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Renascor Resources Limited (ASX: RNU), a mineral explorer, announced an optimised development plan (ODP) for its Siviour Graphite Project on 3rd May 2019. As per the company, the adopted optimised plan will enhance the production profile of the stage-one processing capacity by approx. four times. The updated plan led the company to secure support from Atradius Dutch States Business in terms of project finance. As per the company, the optimised plan is based on a two-stage approach to achieve 145,000 tonnes per annum of production.
The two-stage approach aims to increase the output while reducing the capital requirement, as the company plans to raise the capital for stage two through the projected cash flow from the first stage. Renascor intends to maintain a low operating cost and adopting a procurement strategy that will focus on high-quality equipment, which in turn, will ensure the reliability of performance, reduced maintenance expenditure and increased confidence on the production process.
Renascor undertook a Definitive Feasibility Study (DFS), which incorporated the operation plans of the new optimised development plan, and the advance work of the DFS such as resource modelling and mining, tailings, engineering and logistic studies are near completion.
Optimised Development Plan:
Under the ODP, the company intends to produce 83,400 tonnes of graphite concentrate annually during the stage-one, which as per the company will take tenure of 1 to 3 years. The plant throughput (run of mine ore) is aimed at 825,000 with an average feed grade of 11.0% for the stage-one.
The cash cost per tonne of the produced graphite concentrate is planned at A$477 with a basket sales price of A$1,366 for stage-one. The development capital requirement is estimated by the company to be at A$108 million with a payback period of 3.7years.
Stage-two:
The annual production is estimated to reach 145,000 tonnes annually during stage-two, which is expected to take tenure of 4 to 40 years. The plant throughput is estimated to be at 1,650,000, with an average feed grade of 9.1% (for 4 to 10 years).
The estimated cash cost per tonne of the produced graphite concentrate is planned at A$511 (for 4 to 10 years), with a basket sale price of A$1,366. The estimated development requirement is at A$77m, with no payback as the company intend to finance it from the expected cash flow from stage-one.
The Net Present Value (NPV10 ) is estimated at A$435 million with an Internal Rate of Return (IRR) of 40%.
Outlook Ahead:
As mentioned above the company is currently undertaking a DFS which includes the operation plan from ODP, and as per the company, the outcome of the DFS is expected in July 2019. The company is focusing on the Siviour Graphite Project and is currently working on optimising the previous results received by the company of the Spherical Prefeasibility Study.
The shares of RNU closed the dayâs trade at A$0.020 (as on 3rd May 2019), trading flat as compared to its previous close.
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