Promising PFS results at Talga’s Vittangi Graphite Project

by Leena Thomas
Vittangi Graphite Project - Sweden Image: Talga Resources Ltd

Talga Resources Ltd (ASX: TLG) has announced highly positive results of its PFS study for the development of its wholly owned Vittangi Graphite Project in the County of Norrbotten in northern Sweden.

The company reported that the PFS for Vittangi delivered outstanding project economics including Pre-tax project NPV8 of US$1,056 million and strong pre-tax IRR of 55%, as well as rapid post Stage 2 commissioning payback period of 1.5 years.

TLG noted that the economics were based solely on the Ore Reserve of 1.9 million tonnes at average grade of 23.5% TGC as a portion of the current global Indicated Mineral Resource Estimate of 10.7Mt @ 25.7% Cg.

The company reported that it would have a staged development approach to meet near term market demand at low initial estimated capital expenditure of US$27 million in Stage 1 and US$147 million in stage 2.

The company said that annual estimated revenue from Stage 2 is estimated to be US$210m. The commencement of Stage 1 is planned for mid-2020 with initial production in early 2021.

Talga noted that the vertically integrated project captures full anode material production margins with conservatively discounted, independently assessed Talnode-C price of US$11,250/t at an estimated US$1,852/t production cash cost.

Vittangi project

Talga’s 100%-owned Vittangi Graphite Project is located approximately 20km east of LKAB’s iron ore mine and railhead at Svappavaara in Sweden. The project comprises of the Nunasvaara deposit and has a total JORC resource of 12.3Mt at 25.5% graphite (Cg).

Talga aims to produce a high-performance fully engineered and coated lithium-ion (Li-ion) graphite battery anode product, Talnode®-C, for the global Li-ion battery supply chain.

PFS at Vittangi

The company’s recent Pre-feasibility Study (PFS) for its Vittangi Graphite Project in north Sweden is underpinned by a maiden Nunasvaara South Ore Reserve of 1.9Mt at 23.5% TGC (Golder UK), which represents only 18% of the current global Indicated Nunasvaara JORC (2012) Mineral Resources Estimate (MRE) of 10.7Mt @ 25.7% Cg.

Positive PFS results at Vittangi

Talga reported that the PFS for its Vittangi Project delivered outstanding project economics.

This includes an estimated pre-tax Net Present Value (NPV) of US$1,056 million at an 8% discount rate and a pre-tax Internal Rate of Return (IRR) of 55%, with a rapid pay-back period of 1.5 years from the commencement of Stage 2 commissioning.

The company said that the PFS indicates a 22-year life of mine that supports reliable, long-term supply of fully purified, shaped and coated lion battery graphite anode product (Talnode®-C) to emerging European battery supply chain.

Talga noted that the Positive Project economics are driven by vertical integration capturing full margins of the anode supply chain, the Project’s high resource grade, and the high product performance.

Two-stage development

The company said that it would have a staged development approach to meet near term market demand at low initial estimated capital expenditure of US$27 million in Stage 1.

Stage 2 capital expenditure is estimated to be US$147 million (including ~20% contingency) for full-scale mine-to-anode strategy with growth potential.

The company reported that the annual estimated revenue from Stage 2 steady state Talnode-C production of 19,000 tpa via integrated concentrator and refinery in north Sweden is estimated to be around US$210m.

The company said that the commencement of Stage 1 is planned for mid-2020 with initial production in early 2021.

Huge margin

The company announced that the PFS demonstrates an approximate life of mine (LOM) revenue of US$4,148 million with an estimated production cash cost of US$1,852 per tonne of Talnode-C.

The PFS pricing of Talnode-C proposed to be sold directly to Li-ion battery manufacturers is estimated at US$11,250/t. This implies that Talga’s graphite product is aimed to be sold for almost 6 times more than the cost of production.

What’s next?

Talga said that it will move to initiate the Stage 1 Definitive Feasibility Study (DFS), aiming for completion by Q1 2020.

The Company reported that it is continuing to progress all necessary project permitting and approvals, whilst working on a range of funding initiatives with customers and potential strategic partners to take the Project into production, targeting commencement of Stage 1 in 2020.

Management comments

Talga Managing Director, Mark Thompson said: “The outcomes of the PFS support Talga’s move to produce fully value-added graphite products for li-ion batteries. This is the most immediate path to significant revenue for Talga and aligns with our vertically integrated business that sets us apart from peers.

Next steps include a Stage 1 Definitive Feasibility Study (DFS) to further optimise scale, in line with growing li-ion battery anode demand, and progress discussions with customers and potential strategic partners toward the targeted 2020 commencement of Stage 1.”