An update to the 2015 prefeasibility study (PFS) for the Chilalo graphite project has delivered “robust” financial returns and confirmed the “exceptional economics” of the Tanzania project, Australian firm Graphex reported on Thursday.
The updated PFS assesses a two-stage production scenario, under which Stage 1 would produce about 58 000 t/y of graphite for the first two years of operation and the Stage 2 expansion starting in the third year would produce about 104 000 t/y.
In both the 6.3-year ore reserve case, based solely on the current ore reserves, and the 8.5-year increased life-of-mine (LoM), which includes inferred resources, Stage 1 capital cost is set at $43.6-million and Stage 2 at $32.5-million.
Graphex said that it was confident in its ability to sell 104 000 t/y of graphite from the beginning of the project, but stated that it had chosen a staged approach to minimise upfront costs.
The ore reserve case returned a net present value (NPV), applying a 10% discount, of $273-million, an internal rate of return (IRR) of $130-million and a payback period of 0.84 years.
The NPV of the increased LoM case is $349-million, the IRR is 131% and the payback period is the same as the ore reserve case.
The study proposes a high-grade openpit operation and plant that applies simple communition and flotation processing. Graphite will be transported to and shipped from a deep-water port in Mtwara, about 220 km from the Chilalo site.
The average LoM operating cost is estimated at about $479/t free-on-board (FOB) Mtwara port. The company stated that the forecast basket price of $1 777/t FOB Mtwara port deliver industry leading margins of $1 298/t.
“Following substantial improvements to Chilalo’s product specifications and the continued strength in coarse flake graphite pricing, the economic outcomes of this study are compelling,” said MD Phil Hoskins.
The completion of the updated PFS represented a milestone towards an investment decision by potential financiers, he added.