Canada Carbon Announce PEA Showing 100.2% Pre-tax IRR at Miller Project

Canada Carbon Inc. (TSXV:CCB) announced the results of a positive Preliminary Economic Assessment for its flagship 100% owned Miller hydrothermal disseminated and lump vein graphite and architectural marble Project located 80 kilometres west of Montréal, near Grenville, Québec.
As quoted in the press release:

PEA HIGHLIGHTS

Highlights of the Miller graphite and marble Project’s PEA are summarized below. All dollar amounts are based in Canadian currency unless otherwise stated:

• The estimated mineral resources comprise 952,000 tonnes of inferred graphite resources at an average grade of 2.00% Cg within the graphite pit shells (cut-off grade of 0.8% Cg) and 1.2 million tonnes of inferred graphite resources at an average grade of 0.53% Cg within the architectural marble pit limits (cut-off grade of 0.4% Cg).
• The architectural marble mineral resources comprise 1.52 million tonnes of inferred marble with an average probability factor of 0.82.
• The PEA is based on the Miller project producing and selling two products: specialty, thermally-processed graphite product of >99.99% Cg and marble product suitable for architectural applications. The PEA is not modelled on producing and selling final run-of-mine (“ROM”) graphite concentrate product typical of other conventional flake graphite projects;
• Mining is expected to occur in three pits (two for graphite and one for marble). Marble will be mined for eight years and graphite will be mined for 10 years;
• The marble quarry is expected to produce and sell approximately 150,000 tonnes of architectural marble annually;
• Milling, concentrating and thermal processing will occur over 17 years producing a maximum of 1,500 tonnes of specialty high-purity graphite product annually;
• Initial Capital Expenditure (“CAPEX”) of $44.4 million, with a payback period of 1.9 years (pre-tax) and 2.0 years (post-tax);
• Base-case pre-tax Net Present Value (“NPV”) of $150 million, post-tax NPV $110 million (8% discount rate); pre-tax NPV of $131 million, post-tax NPV of $96 million (10% discount rate);
• Pre-tax Internal Rate of Return (“IRR”) of 100.2%; post-tax IRR of 85.0%;
• Life of Mine (“LOM”) Gross Revenue of $550 million and Operating Expenses (“OPEX”) of $231 million;
• Selling price for purified graphite at US$13,000 per tonne (CDN$17,333 ) and marble at CDN$184 per tonne; exchange rate used for the estimates is $US:$CDN = 0.75: 1.00;
• Life of Mine average cash operating costs of $8,666 per tonne ($6,880 for the first five years) for final graphite product and $54/tonne for marble product.

Canada Carbon Chairman and CEO, R. Bruce Duncan, stated:

We are pleased that the PEA has confirmed the financial viability of our proposed business model. CCB is positioning itself to be both a marble and low volume high value specialty graphite producer. We have been fortunate to have found significant quantities of quality marble on the Miller property which the PEA has demonstrated to be a profitable commodity. Given the low CAPEX costs for marble extraction, the less onerous quarry permit process and the marble sales contract already in place, the Company’s business plan envisions that operations on the Miller property would begin with the extraction of marble. This is the fastest path to cash flow which will in turn be utilized to fund some of the graphite CAPEX costs.
The business model presented in the PEA shows that the extraction and processing of graphite will occur approximately one year after the extraction of marble. While our lower graphite processing volumes result in higher processing costs per tonne compared with large producing mines, our high purity graphite commands higher prices which more than offset the costs (revenues exceed cash mining and processing costs by an average of $8,667 per tonne). While the PEA assumes no more than 1,500 tonnes of graphite produced and sold annually, we believe there is growth potential and our proposed processing facilities are scalable. Given the fixed nature of a significant portion of the operating costs, higher volumes or higher head grade will reduce costs and increase profits. It is our understanding that lower processing volumes will have a positive impact on the permitting process.
We are excited to advance to the pre-feasibility stage of development.

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