TORONTO (miningweekly.com) – Emerging Canadian graphite producer Focus Graphite this week announced that Caterpillar Financial Services Corporation had expressed formal interest to further evaluate the company's Lac Knife project to provide Focus with a financing solution that could account for 12% of the Lac Knife project's development.
Focus had last August published its Lac Knife project feasibility study that included a mine and concentrator operation, which could be built for $165.6-million, including a $17.1-million contingency.
"Cat Financial's letter of interest represents an important milestone as we develop the Lac Knife project financing structure. Both parties are discussing mine equipment leasing plus project financing options with a view to achieving a mutually satisfactory conclusion.
"This financing package could potentially represent 12% of the total project financing requirements and reduce operating costs as we move to owner-mining instead of contractor-mining as outlined in our feasibility study,” Focus Graphite president and COO Don Baxter said.
Focus explained on Monday that as there was not yet a formal commitment in place with Cat Financial, financing discussions continued with a number of investors and institutional funds, in both the public and private sector, with the objective being to reduce shareholder dilution through a mix of debt and equity financing.
Baxter also noted that the Quebec government provided some financing alternatives that were not available in other jurisdictions.
The TSX-listed project developer in June published a feasibility study based on a 25-year mine life, which produced an after-tax net present value of C$224-million when using a discounted cash flow rate of 8%.
The study had demonstrated that the Lac Knife project was economically viable with a base-case scenario that included a concentrator-production line rate of 44 300 t/y of concentrate at an average mill feed rate of 323 670 t/y.