Energy Minerals Investor Hub: John, you’re in Jinan while pilot plant testing of some Kookaburra Gully oxidised graphite is in progress as part of work to optimise the project flowsheet. Firstly, can you just describe the facility and tell us how long the test run is scheduled to go for?

John Parker: Yes, we have just started pilot plant test work on a 37 tonne sample of oxide zone graphite schist from Kookaburra Gully. This is the top of the high-grade deposit and represents the first ore that we propose to mine and process.

The test facility is a mini-process plant that mimics typical commercial graphite process plants in China. It has a small crusher, grinding mill, spiral classifier, rougher/scavenger flotation tanks and several cleaner flotation tanks with associated regrind mills. It is a state-of-the-art pilot plant specifically set up for graphite processing.

The tests will run for about two to four weeks.

EMIH: How might the work impact the design of the KG plant?

JP: The aims of this test work are to demonstrate that, in a small scale continuous operation, we can reproduce the results and prove up the flowsheet that we have developed from laboratory scale batch and locked-cycle tests. This will enable us to fine tune the process flow sheet for final detailed design of the process plant.

EMIH: In terms of the product evaluation and qualification side of the testing, any news on that front? What are the primary aims there?

JP: The other, equally important aim of the pilot plant test work is to generate a large quantity of graphite concentrate for, one, bulk downstream advanced processing such as micronisation or spherical graphite production, and, two, product evaluation and qualification with potential customers.

EMIH: You are due back in Australia at the end of the month and then LML is planning to lodge the project Preparation for Environment Protection and Rehabilitation (PEPR) plan in September. How long after that before you get word on final SA government approval to start mining at Kookaburra Gully?

JP: The PEPR is the last major hurdle to enable us to start development at Kookaburra Gully. It has been a major project for us and has involved a large number of specialist consultancies from mine and infrastructure design specialists, geochemical and tailings specialists, process engineers, metallurgists, groundwater, surface water and environmental consultants and power, water supply and road infrastructure specialists. We have given the government the majority of those reports and parts of the PEPR for pre-lodgement review while we complete the final draft for lodging later in September 2017. We would expect PEPR approval within 4-6 months after that subject to any further government conditions.

EMIH: LML has measured, indicated and inferred resources at KG of 2.03Mt grading 15.2% TGC. You did a lot of drilling in your 2017 program. How and when does that impact the project resource model, and ultimately the life-of-mine plan?

JP: Yes, we did some drilling earlier this year and propose to do more drilling after harvest to enhance resource definition and test the depth and along-strike extensions of the existing mineral resource. We are certainly keen to extend the life of the proposed mine within the bounds of the existing mineral lease but we also have a good high grade graphite mineral resource at the historic Koppio Graphite Mine and further mineralisation over a large area at Kookaburra Extended.  So we are confident that, subject to getting government approvals, the Kookaburra Gully project has a long life.

EMIH: What follow-up work is planned on the drilling that produced very high grade, expansive graphite intersections at KG earlier this year?

JP: As indicated, we plan to drill along strike from the very high grade results at Kookaburra Gully after harvest 2017.

We are currently undertaking QA/QC work on assay results from Kookaburra Extended drilling earlier this year so when that is complete we will be able to define a mineral resource for that area. Further drilling is planned in the future.

EMIH: What are the next steps, and timeline, on the financing front?

JP: As per our ASX release on 21 August 2017, we are holding a general meeting of shareholders on 22 September 2017 to approve the allotment of up to 300 million shares to two directors (or their nominees) on the terms and conditions set out in the explanatory notes to raise up to A$9.6 million for project development. Additional finance will be required in 2018 to fully finance the project and we are pursuing opportunities for a South Australian Government grant and/or loan through the Future Jobs Fund.

EMIH: As we said, you’re in China, where 70% of the world’s natural flake graphite is produced. What are you seeing and hearing about graphite markets there that is encouraging for your investors, and the sector generally in Australia and elsewhere?

JP: There are currently environmental inspectors moving through various graphite mining areas in China and several operations have already apparently been shut down. That, combined with the growing internal demand for spherical natural flake graphite for the battery market and coarse flake graphite for the expandable graphite market, is putting increasing supply pressure on the graphite industry in China. I believe this is opening the door for supply outside of China and significantly changing the global supply-demand metrics.

EMIH: What are the three milestones/developments that will define, or redefine, LML’s value path over the next 12 months?

JP: Clearly the number one milestone for us will be completion and approval, hopefully early in 2018, of our PEPR for the Kookaburra Gully graphite project.

In the meantime, successful placements following approval at the 22 September 2017 general meeting will put us in a strong financial position going forward. A successful Future Jobs Fund application early in 2018 would be the icing on the cake.

Successful completion of the pilot plant test work in September-October 2017 will pave the way forward to undertake detailed design of the process plant and enable capital and operating costs to be finalised.