PERTH (miningweekly.com) – A bankable feasibility study (BFS) into ASX-listed junior Kibaran Resources’ Epanko graphite project, in Tanzania, has improved the project economics, but has also resulted in an increase in the required capital expenditure.

Based on production of 40 000 t/y of high-grade graphite flake concentrate over the first 15 years of the project’s 25-year mine life, the BFS estimated that the project would have a net present value (NPV) of some $197.4-million and an internal rate of return of 41.2%.

A 2014 scoping study had estimated an NPV of $213-million for the project.

However, the estimated capital costs for the project have also increased from the $56-million anticipated in the scoping study to $77.5-million. The cost per tonne of concentrate also increased from the $489/t estimated in 2014 to $570/t, before the payment of a 3% royalty and taxes to the government of Tanzania.

“Completion of the BFS is a significant milestone for our company and shareholders. The study is based on a realistic development strategy and supported by strategic partnerships in European markets,” said MD Andrew Spinks.

“The positive BFS results enable the company to advance Epanko to production and, in parallel, further progress its second fully owned graphite project at Merelani East, and to advance the strategic downstream value-add opportunities we have announced to date.”

Kibaran, at the end of 2013, signed a binding offtake and partnership agreement with a European graphite trader, who would buy some 10 000 t/y of graphite concentrate over an initial five-year period.

The company last year also executed a letter of intent with a German company to develop a long-term commercial agreement for the sale of natural flake graphite products. The agreement would cover a minimum of 20 000 t/y of natural flake graphite and would run for a period of ten years.

Kibaran noted on Thursday that, with all mining licences now granted and environmental approvals in place, the company has started debt financing discussions.

It was anticipated that first production would start some 17 months after the completion of project financing.