A southern Ontario healthcare solutions company is looking to spin off its high-grade graphite deposit, west of Hearst, into a separate mine development entity to advance it toward commercial production.
Guelph-based Zentek said in a Feb. 15 news release that it has signed a non-binding letter of intent with a numbered company in British Columbia to “transfer” its Albany deposit into the hands of a publicly-listed company to be registered on a Canadian stock exchange.
Zentek will retain a majority ownership in this development outfit.
In the release, Zentek maintains its current share price - $2.08 on the TSX - is undervalued by the market considering it possesses a graphite deposit, once described as a highly pure “freak of nature.” The Albany deposit is situated just off Highway 11 near the community of Constance Lake First Nation. It was first discovered in 2011.
Zentek said spinning off Albany into a separate company delivers better shareholder value and will enable the potential mine to move forward with a second year of environmental baseline and hydrogeology studies. The plan is to launch a pre-feasibility study at some point, which is an early-stage analysis of a potential mine project.
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.
Zentek, formerly known as Zenyatta Ventures and ZEN Graphene Solutions, has transitioned over the years from a junior exploration mining company to a firm which bills itself as intellectual property development and commercial company.
Zentek achieved a commercial breakthrough at in the midst of the pandemic with a Health Canada-approved product in the form of a graphene-based microbial coating that can be applied to surgical masks and gowns to neutralize viruses like COVID-19. The company has a growing catalogue of related healthcare products involving nano-graphite and graphene-based materials.
Based on the outside interest in Albany, Zentek hired a consultant last April to consider what to do with it, since the project wasn't considered part of its core business. Given the trend toward safe and secure domestic supply chains of critical minerals, Zentek decided this is the best option.
“With significant production shortfalls anticipated in the next decade, and the limited number of producing mines and graphite deposits in geopolitically stable countries, the importance of North American graphite and our Albany Deposit is growing by the day,” said Zentek CEO Greg Fenton in the release.
“Amidst this backdrop, we believe our strategy of using a separate entity to move Albany forward and pursuing funding directly for it gives us a compelling pathway to help unlock the value of our wholly-owned deposit for shareholders in the near and longer term.”
Zentek’s decision follows a similar strategy taken last week by Volt Carbon Technologies. The Calgary lithium battery company is establishing its own supply chain by staking claims in Northern Ontario to create lithium and graphite exploration projects near Nakina and Manitouwadge.
Graphite is considered a "critical mineral" used in batteries for electric vehicles and other metallurgical applications in aerospace, defense, energy, electronics, telecommunications, and transportation technologies.
The letter of intent was recently approved by the board of directors of Zentek and 1329307 BC Ltd. More substantial details will follow, Zentek said, if a definitive binding agreement is reached. The news release gave no date when a deal might be consummated.