Tanzania – In addition to the BFS, Kibaran Resources also completed its associated Environmental and Social Planning.
The BFS, which incorporates conservative design parameters, has been subjected to rigorous due diligence by bank appointed independent engineers SRK Consulting (UK) which confirms as follows: all technical areas have been significantly advanced to conform with the requirements of international project financing standards; and the Environmental and Social Management Planning and supporting impact assessments conform to relevant Tanzanian legislation, International Finance Corporation (IFC) Performance Standards and World Bank Group Environmental Health and Safety guidelines.
- The BFS is based on an increased production rate of 60 000 tpa to support new demand
- Key BFS results:
- Pre-tax NPV10 of US$211 million
- Internal rate of return: 38.9%
- Capital cost of $88.9 million
- Annual EBITDA of $44.5 million (A$59.3 million)
- Payback period of 3.4 years
- Study subject to technical due diligence by bank appointed independent engineers SRK Consulting covering all study parameters and disciplines
- Positive initial review and commencement of debt financing programme under the leadership of Germany’s KfW IPEX-Bank
- Executed marketing strategy with binding sales and off-take agreements in place covering production of 44 000 tpa, an additional 16 000 tpa is under negotiation with existing partners and leading German carbon groups
- Project benefits from opportunity to connect to grid power and proximity to established transport corridor for market access
- Testwork confirms ability to produce a higher grade graphite product of 99% carbon from fresh ore with no additional milling or cleaning stages
- Upgraded BFS economics do not include sales into the high-growth lithium-ion battery markets or value-added products from the proposed downstream processing facility
- Negotiations in progress with leading German industry groups for sale of downstream processed products
- Opportunities for further on-strike exploration to extend mine life beyond 18 years and for other savings on implementation due to conservative design and costings.
The BFS has demonstrated a highly robust business case for a 60 000 tpa operation at Epanko and has also substantially enhanced and de-risked the project’s development.
Discussions are progressing with both existing and new blue-chip German industry partners for the sale of additional products. These arrangements will support the downstream processing of Epanko graphite to produce spherical graphite products for the high growth battery market, which has the potential to provide significant additional value and increase margin capture.
A separate feasibility study on the production of battery grade spherical graphite and value add graphite products is currently being finalised and is expected to be released in Q3, 2017.
“This detailed updated feasibility study shows that Epanko is a world-class graphite project in every respect. The outstanding quality of the deposit underpins the project’s extremely robust economics, demonstrated by the strong alliance the project has managed to secure with a range of German industrial groups,” says Kibaran Resources MD Andrew Spinks.
“Passing this milestone was the key catalyst to advance debt financing and allows Kibaran and its sales partners, industry groups and private equity groups that have previously expressed interest, to commence project financing discussions in detail.”