Canadian graphite project developer NextSource Materials has published the results of an updated feasibility study for its flagship Molo graphite project, in Madagascar, which increased the build cost of the project, owing to equipment inflation.
The 2019 study, which is an update to a feasibility study published in 2017, takes into account updated mine capital equipment and mining costs, as well as current 12-month rolling flake graphite pricing on a free-on-bard (FOB) China basis.
To maintain a first-mover competitive advantage and to appropriately plan for future market demand, the feasibility study was designed to provide a flexible mine development approach that comprises an all-modular build solution.
Phase 1 will consist of a fully operational and sustainable graphite mine with a permanent processing plant capable of processing 240 000 t/y of ore and producing about 17 000 t/y of high-quality SuperFlake graphite concentrate.
The updated build cost of the fully modular process plant increased from the $18.4-million reported in the 2017 feasibility study to $21-million, owing to equipment cost inflation.
Phase 2 incorporates the processing of 240 000 t/y of ore for the first two years of operation and then ramping up to 720 000 t/y of processed ore in the third year to accommodate additional sales, resulting in a total of 45 000 t/y of SuperFlake concentrate being produced for a mine life of 30 years.
NextSource says the costing for Phase 2 is based on the addition of two modules of the beneficiation plant with a proportional increase in mining and infrastructure costs.
The capital mine cost for Phase 2 will be $39.1-million, for a total project cost (Phase 1 and Phase 2) of $60.1-million.
NextSource has an offtake agreement in place with a Japanese trader and is in the process of formalising an additional sales agreement with a European trader. The phased approach enables the company to cater for offtakers’ demand.
The company notes that buyers have indicated their preference to purchase Molo graphite concentrate at the local Madagascar port at FOB China prices. As such, the feasibility study operating costs (opex) include the all-in FOB cost to ship concentrate to the local Port of Fort Dauphin.
The project’s Phase 1 opex is estimated at $565.93/t and Phase 2 at $514.17/t.
NextSource CEO Craig Scherba comments that the updated study reconfirms to the market the economic viability of the Molo project under current market conditions.
“Our all-modular build strategy has low capital and operating costs, and a rapid build time. With our phased build-out, this will allow our graphite to be easily absorbed into the current market while maintaining NextSource’s flexibility and competitive advantage to quickly penetrate the market and generate revenue, establish strong relationships with as many key buyers as possible, and verify our product for highly technical markets with production-run material.”