TORONTO (miningweekly.com) – Graphite junior Northern Graphite this week updated the economics of its bankable feasibility study for the Bissett Creek project, saying a significant resource increase and lower costs more than offset the low current graphite price.

The updated results were based on a 49% larger probable reserve of 28.3-million tonnes grading 2.06% graphitic carbon. The capital costs were marginally lower at C$101.6-million, including a 10% contingency, and the cash costs per tonne of concentrate fell 18% to C$795.

The decline in operating costs was mainly owing to a switch from contract to owner mining, increased grades and throughput, and shorter haul distances in the new mine plan.

The mine life also increased to 28 years from 23 years, and the expected output increased 31% to 20 800 t.

The project now had a pre-tax internal rate of return (IRR) of 19.8% (17.3% after tax) and a pretax net present value (NPV) of $129.9-million ($89.3-million after tax) in the base case, which used a weighted average price of $1 800/t for the graphitic concentrates.

This represented a substantial improvement in project economics over the feasibility study, which had a 15.6% pretax IRR at a price of $2 100/t.

Northern said the project had significant leverage to higher prices as the pretax IRR increased from 19.8% to 25.7% and the pretax NPV from $129.9-million to $201.1-million at a price of $2 100/t.

"Despite graphite prices being at the bottom of the cycle, the update confirmed that the Bissett Creek project still has solid, attractive economics to go along with low resource, technical and political risk.

“Production will be almost entirely large and extra large flake concentrates, which gives us a substantial advantage over deposits that will produce a high percentage of small flake and -150 mesh fines, as these products have experienced greater price declines and they have significantly greater marketing challenges,” CEO Gregory Bowes said.

The proposed development of the Bissett Creek graphite deposit consists of an openpit mine and a processing plant with conventional crushing, grinding and flotation circuits followed by concentrate drying and screening.

The plant capacity had been increased to 2 670 t/d (based on 92% availability) and the update assumed that compressed natural graphite would be trucked from the main Trans Canada line, about 15 km away, rather than brought in by pipeline.

These changes had minimal effect on estimated capital costs. The processing plant included a sulphide flotation circuit to remove enough sulphides to make about 97% of the tailings benign.

All sulphide and nonsulphide generating waste rock would be backfilled into mined-out areas of the pit after five years of operation, and all sulphide tailings after eight years, resulting in low final closure costs.

The TSX-V-listed company’s flagship project was at the end of August given the go-ahead after the Ministry of Northern Development and Mines approved the project’s mine closure plan and granted a mining lease.

After ten months of waiting for the approval of the closure plan for the eastern Ontario mine, and two years for the mining lease, the company, subject to the availability of financing, could immediately kick off its construction activities.

A preliminary economic assessment was also under way to show the economics of doubling production in three or four years to meet the anticipated growth in graphite demand.

Graphite is mainly used in the steel and the automotive industries and also increasingly in batteries, lubricants, fire retardants and reinforcements in plastics.