A new mine schedule for the Mahenge Liandu graphite project in south-east Tanzania will result in a 30% increase in the production of large-flake high-purity graphite to 109 000 t/y of concentrate over the life-of-mine (LoM), reports natural resource investment group Armadale Capital.
The updated mine schedule, completed by experienced graphite specialists BatteryLimits, uses a higher-grade cut off of 9% total graphite content and a higher strip ratio of 1.95:1, and a revised expansion schedule.
The implication of the updated mine schedule is that more high-grade graphite will be processed over the LoM, ultimately bolstering potential cash flow and enhancing the project’s overall valuation, while enabling the stockpiling of lower-grade material for potential future processing.
A recently completed definitive feasibility study (DFS) had confirmed Mahenge as a long-life low-cost graphite project with a $358-million net present value and an internal rate of return of 91%.
The material increase in production is expected to have significant potential to further improve the "already compelling" economics at Mahenge, significantly uplifting average yearly output with only incremental changes to the initial capital expenditure, says Armadale.
An updated feasibility study, based on the updated mine schedule, is expected to be completed by the end of May.
Armadale also expects its production profile to take advantage of increasing demand for graphite as the electric vehicle market rapidly expands.
Chairperson Nick Johansen says the updated mine schedule demonstrates the exceptional potential of the Mahenge project.
“The use of a higher-grade cut off and mining of a higher-grade material at an increased pace leaves significant scope for the project to produce higher volumes of graphite over the 15-year mine life at a higher earnings before interest, tax, depreciation and amortisation margin, thus enhancing its overall near-term upside.”
He adds that the project has a relatively long LoM, low cost of production and has now been significantly de-risked at a time of rapidly increasing demand for large-flake graphite.
“As such, it represents an attractive opportunity for investors who wish to gain exposure at a crucial inflection point in its development.”
In addition to the feasibility study work, multiple workstreams, including continued detailed design engineering, the progressing of existing offtake agreements from memorandums of understanding to binding agreements, finalising of the company’s application for a full mining licence, and crucially, advancing discussions with potential debt finance partners and project level development funding for construction, are also ongoing.
