Nouveau Monde Releases West Zone FS, Outlines Next Steps

Nouveau Monde Graphite (TSXV:NOU) has announced feasibility study (FS) results for the West Zone deposit of the Tony claim block, part of its Matawinie graphite property in Quebec.

Compared with a prefeasibility study (PFS) released in October 2017, the FS shows growth across several categories, including after-tax net present value, which rose from C$297 million to C$751 million, and after-tax internal rate of return, which rose from 25.9 percent to 32.2 percent.

The company also reported an increase in average annual graphite concentrate production, which has been boosted from 52,000 tonnes to 100,000 tonnes.

These increases are accompanied by higher initial CAPEX, which rose from C$179 million to C$276 million. Operating expenses have dropped from C$539 per tonne of concentrate to C$499.

The stats for the West Zone’s life of mine took a small hit between the studies as well, falling to 25.5 years in the FS versus the originally docketed 27 years in the PFS.

Nouveau Monde President and CEO Eric Desaulniers commented on the feasibility study in a statement, highlighting the company’s next steps for the asset going forward.

“We are very pleased to present these robust FS results which clearly demonstrates the competitive economics of our project and once again confirms that Nouveau Monde is on track to become a reliable long-term supplier of quality natural flake graphite,” he said.

“On the basis of this FS, we are excited to move the project forward quickly by completing our Environmental and Social Impact Assessment (ESIA) as well as starting the Engineering, procurement, construction and management (EPCM) phase,” Desaulniers added.

According to the company, discussions for the EPCM phase have already begun, and a letter of intent has been signed with a mining contractor. The ESIA is expected to be completed during 2019’s first quarter.

Last month, Nouveau Monde began graphite production at a demonstration plant. It will operate for two years, and the company says it represents “a significant scale-up from laboratory scale testing.”

In total, the company plans to send 40,000 tonnes of ore to the plant over the next two years. The plan is for Matawinie to be an all-electric, open-pit operation.

Also commenting on the FS results was equity research firm Eight Capital, which maintains an optimistic stance on the visible jump in production numbers between the studies.

“Doubling of production helped drop graphite production costs and would provide enough material for future value added production,” the firm’s report says, continuing, “[a]s good as these results are, we believe that they will only improve as value added products ultimately make up approximately 65% of production (studies pending).”

As of 1:40 p.m. PST on Thursday (October 25), Nouveau Monde was trading at C$0.29 on the TSXV, up 11.54 percent.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.