Maniry costs skyrocket

3rd November 2022 By: Esmarie Iannucci - Creamer Media Senior Deputy Editor: Australasia

PERTH ( -  A definitive feasibility study (DFS) for the Maniry graphite project, in Madagascar, has nearly doubled the expected capital costs for Stage 1 of the operation, compared with a 2021 scoping study.

ASX-listed BlackEarth Minerals on Thursday reported a capital cost estimate of $79.2-million for the Stage 1 development, to support concentrate production of 39 000 t/y on average. The Stage 2 operation will require a further $24.6-million investment to increase production to 56 400 t/y from the fourth year of operations.

This compared with the 2021 scoping study Stage 1 capital cost estimate of $38.3-million and a Stage 2 capital expenditure of $26.3-million.

BlackEarth told shareholders that the significant capital cost increase for the Stage 1 operation was primarily owing to larger process plant equipment incorporated in the initial flowsheet, resulting in a significant increase in grade and product produced in Stage 1, which required a larger flotation circuit, dryer, screening and bagging equipment. The primary crusher was also upsized to meet Stage 2 requirements.

Furthermore, material increases in equipment and freight costs over the last 12 to 24 months had also driven the cost increase, BlackEarth said.

The company argued that the additional strategic investment in Stage 1 capital cost estimate had, overall, enhanced the project’s viability and would provide for significant and continual ongoing development and expansion. Overall capital cost improvements had resulted in an increase to Stage 1 concentrate production output of 30% on average and over 12.5% a year from Stage 2.

Additionally, substantial resource expansion during 2022 has contributed greatly to the project’s increased life-of-mine (LoM), project returns and long-term project revenue. The company intends to undertake additional exploration programmes within the high-grade Razafy North West area to increase the resource even further with the intention of adding significantly to project economics.

Meanwhile, the DFS estimated a project life of 21 years, compared with the 13.6 years considered in the updated scoping study, with average sales prices over the life of the project expected to reach $1 448/t, up from the $1 258/t previously estimated. As a result, projected LoM net revenue has increased from the $899-million expected in the scoping study, to $1.63-billion, while expected LoM earnings before interest, taxes, depreciation and amortisation have increased from $561.2-million to $857.2-million.

The DFS also estimated a post-tax net present value of $204.8-million and an internal rate of return of 32.65%, before tax.

“The DFS confirms that Maniry is on track to be a world-class graphite project which will generate strong financial returns underpinned by an exceptional resource and robust processing route,” said BlackEarth MD Tom Revy.

“The study supports our view that Maniry will be perfectly placed to capitalise on the enormous opportunity to supply graphite for use in lithium batteries. The graphite supply shortfall is widely forecast to grow rapidly from next year onwards, increasing prices and profit margins for producers in the process.

“Demand for non-Chinese graphite is expected to be even stronger as battery manufacturers and electric vehicle makers look to diversify their sources of supply. Maniry’s location in Madagascar is also an important strategic advantage. The government there is highly supportive and the country’s production and export of graphite is projected to expand rapidly over the next few years.

“This DFS provides more firm evidence that we have all the ingredients required to take full advantage of what is rapidly shaping up to be a boom time for graphite producers.”