Balama Graphite Project To Generate Outstanding Returns, Says Battery Minerals

Balama Graphite Project

Battery Minerals Limited (ASX: BAT) is a mining and exploration company operating in Mozambique, Africa with its registered office in Perth, Australia. BAT’s principal focus is to extract graphite from Montepuez and Balama region.

The mining at Balama Central, located in the province of Cabo Delgado in northern Mozambique, is expected to come into production in 2021. It will be completed with a standard truck and excavator method at a Run on Mine (RoM) average rate of 480,000tpa at over 12.2% Total Graphitic Carbon (TGC). Further, it requires drilling and blast of the fresh material. It provides a scope for a production rate of more than 200,000 tpa in 2022. [optin-monster-shortcode id=”swikrbu1d9j9aq0o4cko”]

The overall process starts with crushing, RoM ore feed stockpile, milling, regrinding, filtering, drying, screening, bagging, trucking to finally exporting the graphite.

BAT had conducted a feasibility study over its second project, Balama Graphite Project (BGP) with its results being announced yesterday. Mr. Jon Hudson, a fellow of the South African Institute of Mining and Metallurgy, supervised the study.

The ore reserve at the BGP is estimated to be 19.66 Mt with 2.17 Mt graphite of grade 11.06% TGC with a cut-off grade of 6% TGC and a conversion rate of 74% based on probable ore reserves. The ore reserve comprises of 5.4Mt weathered ore and 14.2Mt of fresh ore.

The annual production at the Balama Central process plant is estimated to be 58,000 tpa of 96% TGC graphite concentrate. The net revenue over the 27 years of the Life of Mine (LoM) is expected around USD 3 billion with the cash generation of approximately USD 2 billion.

The updated Ore Reserve and associated mine plan have changed the Balama Central flake size classification materially with the inclusion of a significant quantity of fresh material with a high proportion of +150 micron flake.

The price of BGP’s graphite concentrate in 2022 is estimated to be USD 1,106/t for the weathered material and USD 1275/t for the fresh one, as per the latest BMI CIF China graphite prices. The average EBITDA will be around USD 35 million per annum.

The total estimated pre-production cost of the project is USD 69.4 m with the processing plant cost be the highest of USD 20.9 m. The project’s pre-tax IRR is calculated to be around 55% with a payback period of 2.3 years. The C1 LoM operating cash cost is estimated at USD 425/t of product (FOB Pemba) with the first 8 years of around USD 363/t. The waste to ore strip ratio will be about 2.

Earlier, on 4 December 2018, BAT announced the Ore Reserves at Montepuez to be 42.2 Mt at 9.3% TGC with an increase in graphite content by around 10% reaching to 3.9 Mt.

Over the past one year, the scrip price has fallen from 6.9 cents on 11 December 2017 to 2.2 cents on 11 December 2018, with a dip of 68.12%. But following the above news, the scrip price soared by 9.09% on December 12, 2018 with an increase of 0.2 cents reaching a price of 2.4 cents. However, BAT was seen to be trading flat post market open on December 13, 2018.


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