Sovereign Metals
Sovereign Metals
ASX-listed Sovereign Metals has commenced with a pre-feasibility study (PFS) for its low cost Malingunde saprolite-hosted graphite project.

Malawi – The PFS will build on the results delivered in the scoping study, which highlighted the potential for a very low capital and operating cost operation with annual graphite concentrate production of approximately 44 000 t over an initial mine life of 17 years.

“Sovereign is now fully funded to complete all the required technical studies on the 100%-owned, world class Malingunde project in Malawi. The PFS will build on the scoping study that clearly demonstrated the project’s world-class potential centred on very low operating and capital costs, with high revenues derived from a premium graphite product,” says Sovereign Metals’ MD Dr Julian Stephens.

Malingunde PFS

Sovereign Metals reported the results of the scoping study for the Malingunde project in June 2017. A number of opportunities were identified in the study to further enhance the project economics.

The company has completed a comprehensive review of the scoping study to assess these opportunities and define key work programmes for the PFS.

Following completion of the review, the scope of work for the PFS has been finalised, with key activities including:

  • A 6 000 m infill and extensional aircore drilling programme, to commence shortly. The programme is designed to increase the resource classification level for the mine plan, as well as test a number of other prospects for high-grade saprolite hosted graphite mineralisation.
  • Mine design, including optimisation of the mining schedule and mine-site layout.
  • A substantial metallurgical programme, processing multiple samples to optimise the flotation regime, producing concentrates for evaluation by off-take partners and for further downstream test-work.
  • Process design and engineering works based on the results of the metallurgy programme.
  • Ground water assessment, with numerous monitoring bores to be installed this year.
  • On site infrastructure requirements including preliminary design of the tailings storage facility.
  • The continuation of the environmental baseline studies which commenced in April. These include terrestrial fauna and flora, aquatic biology, air quality, surface water and groundwater studies.
  • Commencement of major stakeholder engagement program including with local communities, government and NGOs.

Outside the PFS, approximately 1 000 m of aircore drilling is planned on regional saprolite targets generated by the company’s hand auger drilling programme. Sovereign is targeting completion of the PFS in mid-2018, with certain work programs designed to continue directly through into the DFS stage.

It is expected that the various work programmes forming the PFS will generate significant news flow over the coming 6 – 8 months.

Extremely low, first quartile cash operating costs

The Malingunde project is projected to have an average life of mine unit operating cost of approximately US$301/t concentrate Free On Board (FOB) for its high quality graphite concentrates, producing an average of 44 000 tpa.

Production from Malingunde is anticipated to have amongst the very lowest unit operating cost of the future graphite development pipeline, at a scale that can easily be placed into existing traditional markets, primarily in China.

Potential for low cost, high margin operation of marketable scale

Sovereign Metals is in a unique position of targeting the economic production of graphite without relying on extreme size to achieve economies of scale, or assuming very optimistic product pricing assumptions.

The company takes a very conservative view on future graphite pricing. The results of the scoping study demonstrate the potential for exceptionally high operating margins and cash flow generation given the low operating costs of the Malingunde project, in both upside and downside pricing scenarios.

The combination of low opex, low capex and high-quality concentrates enables Sovereign Metals to focus upon initial entry into existing primary end-markets, including refractories and foundries, allowing the product to compete on price point with China; the world’s largest supplier and consumer of natural flake graphite.

The potential for entry into developing markets such as the lithium-ion battery supply chain are retained as future upside.

Feature image credit: Sovereign Metals