Name of the Project
Chilalo graphite project.

Location
South-east Tanzania.

Client
Graphex Mining.

Project Description
The results of an updated prefeasibility study (PFS) have confirmed Chilalo as a high-quality and -margin graphite project.

The project has probable reserves estimated at 5.3-million tonnes grading 10.9% total graphitic carbon (TGC), and a total indicated and inferred resource of 53.5-million tonnes grading 5.6% TGC.

The PFS envisages a two-stage production scenario, under which Stage 1 will produce about 58 000 t/y of graphite product for the first two years of operation and a Stage 2 expansion to start operation in Year 3, which will produce about 108 000 t/y of graphite product. The staged approach has been chosen to minimise upfront capital.

The PFS proposes a high-grade openpit operation and a plant that applies simple comminution and flotation processing. Graphite product will be transported to and shipped from the deep-water commercial Port of Mtwara.

Based solely on current ore reserves (ore reserve base case) the project has a life-of-mine (LoM) of 6.3 years. Under the increased LoM case, the project has an LoM of 8.5 years, which includes inferred resources also developed.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The ore reserve case returned an after-tax net present value (NPV), at a 10% discount rate, of $273-million and an internal rate of return (IRR) of 130%, with a payback of 0.84 years. The increased LoM case returned an after-tax NPV, at a 10% discount rate, of $349-million and an IRR of 131% with a payback of 0.84 years.

Value
Stage 1 preproduction capital expenditure is estimated at $43.6-million, including contingencies. Stage 2 is expected to cost about $32.5-million funded from free cash flow. Both these figures apply to the ore reserve case and the increased LoM case.

Duration
A decision to mine is expected in the second quarter of 2019, with commissioning and production expected to start in the second quarter of 2020.

Latest Developments
Graphex Mining has secured a funding package to fully fund the development of its Chilalo project.

The company has entered into a loan note subscription agreement with global private investment firm Castlelake to raise $5-million from the issue of secured interim loan notes, which will be available immediately.

Graphex has also signed a term sheet with Castlelake and other market participants providing up to $40-million in equity and up to $40-million from the issue of senior secured loan notes.

The final financing amount for the senior funding package will be determined by the bankable feasibility study (BFS) for the Chilalo project, and is expected to fund all associated costs and allowances typical for the construction of a mining project.

The proceeds from the interim loan notes will be used to advance the project to be able to satisfy the conditions precedent for the senior funding package, and if the conditions of the senior funding package are not satisfied within two years, the amount outstanding under the interim loan notes will become immediately repayable.

 “We can now proceed with completion of the BFS with a view to Graphex becoming a leading supplier of premium, coarse flake graphite,” Graphex MD Phil Hoskins has said.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Too early to state.

Contact Details for Project Information
Graphex Mining, tel + 61 8 9200 4960 or email info@graphexmining.com.au.