Will graphite pencil out for miners?
May 28, 2013
Stirred by a sharp rise in price since 2010 and the possibility of tighter world supplies, a handful of small Nevada mining companies are stepping up their search for deposits of graphite.
While most people think of graphite only for its use inside a yellow No. 2 pencil, demand for the mineral is growing for uses in consumer electronics, green-energy and electric-vehicle applications.
And that's reflected in prices that have doubled since 2010 for many grades of industrial graphite.
The jury still is out, however, on whether graphite will join the list of minerals ranging from gold to vanadium that are commercially produced from Nevada's mines.
"I'm intrigued because we are not known for our graphite," says Alan Coyner, administrator of the Nevada Division of Minerals.
The largest of the graphite-focused companies in the state — "largest" being very much a relative term — isn't convinced that Nevada is good territory for graphite exploration.
Instead, Elko-based Graphite Corp. is putting its energy into potential graphite properties in Alabama and Montana.
Brian Goss, who works a day job as owner of an Elko-based geological-services firm, Rangefront Consulting, says the 3,760-acre Alabama property is particularly interesting because none of it involves federal or state land.
"Things can move along much faster on private land," he says.
And the ability to move quickly could prove important if China, the producer of about 80 percent of the world's graphite, makes good on plans to limit its exports.
The United States currently imports all of its graphite needs, the U.S. Geological Survey reported at the end of 2012.
Graphite Corp., which reported assets of $72,686 at the end of the first quarter, looks to raise more money for exploration through investor or joint-venture deals.
But, Goss says, "It's tough right now. It's tough for all commodities."
Still, exploration companies continue looking.
Just four miles southwest the Nevada Division of Minerals office, in the hills above Carson City, for instance, a Las Vegas company is trying to raise the money to reopen the long-closed Chedic Mine.
National Graphite Corp. bought interests in about 700 acres around the mine in mid-2012. It raised a commitment of $2.5 million from private investors to finance exploration and plans a drilling program on the property this year.
Worked by Walter Chedic in the early 1900s, the mine off Voltaire Canyon Road shipped graphite to a manufacturer in Richmond, Calif., that used the mineral to create paint and lubricants.
Another small Las Vegas company, USA Graphite, plans to complete basic geological studies and mapping this spring on its 1,985-acre holdings in the Blue Wing Mountains halfway between Gerlach and Lovelock.
USA Graphite, which reported it had all of $12 in the bank the last time it made a filing with the Securities and Exchange Commission, has been financing its operation mostly by using shares of publicly held stock rather than cash.
(The stock was trading at about a dime a share in recent days, a nosedive from its 90-cent level at the start of the year.)
The company also owns graphite interests along Gordon Creek 22 miles south of Wells and in the Ruby Mountains 25 miles southeast of Elko.