PERTH (miningweekly.com) – A prefeasibility study (PFS) into the Malingunde graphite project, in Malawi, has estimated a capital cost of $49-million to develop the 52 000 t/y operation.
ASX-listed Sovereign Metals on Wednesday reported that the project was expected to have a mine life of 16 years, with the pre-tax net present value estimated at $201-million and the internal rate of return at 56%.
The capital cost estimate for Malingunde was up from the $29-million estimated in a 2017 scoping study, where the production had also been estimated at 44 000 t/y over a 17-year mine life.
“We believe Malingunde is the world’s best flake graphite project. The high-grade, soft, free-dig saprolite-hosted ore, requiring no primary crush or grind, combined with a simple and proven flowsheet, results in low capital intensity and extremely low operating costs,” said Sovereign MD Dr Julian Stephens.
“Malingunde is an unparalleled, low technical risk, high margin project that provides significant cash flows with substantial upside scalability into a growing graphite market.”
The Malingunde project is estimated to have an average earnings before interest, taxes, depreciation and amortisation of $42-million a year over the life of the project, with payback within three years from the start of production.
Average operating costs are estimated to be $323/t, with Sovereign saying on Wednesday that the significant cost savings, compared to hard-rock peers, were realised by the soft, free-dig nature of the mineralisation and the low strip ratios.
Based on the results of the PFS, Sovereign will now proceed to a definitive feasibility study, with the environmental-impact statement also being readied for submission by the first quarter of 2019.