The Bisset Creek graphite project, in Ontario, could yield at least 20% more production for a relatively modest 6% increase in capital costs, owner Northern Graphite said on Friday, citing an ongoing review of the project by G Mining Services.
The TSX-V-listed company said that higher production of 25 000 t/y would reduce operating costs and would have a positive impact on the net present value (NPV) and internal rate of return (IRR) of Bisset Creek.
The previously filed feasibility study for the project contemplated producing 20 800 t/y of graphite concentrate in Phase 1, which has a capital cost of C$101.6-million. Phase 2 would double production.
A preliminary economic assessment (PEA) encompassing Phase 1 and 2 estimated a pretax IRR of 30.1% and a pretax NPV of $304.9-million, using an 8% discount rate.
“The Bisset Creek project already has attractive economics at current prices and they will be further enhanced by the higher production level. We do not believe this will significantly increase the risk associated with introducing new supply into the market. Most graphite deposits contain large resources, but production must be “right-sized” for markets as some large, low-margin segments are currently unattractive to western producers,” explained CEO Gregory Bowes.
He added that Northern’s strategy was to focus on higher value industrial markets, mainly the US and Europe, where many customers required large and extra-large flake graphite.