Aim-listed Armadale Capital’s updated definitive feasibility study (DFS) for its Mahenge Liandu graphite project, in south-east Tanzania, completed by graphite specialists BatteryLimits, has affirmed it as a long-life low-cost graphite project.
The update, which is based upon a revised mine schedule using a higher-grade cut-off of 9% total graphitic carbon (TGC), a higher strip ratio of 1.95:1, and a rescheduled Stage 2 expansion, results in the production profile increasing average output from 80 000 t/y to 109 000 t/y of concentrate over the life-of-mine (LoM), which is a significant 30% increase on the recently completed DFS.
There is also a 20% increase in estimated pre-tax net present value (NPV) to $430-million and an internal rate of return (IRR) of 91%.
The updated DFS indicates that there is $985-million of pre-tax cashflow to be generated from an initial 15-year mine life using just 25% of the resource, which remains open in multiple directions, offering significant further upside.
Armadale is planning a staged ramp-up to facilitate near-term production with 60 000 t/y graphite concentrate to be produced for the first three years (Stage 1) before increasing to the LoM average 109 000 t/y (Stage 2).
A higher-grade cut-off is expected to allow the company to maximise initial production and build lower-grade stockpiles in subsequent years.
The delivery of the updated DFS confirms the enormous commercial potential of Mahenge and will support ongoing discussions for binding offtake agreements, debt package finance for construction and project level development funding, notes the company.
“Following these substantially improved economics to an already attractive feasibility study, a number of initiatives are currently advancing with respect to project financing and the company hopes to be in a position to update the market shortly with respect to one or more of these work streams,” it says.
“The updated DFS demonstrates the exceptional potential of the Mahenge Liandu graphite project.
"The use of a higher-grade cut off and mining of a higher-grade material at an increased pace leaves significant scope for the project to produce higher volumes of graphite over the 15 year mine life at a higher earnings before interest, tax, depreciation and amortisation margin, and as reflected in the significantly improved NPV figures greatly enhances its already attractive economics,” comments Armadale chairperson Nick Johansen.
He noted that the project has a long mine life, low cost of production and has now been significantly de-risked at a time of rapidly increasing demand for large-flake graphite, therefore presenting an attractive opportunity for investors who wish to gain exposure at a crucial inflection point in its development.
“The updated DFS reconfirms the enormous commercial potential of the Mahenge graphite project and lends strong support to our ongoing discussions for binding offtake agreements, debt package finance for construction and project level development funding – all work streams which are in flight and advancing well and which we hope to provide further updates upon in the near future.
"In addition, important work continues with progressing work streams in relation to detailed design engineering, and the finalisation of the company’s application for a full mining licence.”