Graphite explorer Graphex Mining Limited confirmed the significant improvement in Chilalo graphite project economics compared to the pre-feasibility study completed in 2015.
In the results of the updated pre-feasibility study for the Chilalo Graphite Project, Graphex confirmed that Chilalo is a high margin and high quality graphite project which is well positioned for development.
Discovered in 2014, Chilalo is known for hosting high grade coarse flake graphite deposits. It is located within the Mozambique belt in south-east Tanzania. Following the results of a Pre-Feasibility Study released in November 2015 and a maiden Ore Reserve announced in May 2016, the economic viability of the Chilalo Project was demonstrated by the company.
With the view to minimize upfront capital as well as to generate maximum value for existing shareholders, the company has opted a staged approach to Chilalo graphite production. The updated Pre-Feasibility Study has assessed two-stage production under which Stage 1 is estimated to yield the average annual production of approximately 58,000 tonnes of graphite product for 2 years, followed by Stage 2 average annual production of approximately 108,000 tonnes of graphite product for 4.3 years.
Graphex has estimated US$76.1 million of total pre-production capital expenditure which will include approximately US$43.6 million for Stage 1 and approximately US$32.5 million for stage 2. Furthermore, it has been reported that the graphite product will be transported through the commercial port of Mtwara. The port is located approximately 220 km by road from Chilalo, the majority of which is a sealed main road.
The Company’s Managing Director Mr Phil Hoskins commented, “Following substantial improvements to Chilalo’s product specifications and the continued strength in coarse flake graphite pricing, the economic outcomes of this study are compelling”.
At the project level of Ore Reserve case, the company has estimated 130% of internal rate of return, US$273 million of post-tax NPV and post-tax payback period of 0.84 years.
The company has estimated the mine life of 8.5 years in the Increased Average life of mine (LOM) Case which is comprised of 5.3 Mt ore reserves and 2.2 Mt Inferred Mineral resources. The Increased LOM Case includes a proportion (30%) of JORC classified inferred material representing the last 2.5 years of the 8.5 year mine life.
It has been informed that an in-fill diamond drilling program of up to 3,000 metre commenced in July 2018 which is currently underway targeting an upgrade in Mineral Resource classification.
The company is expected to undertake additional work to further increase the underway Ore Reserve and complete the detailed engineering and mining optimization along with pilot plant metallurgical test work which would enable the completion of a bankable feasibility study.
Graphex Mining’s share price has surged by 4.255% to $0.245 on 24 September 2018. The stock has seen a performance change of -2.08% over the past one year. But in the last one month it has been noted that stock performance has changed by +11.90%.
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