Over a 29 year mine life, the project is expected to produce 54,600 tonnes of graphite flakes averaging over 95 percent.
The study, which started in September last year, includes an updated mineral estimate that brings measured and indicated resources to a total of 46 million tonnes grading 4.09 percent graphitic carbon.
Over a 29 year mine life, the project is expected to produce 54,600 tonnes of graphite flakes averaging over 95 percent, with an average selling price set at US$1,321 per tonne. Graphite is currently a key element in lithium-ion batteries used to power electric cars.
The pre-tax internal rate of return of the project is estimated at 28 percent and the pre-tax net present value is set at US$277 million, using an eight percent discount rate. After tax, the net present value is expected to be US$159 million and the internal rate of return 21 percent.
“These results are the culmination of many months of studies to de-risk the project and add to its robustness,” said Ugo Landry-Tolszczuk, president and COO of SRG.
“The economic highlights present a highly profitable business using reasonable estimates for graphite selling price. Basic engineering will focus on improvements in the front-end of the plant, tailings management, and reducing the mining footprint.”
The capital costs for the project are set at US$123 million, a number that includes a power plant worth US$5.8 million, concentrate transport equipment worth US$3.6 million and a contingency of US$12 million.
Operational costs for the first 16 years of production are set at an average of U$447 per tonne.
As of 1:00 p.m. EDT on Thursday, shares of SRG were up 5.9 percent, trading at C$0.90 in Toronto. The company’s stock price has increased 18.42 percent year-to-date.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.