PERTH (miningweekly.com) – An updated bankable feasibility study (BFS) into the Nachu graphite project, in Tanzania, estimates that the project will require a capital investment of $324-million.

ASX-listed Magnis Energy Technologies on Tuesday reported that the update estimated that the five-million-tonne-a-year operation would produce 236 000 t/y of graphite at steady state, with a mine life of 15.5 years.

The updated BFS estimated a post-tax net present value (NPV) of $1.2-billion and an internal rate of return (IRR) of 51%, with a pay-back period of 19 months.

The updated BFS compared with the original study in 2016, which estimated a capital cost of $269-million, and a post-tax NPVe of 1.69-billion and an IRR of 98%, with a payback period of 14 months.

“The update to the BFS demonstrates that the Nachu graphite project represents one of the best graphite production opportunities in today’s market. The project will produce a high-quality, sustainable product that requires minimal purification, placing Magnis in a strong competitive position relative to others in the market,” said Magnis CEO David Taylor.

“Our high purity graphite concentrate will provide lithium-ion battery manufacturers and other industrial customers with an attractive and competitive alternative to current sources in the global graphite market.

“The update to the BFS has focused on improving the plant process design to ensure it maintains our product quality advantage, using a more sustainable and efficient power supply, and reviewing the overall capital and operating costs of the project.

“As expected, and consistent with the mining industry as a whole, we have seen increases in capital costs from 2016, although opportunities remain to improve the current capital cost estimates as part of the next stage of optimization and detailed engineering. Pleasingly, operating costs have remained relatively stable and position Magnis well in terms of expected margins,” Taylor said.

He noted that with existing offtakes in place, and discussions with other major offtakers in key sectors well advanced, Magnis was confident that the project will be strongly supported by project funders.

“Initial discussions with funders have commenced, and we have received positive responses in relation to the overall bankability and attractiveness of the project. A rigorous financial risk management strategy will be put in place to ensure that Magnis can protect and enhance project returns as economic circumstances undoubtedly change over the course of the project life,” he added.

A final investment decision for the project is targeted for the end of the second quarter of 2023.