- The DFS was updated last week
- Financing and construction are next steps
What does Walkabout do?
Walkabout Resources Ltd (ASX:WKT) specialises in exploration and development, primarily in Africa. It is run by a team that includes executive chairman and capital market specialist Trevor Benson and mining engineer and executive director Allan Mulligan.
Chairman Benson has more than 30 years of experience in capital markets and with the resources and oil & gas industries. He has extensive experience chairing and serving as a director on company boards. Benson served with UBS for 12 years and managed a $300 million resource fund for overseas.
He has been a director of Perth-based boutique investment banking organisations PCF Capital and Argonaut Capital, also serving as an executive director at Strategic Capital Management and its absolute-return international equity fund ARIE Fund.
Founding director Mulligan has previously served as a director at Epic Exploration Pty Ltd and RSV Australia Engineering. The mining engineer and Technikon Witwatersrand alumnus has 30 years of mine management and production experience.
Mulligan has speciality skills in technical assessment and production economics, feasibilities, project design and the costing of underground mines and prospects. He has worked extensively in Africa and Australia and has been a director of several Western Australian junior exploration companies.
What does Walkabout own?
The company's key asset is the Lindi Jumbo Graphite Project in Tanzania, which is considered to be East Africa's highest grade graphite project.
It is found in southeast Tanzania, 200 kilometres from Mtwara port.
Lindi Jumbo is now valued at a net present value (NPV10) of US$197 million when a 10% discount is applied, according to a March 2019 definitive feasibility study update.
Walkabout’s updated costings in the DFS modelled US$1.4 billion ($2 billion) of revenue for the project over a 24-year mine life.
The project’s previously low development capital cost was lowered further to US$27.8 million.
Lindi Jumbo mine life was a 20% increase on the previous DFS.
The project after-tax net present valuation (NPV10) had increased 9.4% to US$197 million after the metric's 10% discount was applied.
Walkbout's updated study had followed a US$2 million resettlement action plan approval for the project in January 2019 from relevant stakeholders which was signed off by the chief government valuator for Dodoma in Tanzania.
The approval came after a series of compensation agreements and effectively allows the project to be progressed to on-site works.
Lindi Jumbo project was awarded a mining licence (ML 579/2018) in late 2018 after Walkabout produced an updated pre-feasibility study (PFS) in August 2017.
Walkabout was the first mining company in Tanzania to receive a licence after regulatory amendments.
The company’s mining licence approval was considered a milestone for the company enabling a resumption in graphite marketing activities for offtake agreements and project development funding.
Walkabout delivered on the promise this month, signing a binding offtake agreement with an expandable graphite producer, Inner Mongolia Qianxin Graphite Co Ltd (IMQG) and a binding term sheet to supply concentrate to a Chinese graphite products manufacturer, Qingdao Risingdawn Graphite Technology Co (QRGT).
A final agreement with Qingdao is timetabled for the December 2019 half-year, with pricing to be determined as part of the partners’ arrangements.
Walkabout executive chairman Trevor Benson noted earlier this month the company had been engaging with a number of potential offtake partners and was “seeing an increased level of confidence in our product and a growing interest in our ability to deliver a stable supply of quality, large flake graphite”.
The company’s two new binding offtake deals with the China-based companies are for 20,000-30,000 tonnes a year.
A further 20,000 tonnes a year is committed under two heads of arrangement (HOA), with China-based entities Jixi Puching Graphite and Qingdao Adtech Technical Eng, and in an MOU with Germany’s George H Luh GmbH.
The deals effectively book up to 75% of the planned production of high-purity large flake graphite concentrate for the first three years after the start of operations at Lindi.
This month the company also inked a binding global sales, purchase and marketing agreement with international commodities trading house Wogen Pacific Limited.
The five-year marketing deal with Wogen carries with it a US$8 million working capital finance facility to reduce supply-chain cashflow risk.
Walkabout’s outsourcing of its marketing is part of a wider push to outsource major components of the project, with Benson describing the marketing agreement as “a key element in de-risking the Lindi Jumbo Graphite Project”.
The company increased the mineral resource at the project by 41% in December 2018 after a drilling and trenching program.
Lindi Jumbo’s global mineral resource increased from 29.6 million tonnes to 41.8 million tonnes total graphitic content (TGC) within the Gilbert Arc Deposit and remains open along strike and to the west/down dip.
Much of the tonnage increase came from an inferred resource zone to the south of the current planned mining shell and will not be used in an updated mining depletion model.
The latest inferred resource area is 12.8 million tonnes at 9.2% TGC and lays directly to the south of the current planned open-pit area.
Other projects include the Takatokwane Coal Project in Botswana.
Walkabout’s Botswanan project is the largest thermal coal asset in central south Botswana with an inferred resource of 6.88 billion tonnes.
The company raised $3 million in an underwritten share placement in the December 2018 half-year and ended 2019 with $6.2 million cash.
Walkabout produced its December 2018 half-year accounts last month and is expected to file its quarterly reports for the March quarter of 2019 by the end of the month.
The company expected $1.7 million of expenses in the March quarter, with $750,000 earmarked for exploration and evaluation and $500,00 for development.
Progression of offtake and marketing agreement arrangements, including with Qingdao
Further refinements and optimisations for Lindi Jumbo
Financing milestones for project construction and expansion
Executive director Allan Mulligan pleased with updated DFS outcome
“We are very excited by the outcome of this DFS,” executive director Allan Mulligan told Proactive Investors in an interview last month.
“We briefed the mining engineer to high grade the property and the mining deposit as much of its life as he could and the outcome is that nearly a million tonnes of graphite will be used over 24 years.
“This equates to over a billion dollars in revenue and not bad for a mine that’s only going to cost $30 million to start.”