PERTH (miningweekly.com) – Graphite developer Black Rock Mining has improved the economics of its Mahenge graphite project, in Tanzania, with the addition of a fourth production module.

The ASX-listed company on Wednesday said that the addition of the fourth module was in response to customer demand for a more aggressive ramp-up of the Mahenge project.

An updated definitive feasibility study (DFS) into the enlarged Mahenge project has seen the steady-state production increase from 250 000 t/y to 340 000 t/y, while the Stage 1 capital costs have increased from the $115-million estimated in the original DFS to $116-million.

The projected after-tax net present value of the enlarged project has increased by 30% compared with the original DFS, from $895-million to $1.16-billion, with the internal rate of return estimated at 44.8%, and the long-run C1 operating costs at $397/t.

“The enhanced DFS brings together a number of competitive advantages associated with Mahenge. Ultimately, this is a customer and financial market driven outcome. Product placement for both the Canadian pilot plant and our recent Chinese pilot plant has demonstrated that Mahenge graphite concentrate has significant value in use advantages, now recognised by our customers,” said Black Rock CEO John de Vries.

“This is evidenced in Black Rock having established pricing and volume frameworks based on the October DFS, a three-module business plan, and our customers being prepared to be named against a pricing framework. Something no other developer or producer has achieved.

“Ultimately, this is an outcome that supports our financing strategy.”

De Vries noted that a key strength of the Black Rock business model was scalability. He said that the ability to add capacity incrementally would ensure that Black Rock did not overcapitalise the asset with excessive redundant capacity, but could respond to changes in market demand.

“This approach ensures the asset is not developed unless market demand is present.”

De Vries added that the enlarged production capacity would make Mahenge one of the world’s largest potential graphite producers.

“Critically, given our concentrate purity and flake size, we have multiple market segments where demand for higher specification product exceeds available supply. Fundamentally, we are not directly competing with existing producers and trying to place product in highly contested lower specification markets.

“What started off as an enhancement study in response to market demand from our customers, ultimately ended up with a conversation with our financiers about a de-risked start-up and commissioning plan.”

First production from Mahenge has been targeted for between 2020 and 2021, with the timing of the first production subject to finance.