Evolution Energy Minerals Ltd (ASX:EV1) is progressing towards a construction decision for the Chilalo Graphite Project in Tanzania by H2 2022, a project which the company believes will add significant value for shareholders.
The Perth-based company started trading on the ASX in November 2021 after raising A$22 million from its initial public offer (IPO).
Evolution’s IPO was cornerstoned by ESG-focused investor, ARCH Sustainable Resources Fund LP (ARCH SRF), which invested A$8 million for a 25% interest in Evolution.
During the December 2021 quarter, Evolution adopted an ESG Framework designed to ensure that Evolution is ‘investment-ready’ for global investment funds ahead of a final investment decision in H2 2022.
The ESG Framework will be applied across all aspects of the company’s activities and in particular to the financing and development of the Chilalo Project.
“Start of a new journey for Evolution”
Commenting on the December quarter, Evolution executive chairman Trevor Benson said: “Our first quarterly report as a listed company comes after a period working with Marvel, local stakeholders, potential investors and advisors.
“The $22 million capital raising received strong support from both institutional and retail investors, which has seen good demand for our shares since the commencement of trading on 16 November 2021.
“We are particularly pleased to have ARCH Sustainable Resources Fund as a cornerstone investor with their commitment of $8 million as part of the IPO and welcome the appointment of ARCH’s MD, Amanda van Dyke, to the Evolution Board.
“Evolution is committed to developing Chilalo as a sustainable graphite project, with activities undertaken to the highest ESG standards.
“Our first quarterly report reflects the start of a new journey for Evolution, as we progress towards a construction decision for the Chilalo Project by H2 2022, a project which we firmly believe will add significant value for shareholders.”
Commencement of optimisation studies
During the quarter, Evolution commenced a series of optimisation studies which are expected to improve the economics and reduce the carbon footprint of Chilalo.
Optimisation of the DFS will be a continual exercise as the company moves towards a construction decision by H2 2022, however, such decision is not conditional on the outcomes of such studies.
Mining costs have been identified as one of the more significant opportunities for improvement in Chilalo economics and a review of the mine plan is underway.
Furthermore, the company commenced exploration in June 2021 to identify undrilled high-conductance exploration targets on its tenement holdings.
A ground fixed loop electromagnetic survey is being implemented to identify high-conductance targets with a focus on high-grade, near surface, coarse flake graphite deposits.
The discovery of additional graphite deposits at surface has the potential to deliver a reduced strip ratio, lower mining costs, extended mine life and an improved NPV.
Potential for net zero carbon operation
Evolution has engaged MinViro to assess the carbon footprint associated with the proposed mining operation at Chilalo as part of a process being undertaken by Evolution to investigate the establishment of a net zero carbon operation at Chilalo.
The company is also in advanced discussions with independent power providers to convert Chilalo’s proposed diesel-generated power supply to a hybrid solar/diesel solution, which is expected to substantially reduce the carbon footprint and deliver operating cost savings.
Additionally, a recent visit to the Mtwara Port to view the upgraded facilities provided insight into the possible operational utilisation of this facility, with the scope to further improve Chilalo economics and reduce carbon emissions.
Existing DFS is executable as it stands
The ongoing optimisations are not expected to delay progress towards making a construction decision by H2 2022.
The existing DFS is executable as it stands and the company will progress project finance discussions in parallel with the implementation of the recently announced ESG Framework which is designed to meet the requirements of key stakeholders including financiers and graphite customers.
Front-End Engineering Design
Evolution is also preparing to tender a Front-End Engineering Design (FEED) package for the Chilalo Project, aimed at advancing the design sufficiently to identify and mitigate against potential risks to the schedule, and further define the project cost estimate.
Engineering firms from three separate continents have expressed a desire to be considered for this work and the company intends to run a pre-qualification process to shortlist the most suitable applicants.
FEED work is expected to commence in Q2 2022 and is envisaged to take four months.