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Graphite One: PEA pegs pre-tax NPV of US$1B for graphite manufacturing project

A preliminary economic assessment on Graphite One Resources Inc.'s integrated Graphite One manufacturing project indicated a pre-tax net present value of US$1.04 billion, at a 10% discount rate, and an internal rate of return of 27%, according to a Jan. 25 news release.

The project will require total CapEx of US$363 million for mining operations, a processing plant, a manufacturing plant and other infrastructure. Spending on the processing plant is spread over three years with the ramp-up to full production at 60,000 tonnes per annum of graphite concentrate to be achieved in the sixth year of production.

The study envisions the project as a vertically integrated manufacturer of high-grade coated spherical graphite, producing 55,350 tpa of finished product, which includes 41,850 tpa of coated spherical graphite and 13,500 tpa of purified graphite powder.

Operating costs are estimated at US$1,774 per tonne for the finished product.

At a mining rate of 1 million tonnes per annum, current resources at the company's Graphite Creek property in Alaska will support a minimum 40-year operation.

Graphite Creek hosts indicated resources containing 744,000 tonnes of graphite within 10.32 million tonnes grading 7.2% graphitic carbon and inferred resources containing 4.97 million tonnes of graphite within 71.24 million tonnes grading 7.0% Cg.

At full capacity, the operation is expected to generate cash earnings of US$182 million per annum on sales of US$280 million with EBIT of 63%.

Coated spherical graphite will account for 75% of sales and 93% of revenue, equivalent to US$260 million, of the total, while the remaining US$20 million in revenue will come from purified graphite powders.

Pending a detailed graphite market study, the study assumes a conservative selling price of US$6,200 per tonne for coated spherical graphite and an average selling price of US$1,500 per tonne for purified graphite powders.

In addition, the PEA indicated opportunities to expand and upgrade resources to the measured category through infill drilling, while also recommending continued refinement of the mine plan and graphite sampling and testing, among other things.