Black Rock Mining Ltd (ASX:BKT) has released a scoping study for the Mahenge Graphite Project in Tanzania which would generate strong project revenues if developed and a payback period of capital in just two years.
Based on the study and resource base, Mahenge could become a long life, low cost graphite concentrate mining operation, based on forecast production of 52,000 tonnes per annum.
The objective of the study was to find the most efficient development opportunity that would yield the best return on invested funds and minimise capital expenditure.
The Board has commissioned a Pre Feasibility Study (PFS) as a result of the positive project economics.
Key takeaways from the study, based on mining the highest grade near surface tonnage of the 131 million tonne resource included:
- 2 year payback period
- NPV of US$285.7m and
- IRR of 62%
This was estimated based on pre-production Capex of US$57.3 million, cash costs of US$458/t and a sales price of US$1,236/t FOB Dar es Salaam.
The study, which was completed by consultant, BatteryLimits Pty Ltd highlighted the use of a small scale plant of 50,000 tonnes per annum production that could generate potentially high returns due to the high grade, near surface and coarse flake nature of the resource.
A smaller, relatively simple plant requires less capital and time to develop and in turn decreases commissioning risk.
Steve Tambanis, managing director, commented: "The results provide further validation of the company’s exploration work at the Mahenge Graphite Project and underpin the potential for Black Rock Mining to become a significant Tanzanian Graphite Producer."
While Stephen Copulos, chairman, added: “The highly positive Scoping Study is another significant milestone for Black Rock Mining Shareholders, following the recently announced large scale JORC resource in February.
"The large resource with high grade portions, straightforward metallurgy and coarse flake product are now further enhanced by positive Scoping Study economics. The company has commenced PFS activities."
Significantly, there is scope to improve mining costs through optimising the waste strip ratio of 1:1.23 and re-calculating the cost of free digging material for the top 20 metres of the resource.
Processing Plant
The processing plant incorporates the following unit process operations:
- ROM ore will be stage crushed in primary and secondary crushers.
- Ore will be wet ground by primary rod mill for concentration by flotation.
- Graphite concentrate will be recovered by flotation roughing, cleaning and scavenging stages with re-grind targeting coarse graphite recovery.
- Graphite concentrate will be dried, screen in to various sizes and bagged for transport.
- Flotation tailings will be thickened to enhance water recovery and discharged in a constructed tailings storage facility.
Infrastructure
Key infrastructure components for the project include:
- Power generation - On site diesel generators with grid power assumed to be available in year two of operation. An allowance for deferred capital to connect to the grid power has been included in the financial model.
- Site accommodation - Modular prefabricated accommodation will be provided for non-‐local employees.
- Water – Water supply for the project will comprise a combination of borefield, pit dewatering, tailings return water and site run off.
- Tailings storage facility - A tailings storage facility (TSF) is included in the design with an initial capacity for 2 years with water recovered from the TSF via a tailings return decant system. The TSF will be progressively lifted from year 2.
- Transport - The Mahenge project is approximately 65km by road from the nearest train line (the TAZARA Line) that runs to Dar es Salaam. For this study it is assumed that product will be trucked to Ifakara rail siding and railed to the Port of Dar es Salaam.
Next steps
The Board has approved moving to a PFS to more accurately cost a circa 50,000 tonnes per annum mine production development. This is expected to take 4-5 months.
The metallurgical evaluation programme is continuing to optimise flake size and purity of the Ulanzi and Epanko north lodes.
The final drilling programme planned for April is designed to increase the proportion of Indicated Resources, define additional high grade portions of the Ulanzi structure and to deliver an Indicated resource for Cascades. This has delivered the highest grade zones to date at Mahenge.
The overall resource is expected to increase as a result of this programme with results expected during May/June.
Already, the Mahenge Project resource is ranked as the largest and highest grade in Tanzania and the fourth largest globally.
A mining study will incorporate the new drill data to prepare an optimised pit shell and mining schedule. Additional core and bulk samples will be taken from Ulanzi and Cascades for metallurgical test work.
A 500kg bulk sample is at its final cleaning stage and is expected to provide 80kg of flake graphite to be used for spherical graphite testing and marketing samples.
The graphite marketing programme is underway for the rest of the calendar year with the objective of delivering offtake agreements to match proposed annual production.
The company is well funded to complete the above programmes and to commence BFS studies.
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