Blencowe Resources PLC (LSE:BRES) has completed a pre-feasibility study for its Orom-Cross graphite project in Uganda.
The study shows Orom-Cross to have a net present value of US$482mln, a 52% boost on the number previously ascribed to it in an earlier preliminary economic assessment.
The internal rate of return rings in at 49%.
The study envisaged a 14 year mine life, with EBITDA running at US$100mln per year.
Initial capital expenditure is set at a modest US$62mln.
What’s more, the US$499 per tonne operating cost, free on board to Mombasa), makes Orom-Cross one of the lowest cost graphite projects in the world.
The plan now is to move towards initial stage production by the second half of next year.
The study was delivered in conjunction with leading graphite technical expert Battery Limits Pty Ltd who have managed several other leading graphite project feasibility studies worldwide.
"This PFS represents a major milestone for the Orom-Cross project and the results are outstanding,” said Blencowe’s executive chairman Cameron Pearce.
“We have considerably outperformed the 2021 preliminary economic assessment in all key areas, whilst also reducing the initial capital requirement by 23% to just US$62mln.”
As a result of 50% of its end-products being larger flake size categories Orom-Cross has a substantial weighted average selling price for its basket of end-products.
That allows for considerable margin, and should end up delivering over US$1bn in free cash to Blencowe as return on investment.
“We have adopted a more conservative production profile for both start-up and the ramp-up thereafter to maintain the integrity and viability of delivering new graphite product into the market,” continued Pearce.
“We could have chosen to boost the NPV further by expanding production and sales of graphite but we don't see that as a credible base case. Also, this modest production profile helps delivers a lower initial capital requirement for Blencowe to commission the mine which is another big advantage. These are tremendous results for our Project and once again highlight the disconnect between the value of Orom-Cross and our current public market valuation.”