Zenyatta Ventures Ltd. (ZEN.V) has climbed to a 52-week high of 2.46 today after closing Friday’s session at 2.14, a climb that has inspired a volume surge for the company with more than 1.7 million shares moving hands by mid-afternoon. With shares currently trading around the 2.42 mark they are well above their 50-day moving average of 1.28 as well as their 200-day moving average of 0.608.
Future success for ZEN.V is deeply rooted in the development of their Albany project in northern Ontario, a project that is still in its early stages. That being said, if ZEN.V is able to achieve what they are setting out to accomplish at the project then today’s 52-week high could be just the tip of the iceberg for the mining company.
Everything seems to be resting on the rare type of natural graphite that exists at their 100% owned Albany graphite deposit and ZEN.V’s ability to continue delivering high-purity carbon values from their test samples. The ‘vein-type’ graphite material that exists at their deposit is the rarest and most expensive type of natural graphite and ZEN.V’s assertion that they have the “ability to produce a natural graphite product equivalent in purity to the highest grade synthetic graphite using low-cost conventional processing techniques” could produce significant gains for the company.
Carbon purity in synthetic graphite is typically greater than 99.0% while carbon purity of natural graphite can range between 70.0% up to 99.0%. Because of its carbon purity synthetic graphite commands the highest market prices but the process of making synthetic graphite is considerably higher than those associated with natural graphite.
What has investors excited about ZEN.V is the fact that the results from the test of samples at their Albany project using two different leaching process both yielded results exceeding the target of >99.0% carbon. According to the company’s February 5, 2013 press release “One process yielded 99.7% C while another different and cheaper process yielded an exceptional purity of 99.96% C.”
Here’s where things get interesting for ZEN.V as they noted in that press release synthetic graphite can cost $4000 – $5000 per tonne (99.5% purity) to produce but can be sold for $7000 – $9000 per tonne” while “Ultra-high purity (99.9%) graphite can demand a price of $20,000 – $30,000 per tonne.” What ZEN.V has said is that they are capable of producing a natural graphite product equivalent in purity to the highest grade synthetic graphite while using conventional processing techniques that cost a fraction of the price need to produce synthetic graphite.
If ZEN.V is able to do this then they could clearly have an advantage in the $13 billion synthetic market as their production costs could given them the ability to be flexible with their price per tonne. Considering the company has said they expect to be able to produce around 100,000 tonnes of high-purity graphite a year the revenues generated from this project have many investors salivating.
Of course it should be noted that ZEN.V is in the very early stages of developing their Albany project and their first resource estimate isn’t expected until September and a prefeasibility study won’t likely be completed until early 2014. Even still, company CEO Aubrey Eveleigh has said “We’re been approached by many end users globally – out of Europe, out of Asia, out of the U.S. These things could materialize into a strategic partner or buyout. If not, there’s enough value here – I don’t think we’ll have any issues raising money to put it into production.”
ZEN.V should be an interesting company to watch over the coming months as the demand for high grade graphite should remain in place and if the company can deliver the results that show they can produce this high grade graphite at a fraction of the costs associated with synthetic graphite then the sky could be the limit.