Modern Mining May 2017

MINING News

PFS confirms Mahenge’s long-life, low-capex potential at US$159 million including Stage 2 and a 15 % contingency. Key financial metrics include a post-tax, unlevered, IRR of 48,7 % and an NPV using a discount rate of 10 % of US$624 million.

Tanzanian graphite developer Black Rock Mining, listed on the ASX, has completed the Preliminary Feasibility Study (PFS) for its 100 %-owned Mahenge graphite proj- ect. The company says the study confirms Mahenge’s outstanding potential as a long- life, low-capex, high-margin operation. The PFS is based on mining and milling 61,1 Mt of resource and reserve at an aver- age grade of 8,9%Total Graphitic Contained (TGC) for a life of mine (LoM) production of 5,1 Mt of concentrate. The LoM strip ratio is exceptionally low, at 0,8 to 1, benefiting from an even distribution of mining mate- rial at high grades through both pits. Metallurgical test work indicates the concentrate will have commercially desir- able product size and purity attributes. The mine plan is also advantaged by bulking in all mineralisation above cut-off grade resulting in limited need for costly selec- tive mining methods. Pre-production capex is estimated at US$90,1 million with total capex estimated

combination of ultra-low pre-preproduc- tion capex, sustained bottom quartile operating costs and a premium high purity large flake product that – as an investment – is simply not available in any other projects. “Our staged development model of two 83 kt per annum modules is unique in our sector. The approach is to be large enough to be investable but small enough not to disrupt the overall flake market, while generating sufficient cash to self- fund the second module. The self-funding, sequential module strategy is sized to accommodate the expanding market in high purity flake without being overly dis- ruptive. It simplifies and de-risks our build by utilising modular assembly and flat- pack, off-site construction where possible. “We are now completing negotiations with DFS and construction partners and expect to commence work quickly on opti- mising the PFS and commencing detailed engineering with a view to commencing construction in 2018.” 

Mining will be by owner-operator using conventional open-cut mining techniques. The mining strategy is to mine out the lower strip ratio Ulanzi deposit, followed by the Cascade deposit commencing in year 13. Processing will be by well-proven crushing, grinding and flotation methods. “The PFS builds on a compelling scop- ing study and reconfirms the Mahenge graphite project’s potential to be a globally significant graphite producer, with indus- try leading low capex, and sustained high margins,” says Black Rock’s Interim CEO and Executive Director, John de Vries. “The mine metrics are driven by low strip ratios and high grade ore that can be relatively simply converted into large high purity, premium flake concentrates. “Mahenge is financeable with a unique

May 2017  MODERN MINING  17