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Massive graphite in Graphite One drill core.

Graphite One at Finding More Graphite at Graphite Creek (Graphite!)

Will the current graphite craze lasts long enough for new mines to come on-line? Higher costs and environmental concerns associated with producing high quality synthetic graphite may result in the reduction in synthetic graphite production. This in turn may help sustain the prices of high quality graphite. Or maybe not.

Disclaimer: This is an editorial review of a public press release and not an endorsement. It may include opinions or points of view that may not be shared by the companies mentioned in the release. The editorial comments are highlighted so as to be easily separated from the release text and portions of the release not affecting this review may be deleted.

CALGARY, ALBERTA–(Marketwired – Jan. 8, 2014) – Graphite One Resources Inc. (TSX VENTURE:GPH)(OTCQX:GPHOF) (“Graphite One” or the “Company”) is pleased to announce the results for the remaining five drill holes of a recently completed ten-hole diamond drill program(see press releases dated Sept. 24, Nov. 13 and Nov. 20, 2013). These five drill holes further extend mineralization to the west of the existing inferred resource. Drilling has now confirmed a total of 4.8 km continuous near surface high-grade graphite mineralization more than doubling the size of the existing strike length.

Graphite One Resources started out as Cedar Mountain Exploration in 2007. After Flipping a number of properties in BC, Canada and Zacatecas, Mexico they acquired the Kelly Creek Gold Project in Alaska. Through 2010 and 2011 they focused on the Kelly Creek Project, but after an unsuccessful 5000-m drill program the company turned its attention elsewhere.

In early 2012 the company announced the optioning of the Graphite Creek Project and changed its name to Graphite One. The Kelly Creek option was relinquished and an intense field programme commenced at Graphite Creek. By the end of 2012, the company announced a 43-101 compliant technical report establishing an Inferred Resource of ~100 million tonnes of 5.78% graphite (base case). Since that time the company has been working to expand the resource at Graphite Creek.

As we mentioned when discussing Zenyatta’s graphite project a few months back, graphite is the current darling among mining plays (although in this market the word “darling” might be a stretch). Values for high quality graphite have risen dramatically over the past few years due the increased demand for high-tech materials and several companies have graphite projects on the go.

Highlights:

  • Holes 13GCH014 A, B, 015, 016, and 017 intercept significant widths of near surface graphite. Every hole continues to be mineralized from top to bottom.
  • 2013 program drilling doubles current strike length of current resource to 4.8 km.
  • Further confirms excellent continuity with simple geological structures and high grades.
  • Updated 43-101 resource expected to be completed this month.

Graphite One has received results for drill-holes 13GCH014 A, B, 015, 016, and 13GCH017 which tested surface graphite showings with a coincident high priority Electro-Magnetic conductor, approximately 2.2 km west and 400m east of the existing Inferred Resource delineated during 2012 (see map attached). The results are summarized in the Table below and highlights include 29.55 m of 5.01% Graphitic Carbon (“Cg”), including 14.00m of 7.15% Cg and 4.0m of 10.82% Cg. All drill holes will be used to produce an updated NI 43-101 compliant graphite resource. Drill sections are attached in an Appendix. The drilling has now shown that mineralization is continuous for over 4.8 km.

Please refer to the January 21, 2013 press release where Graphite One reports the filing of a NI43-101 Technical Report with an inferred resource of 164.5 million tonnes at 4.61% graphite (including 25.44 million tonnes at 9.69% graphite and 7.8 million tonnes at 13.49% graphite).

The company’s 164.5 million tonne resource is based on a cut-off grade of 2.0% graphite, though their “base case” uses a 3% cut-off which we have referred to above. Regardless, it is important to remember that an Inferred Resource represents the lowest level of confidence in mineral deposit reporting – a best guess based on available data. Much more work will need to be done to prove up the deposit.

It is also worth noting that the graphite in this deposit is sedimentary in nature and hosted in metamorphosed sedimentary and volcanic rocks. Compare this to the Zenyatta deposit which is much smaller but consists of the much more valuable igneous-sourced “vein-hosted” graphite.

The Property is only 18 km from a seasonal road and approximately 30 kilometers from a newly proposed deep-sea port west of Teller (Port Clarence), which could be accessible by either land or water.

Graphite One has its own core logging and sample preparation laboratory/facility in Nome, Alaska. The sample preparation laboratory was installed, and is being managed by Actlabs, Ancaster, Ontario. This will ensure Graphite One maintains the highest level of QA/QC and ensures timely receipt of analytical results. All analyses were completed at Actlabs.

Our small drill program from 2013 allowed us to prove that the mineralization is continuous and extends for nearly 5 km, further demonstrating the size of this deposit. We look forward to 2014 as we de-risk this asset geologically so we can move towards production,” stated Anthony Huston, President and Director for Graphite One Resources.

Depth
DRILL HOLE Azimuth Dip From (m) To (m) Intersection (m) Graphite
(% Cg)*
13GCH014A* 160 -50 30.18 49.99 19.81 2.80 %
including 39.32 46.94 7.62 4.35 %
13GCH014B* 160 -50 28.65 110.95 82.30 1.40 %
including 28.65 44.00 15.35 4.04 %
13GCH015 160 -50 7.85 114.00 106.15 2.05 %
including 30.76 36.00 5.24 5.83 %
13GCH016 160 -50 6.10 81.99 75.89 2.39 %
including 37.49 48.00 10.51 6.20 %
13GCH017 160 -50 20.45 147.22 126.77 2.54 %
including 20.45 50.00 29.55 5.01 %
including 36.00 50.00 14.00 7.15 %
including 36.00 40.00 4.00 10.82 %
12GCH008** 160 -50 6.00 183.00 177.00 3.00 %
including 6.00 58.00 52.00 6.02 %
including 19.41 50.00 30.59 7.07 %
*Drill holes 13GCH014A, B were drilled to test the Kigluaik fault. Hole 12GCH014A was abandoned. Both holes had poor recoveries and confirmed the presence of the fault.
**12GCH008 was the step out hole from 2012 which will also now be considered in the new resource.

About Graphite One Resources Inc.

Graphite One Resources Inc.(TSX VENTURE:GPH)(OTCQX:GPHOF) is exploring with the intent to develop the Graphite Creek Project, USA’s only advanced staged large-scale, large flake graphite deposit.

Though the company has published a technical report, I wouldn’t call this project “advanced”. Advanced projects generally have at least a pre-feasibility study. A relative term I suppose.

Dean Besserer, P.Geol., Vice President of Exploration for the Company and a “Qualified Person” under NI 43-101, is responsible for and has reviewed and approved the technical content of this press release.

Will the current graphite craze lasts long enough for new mines to come on-line? Higher costs and environmental concerns associated with producing high quality synthetic graphite may result in the reduction in synthetic graphite production. This in turn may help sustain the prices of high quality graphite. Or maybe not.

Regardless, based on their history I have a feeling that the team at Graphite One Resources will find something to keep them busy.

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Geology for Investors seeks to demystify mineral exploration and mining projects for mining company investors. All of our writers and contributors are experienced and educated in geology and the geosciences.