‘Sustainable’ graphite developer Evolution Energy Minerals (ASX:EV1) has completed the front-end engineering design (FEED) with the results incorporated into an updated Definitive Feasibility Study (DFS) for the Chilalo Graphite Project in Tanzania.
The company says the FEED and updated DFS has confirmed the project as a ‘standout’ high-margin, low capex, and development ready project.
‘Highly’ experienced engineering, design, and construction company CPC Engineering was engaged to undertake the FEED workstream. CPC has ‘significant’ experience in the graphite industry, having undertaken the study work on Syrah Resources’ (ASX:SYR) Balama Project, and has completed several feasibility studies.
Evolution reports the purpose of the FEED was to ensure that, subject to the availability of finance, Chilalo is construction ready. Key deliverables of the FEED work included detailed engineering, cost estimation, schedule optimisation, development of project execution, operational readiness plans, and tenders for long lead equipment items.
The company says the completion of FEED is a key requirement of financiers and enables Evolution to further progress the debt finance process.
Key outcomes of the DFS include a post-tax net present value (NPV) of US$338 million, a 32% internal rate of return (IRR), a 17-year mine life, US$120 million in pre-production capital, and annual earnings before interest, tax, depreciation and amortisation of US$82 million.
Other outcomes highlighted include a 52% operating margin, an average annual plant feed of 500,000 tonnes per annum (tpa) @ 10.6% total graphitic carbon (TGC), and an average graphite concentrate production of 52,000tpa.
Commenting on the updated DFS, Evolution Energy Minerals Managing Director Phil Hoskins says: “We are extremely pleased with the results of the FEED process and the updated DFS, confirming Chilalo is a high-margin, low-capex development option, poised to become a meaningful producer of high-value graphite products and take advantage of the looming graphite supply shortage.
The compelling case for the development of Chilalo is simple. Chilalo’s coarse flake graphite drives leading operating margins (US$841/t) at current prices. Chilalo presents a low capex, financeable development options.
Evolution’s commitment to customer testwork and qualification since 2015 confirms the suitability of Chilalo graphite for high-value applications, yielding quality offtake arrangements.
“Evolution’s commitment to customer testwork and qualification since 2015 confirms the suitability of Chilalo graphite for high-value applications, yielding quality offtake arrangements”
Evolution has built a team with previous graphite development and operating experience, thereby de-risking development and ensuring DFS assumptions are based on real-world graphite experience, and the company’s sustainability commitment has attracted a substantial cornerstone investor committed to following their investment through to financing.
The FEED and updated DFS, under the oversight of Executive Director, Michael Bourguignon, CPC Engineering, and experienced graphite processing expert Oliver Peters, has predominantly retained the flowsheet used in the previous DFS. This is a strong vote of confidence in the technical work undertaken, including substantial variability testwork and pilot plant tests, confirming Chilalo’s ability to produce a high-value concentrate product.
This work is part of the significant investment that has been made into the development of the Chilalo project since its discovery almost 9 years ago.
Graphite represents approximately 45% of a battery’s mass. As widely reported, battery related demand for graphite is growing rapidly, expected to grow from about 50% of the graphite market to about 70% of the market in the coming 24 months.
When this threshold was crossed in the cobalt and lithium markets in 2016 and 2020 respectively, price increases of about 350% and 1,300% then followed respectively for those commodities over the ensuing 24-month period. Combined with the substantial under-investment in new supply, it is difficult to see how graphite will not experience a supply deficit and rising prices over a similar period.
The timing couldn’t be better to be bringing the development-ready Chilalo graphite project towards a financing and construction decision. I couldn’t be more excited by what 2023 holds in store for Evolution’s shareholders as we strategically assess the financing and development options available to us.”
Evolution reports it is now preparing to execute the Resettlement Action Plan, and to begin detailed design work. The company will also continue to further investigate the opportunities outlined by the DFS, which have been identified as having the capacity to deliver improved financial outcomes for Chilalo.
Evolution Energy Minerals is a ‘sustainable’ graphite developer focused on the Chilalo Graphite project in Tanzania. The project holds a total resource of 67.3 million tonnes @ 5.4% TGC for 3,667 tonnes of contained graphite.
Images: Evolution Energy Minerals Ltd
