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UPDATE - StratMin sets out "roadmap" to improve grade and recoveries from Madagascar graphite mine

Published: 22:02 06 Sep 2013 AEST

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StratMin (LON:STGR) managing director Manoli Yannaghas said the group now has a clear plan to improve the graphite carbon content and recovery from the Lohorano property in Madagascar.

In a wide-ranging update that covered its plans to improve the plant, production and financing, the group revealed the results of test-work carried out by consultants.

Bench-scale flotation that simulated the existing Lohorano operation achieved a maximum product grade of 86% carbon and an average grade of 82%.

Further gravity separation on this concentrate achieved a product with 92% carbon, with 90% of the flakes being large (+70 mesh).

As a result, StratMin is planning a plant upgrade, which will be “relatively low cost”. This may include gravity processing and screening that can be retrofitted without significant interruption to production.

“The results are preliminary and need clarification on a number of issues, which is not ideal,” managing director Yannaghas told Proactive Investors.

“What it has shown us is our product can be produced over 92%, which is great news from our perspective.”

The group is already looking at a range of financing options that would also fund it through to cash flow break-even.

Output is slated to start on September 9, though carbon content and recoveries remain “variable”.

As a result, previously announced guidance on achieving plus-90% carbon content production in September will not be met.

Separately, the company is in advanced discussions with interested parties to sell the graphite it produces with a carbon content of plus-70%.

“There is one piece of the jigsaw missing. It is a small piece. We are identifying it at the moment. Our suspicion is it's around gravity,” Yannaghas explained.

“As of Monday we start producing, and everything we produce, we sell.

“Alongside that, we are making some upgrades to the plant, so we will see some upgrades to the plant and will see the percentage of carbon increase in the next few months.

“From where I am right now I expect, by the end of first half, to be producing the thousand tonnes a month that we have discussed. So I feel we are back on track.”

The update met with a mixed reception as the shares eased 11% to 16.22p, valuing the group at £10mln.

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