Renascor Resources (ASX:RNU) has released a positive scoping study for a proposed open pit mine and graphite production plant at the Siviour Graphite Deposit in South Australia’s Eyre Peninsula.
The company’s shares were last trading 10.5% higher intra-day, at $0.021.
The Siviour Graphite project economics are encouraging and highlight Renascor’s potential to become a long-term graphite producer in Australia.
Renascor’s scoping study considered producing flake graphite concentrates over a 20-year mine life, with a pre-production capital cost of $144 million.
The resource estimate for the project is 80.6 million tonnes containing 6.4 million tonnes of graphite grading 7.9% total graphitic carbon.
Based on market requirements and potential capital raising capacity, an annual production rate of 123,000 tonnes per annum was selected as the most viable scenario.
The scoping study estimates a payback period of 1.7 years, pre-tax net present value of $551 million and an internal rate of return of 59%.
Importantly, the project economics of the scoping study are highly encouraging and underpins additional development programs and a more advanced feasibility study.
The project development schedule is based on completing feasibility studies in the second half of 2018.
Renascor has the right to acquire the project through an option agreement with the vendor which is exercisable upon completing a feasibility study.
Subject to obtaining funding and relevant project approvals, the scoping study contemplates the commencement of production in 2020.