ASX-listed graphite developer Walkabout Resources says its mine construction schedule at the Lindi Jumbo graphite mine, in Tanzania, is on track.
An engineering, procurement and construction (EPC) contract for the Lindi Jumbo graphite process plant has been concluded with Yantai Jinpeng Mining and Machinery in China.
This follows the mobilisation payment made to Jinpeng in September to effectively activate the contract.
The execution of the second material contract is part of the conditions precedent (CP) for drawdown of the $20-million debt facility with CRDB Bank in Tanzania.
The project capital expenditure is substantially de-risked with this contract being for a fixed price. Together with the previously announced earthmoving and civils contract with TNR, more than two-thirds of the project is now contracted.
The EPC contract sum, including the plant enhancement scope change, is $11.9-million.
Of this, $500 000 has already been paid as part of the early start programme and a further $1.6-million paid on mobilisation. The contract allows for additional separable portions for power, mobile equipment and shipping.
Walkabout will source the mobile equipment from Jinpeng for $600 000. It includes a telehandler, front-end loaders and mobile crane. Mine power is subject to a separate contracting process with alternative vendors.
The EPC contract costs have been revised to current market prices predominantly for steel and labour.
An estimated escalation of 150% in shipping costs to the original budget has arisen owing to the global Covid-19 pandemic influenced shortage of shipping containers. The resulting increase in fixed cost from the original budget is currently not seen as material and negotiations are underway in the various remaining areas of the project to likely offset these increases.
The company has exercised its option to apply an upgraded design to the back-end of the plant that deals with the screening and bagging of the graphite concentrate. This change of scope includes the redesign of the final processing building, which is larger, to include enhanced screens and supporting equipment and automated bagging units.
These changes will not only improve plant precision for sorting final products but also provide options consistent with its growth intentions, the company notes.
The incremental cost of adding these scope changes to the EPC contract is about $1.5-million.
Since the mobilisation payment made to Jinpeng in September, manufacturing and procurement progress at Jinpeng has been to schedule.
Axis Group International, acting as the Lindi Jumbo representative at Jinpeng, has been undertaking quality management checks on the procured construction materials and completed works. The first shipment batch is planned to be despatched by mid-November.
To date, the power rationing in China aimed predominantly at high energy consuming industries has not affected Jinpeng and there has thus been no adverse effect on their procurement and fabrication schedule.
The company is currently finalising the appointment of a local Tanzanian logistics company to receive the batches at the port, manage customs clearance and the road transport to site. This company will work closely with Jinpeng and the Axis Group International to ensure that the potential for clearance and transport delays is minimised.
Site bulk earthworks in Tanzania are progressing to schedule and within budget.
The excavation and terracing of the processing plant area is nearing completion.