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AMN - MALAWI: PFS confirms graphite project as low-cost

A pre-feasibility study (PFS) for Sovereign Metals' Malingunde Graphite Project in Malawi has confirmed low capital and operating costs. The PFS also confirms high margins and a high-quality product of 96-98% total graphitic carbon (TGC) which commands high revenues.

The low capital and very low operating costs are at the bottom of the graphite supply cost-curve at a scale appropriate for the current market.

The company says that the strong economic estimates can be attributed to the deposit being hosted entirely in soft saprolite material, its high grade at 9.5% TGC and the excellent nearby infrastructure.

Sovereign has advanced ongoing sales negotiations with numerous tier 1 and other offtake parties across multiple industrial sectors and locations.

Sovereign managing director Julian Stephens said the company believed Malingunde was 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.

“Malingunde is an unparalleled, low technical risk, high-margin project that provides significant cashflows with substantial upside scalability into a growing graphite market.”

The project is modelled to have a 16-year mine life in which average annual plant throughput will be 600,000 tonnes, producing 52,000 tonnes of concentrate.

Average plant feed grade over the life-of-mine is 9.5% TGC and the life-of-mine average product grade and recovery is 97% and 90%, respectively.

Being a soft saprolite-hosted deposit, the PFS has modelled low operating costs of US$323 per tonne of concentrate free-on-board life-of-mine average, going as low as US$284 per tonne after year seven.

Mine gate life-of-mine average of US$257 per tonne drops as low as US$218 per tonne after year seven.

Total capital cost for the project amounts to US$49 million including a contingency of US$5 million.

Using a long-term average basket pricing assumption of US$1,216 per tonne of concentrate, the PFS indicates a net present value of US$201 million before tax.

Average earnings before interest, tax, depreciation and amortisation (EBITDA) is over US$42 million per year over the life-of-mine and payback is three years from the start of production.

Soft-saprolite hosted graphite deposits are sought after as they have distinct operating and capital cost advantages over hard-rock deposits. Currently operating saprolite-hosted flake graphite mines are in Madagascar, however, these are mostly small and low grade (typically 4-6% TGC).

Malingunde is rare in that it is the world’s largest reported saprolite-hosted flake graphite deposit and has a high-grade ore reserve at 9.5% TGC.