JOHANNESBURG (miningweekly.com) – A preliminary economic assessment (PEA) of Alabama Graphite Corporation’s (AGC’s) flagship Coosa graphite project, in the US, has demonstrated strong economics and “excellent” potential for the project to become a near-term producer of high-value, ultrahigh-purity speciality graphite products for the burgeoning American green-energy markets, the company said on Monday.
A separate technical report had ratified the positive results of the PEA, recommending that the project be advanced to feasibility stage.
“The [envisaged] Coosa product will address what clean-technology and green-energy customers actually want and need; products that are in high demand and command the highest prices in the flake graphite space, with historically inelastic pricing.
“Our mine-to-green-energy-markets business strategy is simple – we intend to supply American graphite for the growing American green-energy industry,” commented AGC co-CEO and executive director Donald Baxter.
The assessment had outlined initial capital expenditure of $43.2-million, with a payback period of two years from the start of commercial production.
The PEA further pointed to a base case pretax net present value (NPV) of $444-million, a post-tax NPV of $320-million at an 8% discount rate, as well as a pretax internal rate of return (IRR) of 52.2% and a post-tax IRR of 45.7%.
The mine was expected to generate gross revenues of $2.4-billion over a 27-year mine life at total life-of-mine expenses of $533-million and average cash operating costs of $1 410/t.
The assessment also outlined the viability of primary and secondary processing plants to produce 5 500 t/y of speciality high-purity graphite products, ramping up to 16 500 t/y in year seven.
The PEA was based on the sale of coated spherical graphite (CSPG), which would comprise 75% of planned production and purified micronised flake graphite (PMG), which would encompass 25% of overall output.
This was based on a CSPG selling price of $8 165/t, a PMG selling price of $1 814/t and a blended selling price of $6 577/t.
The company said the PEA diverged from others in the flake graphite development space in that it addressed both primary and secondary processing to produce specialty, ultrahigh-purity graphite products, as opposed to sole primary processing to make traditional graphite concentrate.
“This is a significant point of differentiation between AGC and other flake graphite development companies . . . graphite development companies' PEAs and feasibility studies have been based solely on primary processed, run-of-mine (RoM) graphite concentrates of various purities and flakes sizes.
“AGC intends to divert 100% of primary processed graphite to secondary processing to produce specialty graphite, specifically CSPG, for use in lithium-ion batteries and PMG for use in polymer, plastic and rubber composites, powder metallurgy, energy materials, and friction materials, among other applications,” the group held.
As a result, the AGC’s PEA incorporated mining and primary RoM processing capital and operating expenditures, as well as secondary processing, specialty graphite capital and operating expenditures.
Baxter said the news marked the most significant milestone in AGC's history.
“The PEA demonstrates that the Coosa project holds the potential to become a reliable, long-term US supplier of specialty high-purity graphite products. It signals a new era . . . [we] are very pleased with the excellent results, which indicate a low-cost project with excellent potential economics.
“We have delivered a technically sound, realistic and potentially highly profitable project,” he commented.