Torch River Resources has entered into a non-binding purchase and transfer agreement with Han Tal Graphite, a Sri Lankan-based holding company, to acquire 113 mining grids with 56 historical mines and exclusive exploration licenses to explore and develop 113sqkm of lump graphite claims. Many of these deposits, in the island’s southwest, were originally exploited by artisanal miners in the 1920s and 1930s.
In many cases, Han believes the veins associated with these operations may remain open 10-15 metres below surface, offering potential for near-term production. Han’s claims have been described by the Sri Lankan Geological Survey and Mining Bureau (GSMB) as comprising some of the best graphite areas in the country.
The proposed project areas lie mainly within 1 to 4 km-wide charnocktic gneiss and hornblende biotite gneiss rock bands and, in some cases, several km long with NW-SE trending rock bands. The claims are also 45km from the capital and port of Colombo where paved roads provide easy access. Han has also established in-country relationships with suppliers, miners and local authorities.
Torch estimates the mines could be re-activated within 12-24 months of commencing the necessary start-up work, which would include a resource estimate and receipt of a positive feasibility study supporting the mines’ viability.
Over the past year, Torch River has rapidly moved toward development of lump/vein graphite deposits in Sri Lanka and Quebec. The company believes that the agreement with Han Tal is a step forward in its efforts to leverage the cost and production advantages afforded in mining and marketing lump graphite.
Of the three widely established graphites - flake, amorphous, and lump - only lump graphite with its high purity carbon content offers a potential finished product with historically low-cost of mining per tonne, and can compete favourably with any other low-cost developers in the world. The fact that high quality lump prices in excess of $2000 can also be realized and that it can be used in all the same applications as flake, opens the potential for a wide range of global market segments.
Torch CEO Paul Ogilvie says, “We are extremely pleased to acquire such a vast amount of grids in these prime graphite regions.” It is an “ideal fit for the company and the Han project will further differentiate Torch River to be one of the leading emerging lump graphite producers in the world.”
As consideration for the transaction the company will, at closing, make a cash payment of Can$300,000 and issue 5 million shares to Han valued at about $500,000. A further tranche of Can$750,000 and 7.5 million shares will be issued under commencement of full production, the terms of which will be defined in the definitive agreement.
Torch will prepare an NI 43-101 report in coming months. Both companies have commenced due diligence including site visits, assessments, and geophysical test work on each of the new claims.