Magnis' Nachu BFS Points to 'Outstanding' Financial Returns

Magnis Resources (ASX:MNS) ended Thursday up 9.72 percent, at AU$0.395, after it released the results of a bankable feasibility study (BFS) for its Tanzania-based Nachu graphite project.
Highlights include a post-tax NPV of US$1.69 billion and an IRR of 98 percent, both at a 10-percent discount. Pre-production capex is set at US$269 million, and the payback period is pegged at 14 months.
Overall, nameplate capacity clocks in at 240 kilotonnes of graphite concentrate per year, and reserves support an initial 15 years of operation. Meanwhile, operating costs are projected to be US$502 per tonne for the first five years and an average of US$559 per tonne over the full mine life.

Commenting positively on the BFS, Magnis CEO Frank Houllis said it “confirms that the project has outstanding projected financial returns.” Houllis also said that it “details how premium graphite concentrate products of exceptional size and purity can be generated using low cost flotation processes with an exceptionally small environmental footprint.”
Speaking to the Investing News Network earlier this month, Frank Poullas, chairman at Magnis, also emphasized those key characteristics of the graphite at Nachu. Essentially, he said, “[w]e’ve got large, thick flakes that are isotropic, very low impurities. And those impurities are just on the surface, they’re not embedded.”
Explaining further, he said that the benefit of having graphite like that is that Magnis is able to “achieve purity levels in [its] product that are unmatched in the marketplace.” That’s good for a number of reasons. Perhaps most importantly, the high purity of Magnis’ graphite means the company doesn’t have to use expensive (and environmentally unfriendly) chemical processing on it. As a result, the material can be used as a lower-cost alternative to synthetic graphite. 
End users are already recognizing the quality of the graphite at Nachu — the company has two offtake agreements for 180,000 tonnes of graphite per year in place. And according to Poullas, more are in the works. He told the Investing News Network Thursday via email that the company is “working hard towards getting offtake agreements and project financing in the near future.”

Poullas concluded, “there is no doubt Magnis is sitting on a unique project and that’s verified by the outstanding economics of the project published in the BFS.” As mentioned, Magnis ended Thursday up 9.72 percent, at AU$0.395. The company’s share price is up 2.6 percent year-to-date, and an impressive 68.09 percent in the last year.
 
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Magnis Resources is a client of the Investing News Network. This article is not paid-for content.
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