sustained value. We have global tenements and can achieve near term graphite production through the work we are already doing at Uley.”
The 6.6 million tonne Uley graphite deposit is known as one of the largest coarse flake graphite deposits in the world containing disseminated, high-grade flake graphite of 8% total graphitic carbon. It was discovered in the early 1900s and was worked on different occasions since the late 1920s. The mine was reopened in the 1980s but closed in 1993 when graphite prices plunged. The mine and processing facility have since been under care and maintenance.
It is capable of annually producing up to 14,000 tonnes and MEGA wants to ramp up production to 20,000 tonnes, after carrying out a complete facility refurbishment. Power, water and communication lines are all connected.
MEGA is working with a Canadian investment fund to provide additional capital of up to Can$5 million for the continued operations and upgrades to the facility. The company has a global database of customers who require purified natural flake graphite.