Chilalo economics firm up for graphite developer Evolution
miningweekly.com
20th March 2023
By: Esmarie Iannucci
Creamer Media Senior Deputy Editor: Australasia
PERTH (miningweekly.com) – An updated definitive feasibility study (DFS) into the Chilalo graphite project, in Tanzania, has delivered strong economics.
ASX-listed Evolution Energy Minerals on Monday said that the results of a front-end engineering design (FEED) were incorporated into the updated DFS, which resulted in an estimated post-tax net present value of $338-million for the project and an internal rate of return of 32%, based on the production of 52 000 t/y of graphite concentrate, 12 000 t/y of steady-state expandable graphite sales, and 8 000 t/y of steady-state micronized graphite sales, over a mine life of 17 years.
The project is expected to require an up-front investment of $120-million, and will have a pay-back period of just over three years, delivering annual earnings before interest, taxes, depreciation and amortisation of $82-million.
“We are extremely pleased with the results of the FEED process and the updated DFS, confirming Chilalo as a high-margin, low-capex development option poised to become a meaningful producer of high-value graphite products and take advantage of the looming graphite supply shortages,” said Evolution MD Phil Hoskins.
“The timing couldn’t be better to be bringing the development-ready Chilalo graphite project towards a financing and construction decision. I couldn’t be more excited by what 2023 holds in store for Evolution’s shareholders as we strategically assess the financing and development options available to us.”
Hoskins told shareholders on Monday that the company had intentionally left its fine flake graphite uncontracted and intended to pursue vertically integrated downstream processing into coated spherical purified graphite in the US, with the company expected to make further announcements on the development of a US-based downstream processing initiative in the coming months.
“As an alternative to vertical integration, a portion of the fines offtake could be contracted if the counterparty meaningfully assisted the company’s project financing plans for Chilalo,” Hoskins said.
He said that while it had, historically, been challenging to secure finance for the development of graphite projects, Chilalo’s low capital cost, the current flake graphite prices, and Evolution’s capabilities meant there was a case for financing the project.
“We have been particularly encouraged by the multiple expressions of interest received from potential financiers in the process being run by our debt adviser, Auramet International. With the DFS completed, engagement with these potential financiers will now ramp up as they accelerate their due diligence,” he added. |
