Name of the Project
Balama graphite project.

Location
Mozambique.

Client
Syrah Resources.

Project Description
A feasibility study has confirmed Balama as a project with low capital intensity and technical risk, but attractive returns. As part of the study, a maiden proved and probable graphite ore reserve has also been declared. This ore reserve has since been increased to comprise 114.5-million tonnes at 16.6% total graphitic carbon (TGC) for 19-million tonnes of graphite.

Balama will be a high-grade, openpit operation using conventional mining methods, with an extremely low stripping ratio. Operations will start with free-dig mining within the high-grade pits of Balama West using conventional truck-and-shovel mining. Operations will shift to the pits in Balama East thereafter.

The processing plant will have a feed rate of two-million tonnes a year using conventional processes, including crushing and screening, grinding, flotation, filtration and drying, as well as classification, screening and bagging.

Graphite concentrate will be transported to and shipped at the Port of Nacala, about 490 km away, using a sealed highway, south-east of the project.

Syrah also intends to pursue its downstream strategy, which involves further processing of flake graphite from Balama into spherical graphite at a plant in Louisiana, in the US. Spherical graphite is a high-margin, value-added product that is experiencing significant demand, owing to its use in lithium-ion batteries for electric vehicle and energy-storage applications.

Jobs to be Created
Not stated.

Net Present Value/Internal Rate of Return
Based on the assumptions used in the feasibility study dated May 2015, the Balama project has a post-tax net present value, at a 10% discount rate, of $1.1-billion and an internal rate of return of 71%, with a payback period of less than two years from commercial production.

Value
By the end of June 30 this year, Syrah had spent an estimated $162.3-million on the project, with a further $23.7-million committed at the end of the quarter, bringing total current capital expenditure to $186-million. 

Duration
First production has been delayed to October 2017.

Latest Developments
The project was about 90% complete at the end of June.

Capital costs for the project have increased from $200-million to $205-million on the back of delays in completing the construction of the processing plant.

First production of flake graphite has been delayed from August to October.

Reduced power availability and the delay to construction completion have impacted on the plant commissioning. The need to commission the plant sequentially has extended the delivery date for first production by an additional three weeks.

The company is exploring options to bring forward the start of production, and is reviewing project and operations costs to minimise additional expenditure.

On Budget and on Time?
Syrah Resources has warned of more cost increases at the Balama project, along with delays in the commissioning timeline.

Key Contracts and Suppliers
CPC Engineering (detailed engineering and design).

Contact Details for Project Information
Syrah Resources, GM – investor relations, John Knowles, tel +61 419 893 491 or email ljknowles@optusnet.com.au
CPC Engineering, tel +61 8 9365 0300, fax +61 8 9365 0333 or email CPCprojects@cpceng.com.au.