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Balama graphite project, Mozambique

29th January 2021

By: Sheila Barradas

Creamer Media Research Coordinator & Senior Deputy Editor

     

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Name of the Project
Balama graphite project.

Location
Mozambique.

Project Owner/s
Syrah Resources.

Project Description
A feasibility study has confirmed Balama as a project with low capital intensity and technical risk, but attractive returns. The project is one of the highest-grade, large-flake deposits globally after its recent upgrade to 51.1-million tonnes at 9.3% total graphitic carbon (TGC), including 38.7-million tonnes in the indicated category at 9.3% TGC and 12.4-million tonnes in the inferred category at 9.1% TGC.

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.

Capital Expenditure
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.

Planned Start/End Date
Not stated.

Latest Developments
Syrah Resources has reported that it is assessing the potential restart of its Balama graphite project, taking into consideration travel restrictions and an improved natural graphite market balance.

Syrah suspended production at Balama in March 2020, owing to the impacts of the Covid-19 pandemic, specifically the travel restrictions that limited the mobility of the Balama workforce; and weak end-user demand, owing to lockdowns and economic uncertainty, which impacted on electric vehicle sales.

Syrah has said that Balama is positioned to preserve cash during its temporary production suspension while retaining operating and market capability to promptly restart operations once a decision is taken.

Restart lead time is expected to be between two and three months, after a restart decision.

Syrah will continue to assess options to further reduce the operation cost base and improve the environmental and social governance credentials of the operation, upon the restart of production.

To this end, Syrah has signed a memorandum of understanding with Solar Century Africa to progress a solar and battery storage hybrid power system to work in conjunction with the existing diesel generation power plant at Balama.

Key Contracts, Suppliers and Consultants
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.

Edited by Creamer Media Reporter

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