Quantum makes off-market bid for SA graphite play

Quantum Graphite has made a play for fellow SA graphite developer and explorer Lincoln Minerals. Under the off-market bid, Quantum is offering one of its shares for every 40  Lincoln shares based on the two-day weighted average price for Quantum shares of 40.67 cents. The offer represents a 30 per cent premium to Lincoln’s most recent share price of 1.02 cents.

Lincoln’s South Australian tenure totals about 1177 square kilometres on the Eyre Peninsula, which is shaping up as Australia’s world-class flake graphite province.

Quantum has its sights firmly set on the prospective landholding that houses the high-grade Kookaburra Gully graphite deposit. In 2013, Lincoln released a maiden JORC mineral resource estimate coming in at 2.2Mt grading a spectacular15.5 per cent total graphitic carbon, or “TGC”.

As an additional sweetener, the tenure includes the historic Koppio Graphite mine containing a JORC inferred mineral resource of 1.85Mt at 9.76 per cent TGC.

Quantum’s South Australia operation, about 40km south along the Eyre Peninsula, takes in the Uley 2 and Uley 3 resources where a hefty 7.2 million tonnes going 10.5 per cent TGC has been defined.

According to Quantum, the addition of Lincoln’s flake graphite assets to its arsenal delivers a greater economy of scale from their joint development.

Not surprisingly, the Kookaburra Gully graphite deposit exhibits many similar key characteristics as that of the broader geology of Quantum’s Uley deposits.

Importantly, the metallurgical properties of the Kookaburra Gully graphite deposit match those of the Uley deposits, posing clear synergies for the preferred processing path for each of the projects.

Quantum is looking to develop thermal energy storage battery cells utilising graphite from its Uley deposit on the Eyre Peninsula through a joint venture with Sunlands.

The duo says the high-purity natural flake graphite found at Uley is important for Sunlands' downstream processing and technologies required to develop thermal energy storage, or “TES” cells. TES cells are devices that temporarily store energy to be used for power generation later. They can be used to balance fluctuating energy demand caused by the changeable nature of renewable energy generation.

Additionally, natural flake graphite is an important component of lithium-ion batteries. Quantum previously reported during the next 18 months demand for natural flake graphite could increase from about 30 to more than 50 per cent of the anode market share and by 2025 the material will be the dominant force in the sector – moving above the now in-vogue synthetic versions.

The Eyre Peninsula is part of the highly endowed Gawler Craton mineral province that hosts the world-class Olympic Dam, Prominent Hill and Carapateena copper mines along with a bevy of iron ore mines in the infamous “Iron Triangle” of the Middleback Ranges.

Lincoln’s Gum Flat Project, only 2km  from Quantum’s Uley project, hosts a plethora of iron-rich magnetite and hematite-goethite deposits with a combined JORC mineral resource of 109Mt.

Despite its proximity to the Uley deposits, limited exploration has been done at Gum Flat for graphite. Resampling conducted by Lincoln on previous drilling targeting iron ore mineralisation returned a suite of encouraging results including 13m at 12 per cent TGC from only 57m down hole.

Whilst Quantum will have its hands full assessing Lincoln’s graphite assets, the tenure also hosts a compelling suite of intriguing gold, zinc-lead-silver, copper, manganese, uranium and vanadium prospects all worthy of a second glance.

Quantum already has its foot on plenty of graphite at its Uley deposits in South Australia’s world-class flake-graphite province. If Lincoln’s shareholders accept Quantum’s offer, it could be a game changer for the evolving graphite developer.

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au