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Crumbling graphite price puts Hearst-area mine development on hold

Zentek delays stock market listing, exploring partnerships while waiting for markets to improve
Albany graphite project (Zenyatta Ventures photo)

Last spring’s “soaring demand” for graphite has apparently crash-landed to earth.

The optimism expressed last May by Zentek, a Guelph-based graphene technology, to develop its graphite deposit near Hearst has dramatically waned as the market for graphite and battery metals “has deteriorated significantly.”

In a news release, Zentek management said its plans to bring its highly pure Albany graphite deposit, near Constance Lake First Nation, into future production, are on hold.

In May, Zentek transferred its Albany deposit to a new subsidiary, Albany Graphite Corp., with big plans to raise project financing for a potential mine through a non-brokered private placement and to get the company listed on a Canadian stock exchange.

That’s not happening right now, the company said this week. Zentek said it will wait for market conditions to improve before proceeding with a private placement and the listing.

“Any and all funds that have been received by prospective investors, and are currently held in trust pending closing of the private placement, will be returned to such prospective investors,” said the release.

The deposit is situated 30 kilometres north of Highway 11. The discovery was made in 2011. A 2015 preliminary economic assessment placed a 22-year open-pit mine life for Albany with projected production pegged at 30,000 tonnes of graphite ore a year.

Last week, Brian Bosse dropped out as CEO of Albany Graphite, but will stay as on a Zentek director. Greg Fenton, Zentek CEO, will taking over the mining company on an interim basis.

In late October, Fenton said in an online investor news interview that global graphite prices are down 30 to 40 per cent. He views the drop as being caused by China, a major world supplier of graphite, in a retaliatory move against the U.S. By driving down graphite pricing, it makes North American projects less attractive to develop, he said, but it underscores the reason to create a secure North American battery minerals supply chain.

Albany is a regarded as a rare hydrothermal graphite deposit. The material extracted from the deposit has been converted by Zentek to make high-quality graphene, used for its advanced technical product uses.

Over the years, Zentek – formerly known as Zenyatta Ventures and ZEN Graphene Solutions – has transitioned from being a junior exploration mining company to become a healthcare solutions company.

As a critical mineral, graphite is also used in batteries for electric vehicles and other metallurgical applications in aerospace, defense, energy, electronics, telecommunications, and transportation technologies.

Zentek said it believes in the “long-term value and potential” of the Albany deposit and will evaluate potential financing and partnership opportunities, and keep up its engagement with Constance Lake First Nation.