Berkwood Resources Ltd. (TSXV: BKR) is aiming to become the next graphite success story in Quebec
Angela Harmantas | August 17, 2017 | SmallCapPower: There is a commonly-held belief in the mining industry that the best place to look for a new mine is in the “shadow of a headframe.” The phrase essentially means that where one mine exists, there are usually others. Canadian junior Berkwood Resources Ltd. (TSXV: BKR) is hoping to prove that adage at their Lac Guéret South graphite project in Quebec.
Graphite is quickly emerging as an essential energy metal for the future. Flake graphite, the type that is used in electric vehicle batteries, contains the highest natural purity and fetches the highest price. With Tesla’s new Gigafactory forecast to reach full production by 2018, estimates of the electric car-maker’s tons per year graphite consumption run as high as 120,000.
Against a backdrop of skyrocketing demand for flake graphite, investors are looking to the Canadian province of Quebec to see which deposit will become Canada’s first graphite mine. The leader in the race is Mason Graphite, whose Lac Guéret project indicates some of the highest-grade graphite and one of the lowest cost producers. The company is hoping to start construction on the project by the end of 2017.
In the headframe of Lac Guéret are Berkwood’s two properties, the aptly-named Lac Guéret South and East. The project shares similar prospective geology to Mason’s, including along strike stratigraphic units, structure and geophysical anomalies. A recent feasibility study on Mason’s Lac Guéret project identified at least 75 million tons of high grade large flake graphite with robust economics, including a $90 million cost to build the mine, a 2.5-year payback and an estimated mine life of at least 24 years.
Berkwood Resources is hoping to prove that their property is similar to Mason’s. The Company has mitigated risk as much as possible before the first drill reaches the project; airborne survey results on the South property identified two large anomalies, and outcrop samplings revealed extremely high-grade graphite as much as 36 percent graphite as carbon. Confident that they are ready, Berkwood Resources is starting a 2000 metre drilling program in August to prove that the graphite deposit extends into Lac Guéret South. “The premise of the play is what they have, we should have,” said Mr. Yingling. “Unless Mother Nature is playing a mean trick, the geophysical anomaly that runs off of their property onto ours should contain the same mineral: Graphite! Just because a claim boundary cuts through the anomaly doesn’t change what’s been beneath the ground for millions of years.”
Berkwood Resources is expecting drill results by the end of the year, but there is more than graphite that is exciting shareholders. Berkwood recently acquired a cobalt property and another lithium property, both located in Quebec. “Having the graphite, cobalt and lithium projects under one company umbrella, we have all of our high-tech battery metals covered – and they are all located in an extremely mining-friendly province,” said Mr. Yingling.
Globally the demand for energy metals should increase significantly, according to Berkwood’s CEO. China, which produces nearly 70% of the world’s graphite, is losing dominance over graphite market due to export tariffs and environmental regulations that reduce supply and increase prices. Tesla’s Elon Musk has said that the company’s electric vehicle batteries should really be called graphite nickel because there’s more graphite in there than lithium. Thomas Yingling sees a “huge fundamental shift” in the graphite market right now. “The demand for large flake graphite will increase dramatically particularly because of electric vehicle batteries, but there are other sources too – energy storage for power production is a huge growth market as well.”
This is certainly good news for the Berkwood Resources team as they move forward with their Lac Guéret South project. Financially, the management team has kept a tight share structure with only 15 million shares outstanding.
“We are fully financed just as we are about to start a drill program right next door to one of the largest, highest grade graphite discoveries in the world,” Mr. Yingling said. “Success at the drill bit should translate into significant shareholder wealth.”