Tanzania – The BFS highlights the exceptional economic returns and low technical risk of the Nachu graphite project. These characteristics are driven strongly by the high quality size, purity and crystal structure of the contained graphite flake in the deposit.
Magnis Resources CEO Frank Houllis comments: “The release of the BFS is another important milestone towards the development of the Nachu graphite project. It confirms that the project has outstanding projected financial returns.”
“The BFS also details how premium graphite concentrate products of exceptional size and purity can be generated using low cost flotation processes with an exceptionally small environmental footprint. These products are targeted into fast growing graphite markets such as the lithium-ion battery sector and the BFS firmly demonstrates the commercial viability of the Nachu project to potential end users.”
“Today’s announcement coupled with ongoing discussions with potential off-takers, is set to support the case for significant investment to be made into Nachu via debt markets.”
Nachu graphite project
The Nachu graphite project is located in South East Tanzania approximately 200 km from the Port of Mtwara. The project was discovered in 2013 with a maiden resource announced in November 2014. A Pre-Feasibility Study was completed in December 2014.
On 26 August 2015, an Environmental Certificate was granted for the project. A Special Mining Licence (SML) was granted in September 2015 for a period of 16 years. The SML covers approximately 30 km² of the existing Nachu exploration licence, contains a suitable area for mine development including the resource areas of Blocks F, FS, J and B.
In October 2015, a Mineral Development Agreement (MDA) was finalised with the Tanzanian Government for a period of 10 years. The agreement provides the Nachu project with necessary fiscal stability including a 30% tax rate and 3% production royalty.
Bankable Feasibility Study
Sedgman have assumed the lead role in the feasibility study which was prepared with input from a wide range of independent local and overseas technical experts including Orelogy, Digby Wells, Logiman, AMC, Knight Piesold, MTL consultants, AMML Laboratories and Pells Sullivan Meynink.
The Nachu project BFS delivers a post-tax NPV10% of US$1.69 billion and an internal rate of return (IRR) of 98%. Capital payback is projected within 14 months of first production.
A maiden Proved and Probable graphite Ore Reserve has been declared on the Block F and FS ore bodies totalling 76 Mt at 4.79% graphite carbon for 3.6 Mt of contained graphite. This Ore Reserve provides sufficient material to support an initial 15 year operating life.
The BFS is based on a 5 Mtpa processing plant with a nameplate output capacity of 240 000 tpa of graphite concentrate.
The unique crystal structure and low impurities in the Nachu graphite mineralisation allow production of a premium product suite with an average concentrate purity of over 98% TGC. Approximately 41% of this product will be high value Super Jumbo (+500 microns) and Jumbo (+300 microns) flake concentrate products at a purity of 97-98% TGC. The remaining 59% will be a sub-300 micron concentrate product at an exceptional purity of 99.2% TGC. This is firmly targeted at the rapidly growing Lithium-ion battery sector.
Pre-production capital for the Nachu project is estimated at $269 million (including an 11% contingency). Operating costs over the first five years of production are forecast to be $502/t free on board (FOB) from the port of Mtwara (ex royalties), and the life-ofmine forecast is $559/t.
All necessary infrastructure has been identified, and any required construction incorporated in the BFS planning, including roads, water and grid power sourcing.
Mineral Resources and Ore Reserves Estimate
On 1 February 2016 Magnis Resources declared an updated Mineral Resource Estimate for the Nachu Project. The global Mineral Resource Estimate comprises 174 Mt at an estimated grade of 5.4% graphitic garbon and is reported in accordance with the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code, 2012).
The Nachu project represents one of the largest Mineral Resources of large flake graphite in the world. The Block F Mineral Resource (59.5 Mt in the Measured and 39.3 Mt in the Indicated Resource category) is the primary ore body assessed in the BFS for initial production.
Mine design, optimisation and mine production scheduling was undertaken by Orelogy Consulting, a specialist mining consultants based in Perth, Western Australia. The life-of mine strip ratio is estimated at 1.5:1.
Mining is set to be undertaken by the relatively conventional open pit mining method of drill, blast, shovel and truck. Base mine planning involves the use of 90 t excavators and 40 t articulated trucks. However ramp construction design parameters allow for the use of larger 90 t trucks.
Metallurgy and Processing
Metallurgical testing for the BFS centred on taking advantage of the size and quality of the graphite from the Nachu project to generate high purity products using low cost milling and flotation operations. The metallurgical process that forms the basis of the processing plant design in the BFS consists of 1 rougher flotation step and 3 cleaner flotation stages with associated milling at each stage.
The absence of any chemical or thermal purification operations in generating high purity products will ensure products from Nachu will be competitive in the market place.
Infrastructure and Logistics
Graphite concentrate produced on site will be placed in 50 kg bags and trucked to a storage facility located near the Port of Mtwara. There is existing road access into the project site but a 16 km section from the town of Rwanga will be upgraded as part of the Nachu capital works.
The Mtwara port has 400 000 tpa of capacity with current utilisation at 130 000 – 140 000 tpa. While there is ample capacity there are already existing plans to upgrade the port to 750 000 tpa.
Consumer Off-take and Project Finance
Magnis Resources is in advanced discussions with potential North American, European, Japanese and Korean customers on further cornerstone off-take agreements. Interest from end users has been heightened following the release of the lithium-ion battery test results on Nachu product. Project financing discussions are progressing in parallel. A range of financing alternatives is being considered for the Nachu project, including the provision of senior debt
Fixed Price Turnkey Solution
Lead Engineer on the BFS, Sedgman is currently preparing a fixed price, turnkey proposal for the Nachu project.