TORONTO (miningweekly.com) – Emerging Canadian graphite producer Focus Graphite said it was now the frontrunner in a group of project developers aiming to diversify the global dependence on Chinese supplied graphite, reporting the positive results on Wednesday of a feasibility study carried out on its flagship Lac Knife project, in Quebec.
The TSX-listed project developer revealed that the study, performed by Met-Chem Canada, was based on a 25-year mine life and produced an after tax net present value (NPV) of C$224-million when using a discounted cash flow (DCF) rate of 8%.
The after-tax internal rate of return (IRR) was calculated at 24.1%, resulting in the company being able to pay back the C$165.55-million required to build the project in 3.2 years.
The pre-tax financial model had an NPV of C$383-million calculated at a DCF rate of 8% and a pre-tax IRR of 30.1%, with a capital payback of three years.
Focus president and COO Don Baxter noted that the completed study represented a significant milestone in the development of the Lac Knife project.
“With the feasibility study in hand, an offtake [agreement] with an end-user signed and battery-tested spherical graphite, Focus has positioned itself as a leader in the graphite space, with no other company having reached this level of development,” he boasted.
Focus CEO Gary Economo added that Lac Knife was a remarkable property by any Canadian or international standard. “As we have already demonstrated, Lac Knife provides us and our shareholders with a significant advantage; the ability to meet our customers’ needs for [high]-quality products at competitive prices,” he said.
The study had demonstrated that the Lac Knife project was economically viable with a base-case scenario that includes a concentrator-production line rate of 44 300 t/y of concentrate at an average mill feed rate of 323 670 t/y.
Further, the feasibility study lowered the operating costs to $441/t of concentrate produced compared with the preliminary economic assessment that showed $458/t of concentrate produced. One key variable was Lac Knife’s project location giving relatively easy access to low-cost hydroelectric power from Hydro Quebec.
Lac Knife is unique in that all natural flake graphitic concentrates produced with flake sizes above 200 mesh (75 microns) are more than 98% pure graphitic carbon. This will allow Focus to divert finer-sized products, that were typically difficult to sell owing to their flake size, to higher value-added products such as spherical graphite for batteries, owing to the high carbon content.
The study assumed a concentrator availability of 93% and recommended the company make use of a mining contractor that would use conventional openpit mining methods. These included drilling and blasting followed by a hydraulic excavator loading a fleet of 46 t haul trucks.
The mine would operate for seven months of the year and a front-end wheel loader would be used to feed the processing plant from an ore stockpile during the winter months.
The openpit design included 429 000 t of proven reserves and 7.42-million tonnes of probable reserves for a total of 7.85-million tonnes of proven and probable mineral reserves, grading 15.13% graphitic carbon. Measured and indicated resources were estimated at 9.6-million tonnes, grading 14.77% at a 3% graphitic carbon cutoff grade. There were also 3.1-million tonnes of inferred resources, grading 13.25% graphitic carbon, using a 3% cutoff.
Last month, Focus reported that bench-scale tests were able to prove that spherical graphite produced from Lac Knife was about 80% more efficient at reducing irreversible cycling losses in lithium-ion batteries than contemporary commercial benchmark grades.
The Ottawa-based company said the two premium (medium and fine) grade spherical graphite it had developed had achieved first-cycle irreversible capacity losses of 1.44% and 1.01%, respectively, which compared favourably with the performance of benchmark spherical graphite grades.
Focus contended that its spherical graphite grades might help to solve one of the critical issues holding back market growth for lithium-ion batteries, which was to increase the cycling capacity of batteries.
Focus said it was currently in talks with vendors to define financing packages for equipment. This could result in reduced up-front capital and add to the basket of financing options currently being investigated. Another financing option currently under due diligence was alternative nondiluting supply-chain financing options.
In December, the company struck a ten-year offtake accord with a Chinese industrial conglomerate to buy a minimum of between 20 000 t/y and 40 000 t/y of large-, medium- and fine-flake graphite and value-added graphite. Possible future offtake agreements would also contain a financial component, the company said.
Project permitting was well under way with the environmental- and social-impact assessment expected to be submitted by the end of the summer, with the mine closure plan being planned for submission by mid-summer.
Focus reported that it continued to communicate, meet and listen to local communities and would be intensifying these efforts now that the feasibility study had been completed and the impacts were known.