VANCOUVER (miningweekly.com) – A recent maiden preliminary economic assessment (PEA) of developer Graphite One’s similarly named project, in Alaska, has confirmed a pre-tax net present value (NPV) of more than a billion dollars, at a conservative 10% discount rate.
The PEA also calculated a pre-tax internal rate of return (IRR) of 27%.
On a post-tax basis, the NPV is projected at $616-million, also using a 10% discount rate, with a post-tax IRR of 22%.
The PEA outlined coated spherical graphite (CSG) production of 55 350 metric tonnes a year when full production is reached in the sixth year of operations, providing a minimum mine life of 40 years based on the current indicated and inferred resources grading 7% graphite identified to date.
The economic model assumed a project based on 100% equity financing and its ownership and locations make US federal and Alaska and Washington state taxes applicable. However, since it is still early days, Graphite One will commission an accounting, legal and tax study to determine the optimal corporate structure and economics as the project advances and the graphite mining, processing and manufacturing plans are optimised.
Graphite One said the project was conceived as a vertically integrated manufacturer of high-grade CSG, with mining and processing facilities near Nome, Alaska, and advanced material processing done at a dedicated graphite product manufacturing facility. It is looking at Washington state as a potential site for that facility owing to its established maritime links with Alaska, the availability of low-cost power, developed industrial sites and proximity to markets.
The PEA, prepared by Toronto-based independent engineering firm TRU Group, scoped the project to produce 55 350 t/y of finished product, comprising 41 850 t/y CSG and 13 500 t/y purified graphite powder. According to Graphite One, the PEA is based on a conservative selling price of $6 200/t for CSG and an average selling price of $1 500/t for purified graphite powder. Costs have been fixed at $1 774/t of finished graphite product.
Mineral processing is expected at a rate of 60 000 t/y for 95% graphite concentrate at an overall graphite recovery of 80%. Mining at the Graphite Creek deposit will target one-million tonnes a year at a head grade of 7% graphite over the mine life.
Capital expenditures are calculated at $363-million, which cover the Graphite Creek mine and mineral processing plant, as well as the product manufacturing plant.