Mason Graphite shares jump 20% on updated resource for Lac Guéret Project
Over 1.6 million shares of Mason Graphite(TSX.V: LLG) traded Thursday after the company released an updated mineral resource estimate for its 100% owned Lac Guéret Graphite Project in northeastern Quebec.
The updated resource significantly increased the National Instrument (NI) 43-101 Measured and Indicated resources by over 650% to 50.0 million tonnes from the previous estimate of 7.6 million. Inferred mineral resources also increased to 11.9 million tonnes overall.
Equally impressive was that the updated resource maintained an average grade of 15.6% graphitic carbon, as used previously in the Preliminary Economic Assessment (PEA) released in April.
This new resource not only bolsters confidence in the continuity of mineralization at Lac Guéret, but also reinforces the economic validity of the deposit, which remains open in all directions.
“We are very pleased to see the success of our 2012 drilling program materialize in this updated mineral resource estimate,” said Mason President and CEO Benoît Gascon. “We expect the scale of growth of our project to positively impact what is already expected to be an economical project. Results from the Lac Guéret Project continue to reinforce our belief in the world-class potential of this asset.”
The PEA released on Lac Guéret earlier this year calculated a pre-tax Net Present Value (NPV) of $364 million using an 8% discount rate and average sale price of $1,525 per tonne.
Initial capital expenditures were calculated at $89.9 million, which gave the project a 22-year mine life with a payback period of 2.5 years and a pre-tax Internal Rate of Return (IRR) of 33.7%.
On the afternoon conference call hosted by the company, Mr. Gascon noted that the updated resource estimate constitutes only one of two mineralized zones being explored at Lac Guéret. The GR Zone, which is not included in the current resource estimate, could potentially be added in the future.
Looking forward to 2014 Mr. Gason said the company plans to complete a Pre-Feasibility Study (PFS), conduct additional metallurgy work and continue working towards permitting.
Shares of Mason Graphite are traded on the TSX Venture under the ticker symbol LLG. The company has 66 million shares outstanding and with Thursday’s gains now holds a market cap of just $31 million. International businessman Fahad Al Tamimi and investment group GCIC Ltd. are Mason’s largest shareholders at 12.9% and 9.2%, respectively.