MRL Corporation (ASX:MRF) has locked in a contract for diamond drilling services at its Warakapola Pandeniya / Bopitiya graphite project in Sri Lanka, which has been signed with the Geological Survey and Mines Bureau (GSMB).
GSMB will provide all drilling services for a three hole NQ Triple Tube diamond drilling program to test the vein graphite potential in three locations across the Warakapola Pandeniya / Bopitiya area.
The drill is expected to mobilise to site on or around the 29th of May. The first drill location is at Pandeniya and is expected to be between 50 to 125 metres in depth.
Drill holes two and three will be up to 300 metres deep and test the continuity of vein graphite mineralisation below the historical shafts and adits.
The contract stipulates a time to complete the drilling program of 15 weeks, however MRL will work with GSMB to complete the program in the most efficient manner.
Sri Lankan graphite
Sri Lanka is renowned the world over for being the only producer of crystalline vein or lump graphite, which is the highest quality of naturally occurring material.
The quality of vein graphite produced in Sri Lanka has a purity level in excess of 90% Carbon as Graphite.
This is significant as it requires very little upgrading and processing to produce a high quality saleable product, leading to low operating costs and high profit margins.
First Mover Advantage
MRL has established first mover status in southern Sri Lanka, with four highly prospective lump/vein graphite development projects.
The company is establishing a major tenement position covering this type of graphite, which has effectively been pre-treated by nature to contain extremely high levels of carbon purity that attract premium pricing.
Current programs are focused along 650 metres of historic mine workings on the Pandeniya to Wallagala strike-line within the Warakapola Project.
MRL’s Sri Lanka project work is not greenfield exploration; all projects areas have extensive historical workings and remnant graphite.
Analysis
MRL is attractive on a range of metrics.
Potential production of 5,000tpa of vein graphite could generate revenues of up to US$10 million per year.
Capital costs to achieve this would be under US$5m and operating costs would be US$600-650/tonne.
Most other potential graphite producers have CAPEX of between $30 million to $133 million.
Proactive Investors initially placed a Speculative Buy on MRL Corporation when its shares were trading at $0.03, with a valuation of $0.09 to $0.10 on the stock due to early production potential.
MRL Corporation in SYDNEY: Directors of the company will be presenting at the "Sydney Investor Luncheon" on Wednesday 28th May 2014. Only a few seats remaining, register today to attend.
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