Armadale Capital, the AIM quoted investment group focused on natural resource projects in Africa, has provided positive results from an improved mine plan produced by graphite specialists BatteryLimits at the Mahenge Liandu graphite project in south-east Tanzania. The project is at the heart of the group’s transformation from explorer to emerging producer.
Armadale chairman, Nick Johansen, says the improved mine plan brings production forward via a staged ramp-up that will initially focus on producing ore at a grade of 12 – 14% total graphitic carbon (TGC) for the first four years before averaging a grade of 9,5% TGC with a very low strip ratio as the plant ramps up to 1-million tpa.
“The mine plan uses less than 25% of the resource and includes only measured and indicated resources, leaving potential to expand production further. The results of a final round of metallurgical test work are being completed at Bureau Veritas in Perth, Australia, on high-grade composites of the diamond core with average grades of 14,9% and 15,6% TGC expected to be received later this month. These results will be used to confirm the flow sheet for the higher grade mineralisation.”
Work to date has demonstrated the project’s potential as a commercially viable deposit, with significant tonnage, high-grade coarse flake and near surface mineralisation (implying a low strip ratio) contained within one contiguous ore body. A scoping study delivered in March 2018 has demonstrated positive project economics with significant capacity for improvement. The study was based on a throughput of 400 000 tpa over a 32-year mine life and delivered an NPV of US$349-million and an IRR of 122% for production of coarse flake, high-purity, high-grade graphite. Key scoping study findings included:
- Producing an average of 49 000 tpa of high-quality graphite products for a 32-year mine life.
- The near surface nature of the deposit produced a low 1:1 strip ratio for the life of the mine.
- The project has a low operating cost of US$408 per tonne, based on an average 12,5% TGC life of mine grade.
- The project has a pre-tax IRR of 122% and NPV of US$349-million, with a development capex of US$35-million.
- The maximum draw-down during the construction of the project is US$34,9-million and the after-tax payback period is 1,2 years.
Since this time, incremental improvements have been delivered successfully and it is anticipated that the forthcoming DFS will have significantly uplifted economics.
Following completion of the Mahenge mine plan, the company announced that initial production start-up is planned to be considerably higher than the 49 ktpa referred in the original scoping study. Using a staged production ramp-up, the mine plan allows for significant uplift in production capacity to a total of 100 ktpa.A phased production profile will initially see increased starting production figures of 52 ktpa further increasing to 66 ktpa in a year two, and to 100 ktpa in year four. The original scoping study was based on an average annual production of only 49 ktpa.
The results have been achieved through the identification of high grade material, a high-grade starter pit with an average grade of 13,2% over four years, and a strip ratio of 2,7. After year four, the grade averages to 9,5% with a low overall strip ratio of 0,7 to 1. The staged increase in production allows a dramatic increase in production without increasing the initial capex.There remains significant scope to further improve returns with staged expansions as the current mine plan is based on circa 25% of the total resource.
The company also expects that a staged ramp-up will enable operating costs to remain stable as output increases, maximising the value of the resource.
Further details will be provided in the forthcoming DFS.
