Canadian graphite mining hopeful Mason Graphite has updated the economics for the Lac Guéret graphite project, in north-eastern Quebec, following a new capital expenditure (capex) estimate.
The company, at the end of October, increased the capex estimate for the graphite project to C$258-million, from the 2017 estimate of C$200-million, citing design improvements, additional environmental constraints, extra preproduction and commissioning costs, as well as general cost escalation.
The new economics assigns a pretax net present value (NPV) of C$484-million and an internal rate of return of 27.7% to Lac Guéret, with a payback period of 3.7 years.
Its initial feasibility study in 2015 calculated a pretax NPV of C$600-million and a 44.1% IRR, with a 2.3-year payback period. At the time, the total capex was estimated at C$165.9-million.
The 2018 study made no changes to the mineral resources, reserves or to the project scope, with production capacity and the process unchanged. The mine will operate for 25 years, producing 51 900 t/y of graphite concentrate. A new production cost of C$484/t has been estimated and the updated economics assumes a weighted average selling price of C$1 933/t of concentrate.
Mason said it expected to net C$2.51-billion in total sales over the 25 years.
The project has a measured and indicated resource of 65.54-million tonnes at a grade of 17.2%. During the first 25 years of planned operations, only about 7% of the known mineral resources are expected to be mined and processed.
Mason president and CEO Benoît Gascon said this week that the updated economics demonstrated that Lac Guéret remained financially robust.
“The project is becoming a reality at the dawn of an imminent and unique growth period for natural graphite, driven by the lithium-ion batteries and electric vehicle revolution, expected for many years.”
The company believes that Lac Guéret will be well positioned in the market, as the lone North American primary producer of natural graphite, Lac-des-Iles, also in Quebec, is nearing the end of its operational life.
Early construction work is under way at the site, with Mason having started clearing trees. This should be completed by the middle of the month.
In August, Mason appointed Stornoway Diamonds’ Yves Perron and Michel Clement, two executives with strong construction experience to oversee the development of Lac Guéret.