TORONTO (miningweekly.com) – Ten months after starting production at its Woxna graphite mine and processing facility, in central Sweden, TSX-V-listed Flinders Resources will shutter the operation in anticipation of better prices.
The company reported this week that despite Woxna producing graphite to grade and recovery specifications at competitive cash costs, declining global flake graphite demand so far this year had pushed prices to a four-year low of less than $700/t.
The plant was currently undergoing a scheduled summer maintenance shutdown and would not restart meaningful production until market conditions had improved.
This, Flinders hoped, would allow the company to reduce its expenditure to less than C$150 000 a month and maintain the company's competitive advantage by continuing to run the Woxna operation on a ‘production-ready’ basis.
Given these weakening conditions, the board had chosen to reduce output and only supply larger volumes when improved graphite prices return.
In the resources sector, it was the norm to curtail output when commodity prices did not provide a reasonable return.
Flinders was the only western producer of natural flake graphite with a fully constructed, permitted and producing plant and mine. Together with no debt and more than C$4-million in cash, the company was well positioned to concentrate its resources on research to produce high-purity graphite and initiate relevant permitting.
During the past ten months, Flinders had completed Stage 1 plant and mine commissioning, and graphite production, at the Woxna operation. The company was now starting to implement the next stage of its growth strategy to position it as a supplier of choice to the rapidly expanding and game-changing lithium-ion battery, energy storage market.