Walkabout Resources Ltd (ASX:WKT) has delivered a Definitive Feasibility Study (DFS) update for the proposed open pit mine and graphite processing plant at its Lindi Jumbo Graphite Project in south eastern Tanzania.
Walkabout holds 70% of Lindi with an option to acquire the remaining 30% share.
The update follows the subsequent Tanzanian legislative changes and further metallurgical testwork, and has been modelled employing only the Ore Reserve.
This reserve contains Proven and Probable Ore Reserves of 5 million tonnes at 16.13% total graphite contained for 809 kilo-tonnes of graphite concentrate, and comprises 42% of the Measured and Indicated Resources only.
Importantly from the update - working costs, production rates, reserve grades were not affected.
Highlights
- The DFS has been simultaneously updated in several areas;
- Tanzanian legislative effects and 16% ownership modelled.
- Revised capital estimate following Jinpeng initial estimates.
- Revised concentrate ratios following BGRIMM testwork.
- Adjustment of schedule allowing for delays due to legislation.
- Project start-up capital has now been reduced from US$38.7 to US$29.6 million, a saving of US$9.1 million, lowest capital intensity amongst peer group;
- Pre Tax NPV of US$302 million against previous of US$320 million and Pre Tax IRR now at 108% from previous of 96%;
- Post Tax NPV10 of US$180 million against previous of US$230 million and Post Tax IRR adjusted to 88% against previous 86%;
- Weighted average (Base Case) basket price of product is reduced to US$1,564 per tonne from US$1,687 per tonne as a result of modified metallurgical product mix;
- Pre Tax NPV of US$146 million when pricing 2017 graphite prices sourced from UBS report and actuals;
- Gross financial effect of Tanzanian 16% free carry (if it eventuates) and 1% clearing fee is US$101 million over life of mine or 8.4% of total revenue; and
- Modelling and design now using updated concentrate ratios based on large scale, closed circuit metallurgical test results from BGRIMM provides a higher level of certainty to study results.