MRL Corporation is preparing to start a pivotal bulk sampling program at its high-grade Warakapola graphite project in Sri Lanka after raising $1.1 million through a share placement. The raising involved the placement of 16.4 million shares to sophisticated investors from Asia.
The bulk sampling program, which is planned to commence in the December quarter, is aimed at accelerating the start of commercial production of extremely high-grade graphite at Warakapola following the award of an Industrial Mining Licence.
Warakapola has a long history of high-grade commercial graphite production and MRL has identified about 40 historical workings, including two previously used mine shafts which extend to between 10 and 25 metres deep.
MRL is mid-way through a drilling program which has already returned a host of extremely high-grade results of up to 99.2% Total Carbon (TC). This program is aimed at establishing the presence of deep vein graphite mineralization. Each vein typically has the potential to generate substantial revenue and may support a mine life of 10-20 years or even more.
MRL will use some of the proceeds of the raising to rehabilitate two of the shafts at Warakapola, which will in turn enable the bulk sampling program to begin.
Some of the ore extracted in this program will be used to conduct metallurgical tests and provide samples to potential off-take parties. These tests are aimed at determining whether the material is suitable for producing spherical graphite, which is the premium-priced graphite product used in lithium batteries.
Surging global demand for lithium ion batteries, and therefore spherical graphite, has underpinned investors’ appetites for graphite projects in recent months.
MRL may also use some of the proceeds to rehabilitate an adit at Warakapola. The intention is to provide access to extract bulk samples once the company satisfies all conditions for its explosives licence.
MRL recently signed a Heads of Agreement to acquire the rights to the high-grade Aluketiya Graphite Mine. Under the agreement, MRL will acquire the lease covering Aluketiya, giving it the right to explore, develop and mine the graphite.
Aluketiya is in Meegahatenna in the Walallawita District, about 85km from Colombo. Meegahatenna is considered to be one of the richest graphite-bearing locations in this region, with the graphite veins extending for long distances.
MRL will seek to establish the extent of this high-grade graphite mineralization as part of a drilling program due to start in late 2014. However, MRL does not intend to drill Aluketiya to the point of being able to calculate a JORC-compliant resource estimate and will instead aim to begin production as soon as possible.
MRL will also apply part of the raising proceeds towards re-opening the Aluketiya project.