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. The 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 using a sealed highway south-east of the project and shipped at the Port of Nacala, about 490 km away.

The mine is expected to produce an average of 365 000 t/y of graphite concentrate during its first ten years of production. The mine’s production will be sold to traditional industrial graphite markets and emerging technology markets.

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 currently in significant demand, owing to its use in lithium-ion batteries for electric vehicle and energy-storage applications.

Potential Job Creation
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 the start of 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
A ramp-up review of the Balama project has resulted in Syrah Resources adjusting its full-year production expectations.

The company’s new COO, Julio Costa, has reviewed and identified graphite recovery performance improvement actions, focused on stable plant flows, increased plant use and the governance of operating practices to improve process control.

As a result, Syrah has revised its full-year production targets to between 135 000 t and 145 000 t of graphite, down from the initial target of 160 000 t, while C1 cash operating costs have been forecast at between $430/t to $450/t, compared with the previous guidance of $400/t.

During the three months to June, the Balama project produced 21 200 t of graphite, compared with the 11 200 t produced in the first quarter.

Syrah has reported that mining activities and steady-state ore mining at Balama continued to perform well during the June quarter, with about 249 000 t of ore mined, and total material movement slightly ahead of plan.

The mill feed of 258 000 t and the feed grade of 16% were in line with the plan, while the filtration, drying, screening and bagging lines were also performing well, with optimisation continuing as volumes increased.

With a detailed improvement plan now in place, linked to production ramp-up milestones, the average daily production at the Balama operation has increased by 39% and is on track to achieve about 10 000 t/m for July.

The operation is forecast to be cash flow positive from late 2018.

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.