Metals Australia Limited (ASX:MLS) has released a positive Scoping Study on the company’s 100% owned Lac Rainy Graphite Project located in Quebec, Canada.
Director, Gino D’Anna, said the Project economics and technical viability are highly encouraging, highlighting its potential to become a low cost flake graphite producer, in a growing Electric Vehicle (EV) market.
Mr D’Anna said the Study confirms Lac Rainy can support a Base Case scenario with graphite concentrate production of ~96,000 tonnes per annum (excl. first year and last year) over an initial mine life of 14 years.
- Life of Mine (LOM) operating cost estimate of US$433 per tonne of concentrate (including transport costs FOB Sept-Îles port) deliver excellent operating margins – based on an average concentrate selling price of US$885 per tonne of concentrate, Lac Rainy exhibits an operating margin in excess of 104% – exceptional operating margins in a suppressed graphite pricing environment
- Initial capital investment for the open pit mine, process plant and infrastructure estimated at US$118 million (excluding contingency, owners’ cost and indirect costs); initial capital investment (including contingency, owners’ costs and indirect costs) estimated at US$189 million with a 3.4-year payback (pre-tax)
- LOM average feed grade of 11.6% Cg and a graphite concentrate grade of 96.7% Cg with a LOM average open pit strip ratio of 5.6:1
- Pre-tax Net Present Value (NPV) of US$123 million and internal rate of return (IRR) of 18.9%
- Excellent supply / demand outlook for Lac Rainy concentrate products supported by the ability to produce a range of high-carbon (total) and high-purity size fractions
- Concentrate flake size, high-carbon (total) and high-purity ‘footprint’ indicates suitability for use in a wide range of traditional and emerging end-use applications
- Significant infrastructure advantages including proximity to rail, road, clean hydro-power, labour and fresh water supplies
Mr D’Anna said the rapid growth in electric vehicle production is expected to drive a big uptick in demand and pricing over the next few years – there is 10 times more graphite than lithium in a lithium-ion battery, with each EV requiring ~55kg of flake graphite to make the battery anode
The Scoping Study clearly demonstrates the Project’s very strong commercial potential which is centred on very low operating and capital costs, and revenues derived from a premium product. Importantly, the Project is not reliant on an unrealistically large scale to reduce operating costs and/or overly optimistic graphite pricing forecasts. The very low operating cost nature of the Project provides protection even against extreme downside pricing scenarios,” Mr D’Anna said.
“We believe that as the world emerges from the current COVID-19 crisis, economies will start to rebuild and strengthen, resulting in significant funds being invested into alternative energy sources and electrification.
“We are already starting to see this in the lithium and cobalt market and believe it will not be long before graphite prices also start to increase. We see a lot of upside in the future demand for graphite and are positioning the Company to take advantage of the change in market dynamics.
“The Lac Rainy project offers significant flexibility. It has projected low strip ratios, can be readily accessed through open cut mining methods and has consistently delivered exceptionally high-carbon (total) and high-purity concentrate products that exceed the industry standard benchmarks.
The Lac Rainy Graphite Project offers significant upside.”
Lac Rainy hosts a JORC (2012) Mineral Resource of 13.3Mt at 11.5% TGC in the category of Indicated (~72%) and Inferred (~28%) for 1.529Mt of contained graphite, using a 5% TGC cut-off
In addition to the JORC (2012) Mineral Resource Lac Rainy currently has a JORC (2012) Exploration Target Estimate of 7.3Mt to 14.6Mt @ 7.5% to 12.5% Total Graphitic Carbon (TGC) for an additional 0.55Mt to 1.825Mt of contained graphite using a 5% TGC cut-off