The Black Crystal project is an active 100-hectare open-pit graphite quarry and deposit located near the headwaters of Hoder Creek on the eastern slope of the Monashee Mountains, 3 kilometres south of the Valhalla Wilderness Park, 27.5 kilometres north of Passmore and approximately 74 kilometres north of the community of Trail. The Black Crystal holding consists of two claim groups, the Hoder claims hosting the quarry to the north and the Plant claims hosting the Koch Creek processing facilities to the south.

The property is within the central portion of the Valhalla Complex in the Valhalla dome, a domal structure composed of high-grade metamorphic paragneiss structurally overlain and interlayered with thick granitoid sheets. In the project region, the Valhalla assemblage consists of a heterogeneous package of upper amphibolite facies pelitic schist, marble, calc-silicate gneiss, psammitic gneiss metaconglomerate, amphibolite gneiss and ultramafic schist approximately 1.5 kilometres thick.

The Black Crystal deposit is classified as a disseminated flake graphite deposit. Graphite mineralization occurs locally in all rock types except quartz monzonite intrusives. The two principal graphite-bearing units, hosting the most consistently high-grade mineralization on the property, are a pair of calc-silicate gneisses. Both units are fine- to medium-grained, foliated, grey to greenish-grey gneiss. Within these units, graphite occurs as discrete disseminated flakes typically 0.5 to 1 millimetre in diameter. The graphite crystals have developed along and parallel to subparallel to the foliation. Sulphides, mainly pyrite and pyrrhotite, occur as very fine-grained disseminations or local blebs. The upper unit (Cs1) has an overall organic carbon concentration of 2 to 3 per cent fixed carbon, whereas the lower unit (Cs2) has an overall organic carbon concentration of 3 to 5 per cent fixed carbon (Hodgson, 2002).

Sand and aggregrate are produced as byproducts during the mining and refining process. Airy Mountain Resources, a division of Eagle Graphite Corporation, markets the sand and aggregrate produced at the Koch Creek processing facility.

Local geology consists of calc-silicate amphibolite gneiss, biotite-feldspar-quartz±garnet gneiss, a quartz-rich unit and a variety of intermediate to felsic intrusive rocks. Other lithologies present on the property include marble, skarn, quartz syenite, quartz monzonite sills or dikes, pegmatite and lamprophyre. The calc-silicate gneiss is separated into two units, the upper Cs1 and lower Cs2 units. Distinct from Cs1, Cs2 is darker in colour, contains very fine-grained bright emerald-green spinel and hosts distinct textures created by fine elliptical pods of calcite±felspar. The main graphite-bearing zone has been defined as a 5 to 50-metre-thick planar surface that strikes 130 degrees and dips approximately 35 degrees to the southwest. The zone has been offset along one or more approximately east-west–trending faults. A quartz monzonite unit has been intruded along the structures in some locations. Locally, a regolith has formed in situ above the two calc-silicate gneiss units. The regolith consists of weathered calc-silicate material and contains a transition zone of more resilient slightly weathered calc-silicate material. The regolithic and transition zones are considered to be the best exploration targets on the property and have an overall organic carbon concentration ranging from 2 to 5 per cent fixed carbon.

The first claims on the Black Crystal property, the Molly claims, were staked by Steve Paszty in the 1960s. The claims were later allowed to lapse and remained dormant until 1992, when they were restaked by Paszty. In 1993, the claims were optioned to Industrial Mineral Park Mining Corporation and the holdings were expanded out around the original claims to form the Hoder property. That year, 27 samples were collected, with two samples sent for bench flotation scoping tests and size distribution studies. In 1994, six reverse circulation drillholes were completed totalling 250 metres. Other exploration work that year included preliminary geological mapping and the extraction of a 0.4-tonne bulk sample for flotation testing. In 1995, 13 NQ-size diamond drillholes were completed totalling 577 metres and a 3000-tonne bulk sample was excavated from the same location as the 1993 sample and was sent to the Koch Creek plant site.

Construction began on the Koch Creek processing plant in 1996. That same year, the Superior claims were staked south of the Hoder property by Industrial Mineral Resources (now known as Worldwide Graphite Producers Ltd.). In 1997, 27 NQ-size diamond drillholes were completed on the Hoder claims totalling 913.8 metres. All of the core was split and sampled but only four samples were sent for analysis. Exploration continued in 1998 with a scoping study and the use of field observations to outline the surface trace of the calc-silicate host horizon and to calculate the underlying resource. A 362-kilogram bulk sample was extracted from an exposure of friable graphite-mineralized calc-silicate material on the main access road immediately above Hoder Creek Valley and a 90-hole 675-metre handheld auger drilling program was carried out on a 100 by 100-foot grid. The material from both the bulk sample and auger programs was submitted as a single bulk sample for flotation testing, yielding positive results. Industrial Mineral Park Mining expanded the Hoder Creek claims once again in 1999.

In 2000, control of the project was transferred to Crystal Graphite Corporation. Exploration continued with 176 slit trenches, 22 NQ-size diamond drillholes totalling 1180 metres and 27 bulk samples extracted from 1855 metres of linear trenches. The two principal graphite-bearing horizons were identified and traced both up and downdip and along strike. Further work in 2001 consisted of 166 slit trenches, 42 NQ-size diamond drillholes totalling 1895 metres and the collection of 368 till and regolith samples. That same year, the Plant claims at Koch Creek were expanded. In 2002, Crystal Graphite Corporation released a National Instrument 43-101 resource estimate that covered 25 per cent of the quarry. The company was also granted two 30-year mining leases (one for the Hoder Creek surface quarry and one for the Koch Creek processing plant) and a Mining Permit M-211 allowing 75 000 tonnes of graphitic feed to be quarried annually. From 2003 to 2004, Crystal Graphite Corporation developed a small-scale production capability at the Koch Creek processing plant and produced approximately 20 tonnes of fuel cell-grade graphite. In 2004, 1750 tonnes of graphitic plant feed were mined from the Black Crystal quarry with the intention of being milled during 2005 (Press Release, Crystal Graphite Corporation, November 29. 2004).

Crystal Graphite Corporation went bankrupt in 2006 and the Black Crystal project, including both the Hoder Creek quarry and Koch Creek processing plant, was purchased by Eagle Graphite Corporation. Eagle Graphite upgraded the quarry operation and processing plant in 2007. During initial trials, the plant was able to achieve 100 tonnes of concentrate per month (www.eaglegraphite.com). Graphite production resumed in 2008. In 2011, Eagle Graphite undertook drilling and trenching programs to update the graphite resource estimate in the permitted quarry area. Twelve NQ-size diamond drillholes were completed totalling 2000 metres. As part of an off-take customer agreement signed in 2010, Eagle Graphite planned to produce 300 tonnes of flake graphite from stockpiled ore in 2012.

Test work was conducted on various composite samples of the regolith. Metallurgical performance from the pilot plant at a 20 to 25-tonne per hour feed rate of screened regolith material was 90 to 95 per cent graphite concentrate grade at 75 to 80 per cent recovery. The measured mineral resource category was only supported in the regolith unit and at a trench spacing of approximately 25 metres. The indicated mineral resource category was supported by a trench and drill grid on the regolith and calc-silicate units (approximately 50 metres). The mineralization of the Black Crystal Graphite project as of July 5, 2002, was classified as measured, indicated and inferred mineral resources. The classified mineral resources are shown below. The mineral resource was reported at a 0.7 per cent fixed carbon cutoff grade to reflect preliminary metallurgical work and expected long-term pricing for high-purity graphite mineralization (Press Release, Crystal Graphite Corporation, August 7, 2002; Hodgson, 2002).

Regolith

Measured mineral resource = 292 000 tonnes at 1.95 per cent fixed carbon

Indicated mineral resource = 365 000 tonnes at 1.71 per cent fixed carbon

Measured and indicated mineral resource = 648 000 tonnes at 1.82 per cent fixed carbon

Calc-silicate

Indicated mineral resource = 4 763 000 tonnes at 1.21 per cent fixed carbon

Inferred mineral resource = 4 591 000 tonnes at 1.24 per cent fixed carbon