Kibaran Resources (ASX:KNL) is moving closer to producing graphite in East Africa. On Wednesday (June 21), the firm announced the completion of an updated bankable feasibility study (BFS) for its Epanko graphite project in Tanzania.
The BFS shows that Epanko has a pre-tax net present value of US$211 million and a 38.9-percent internal rate of return. Meanwhile, capital costs came in at US$88.9 million, while annual EBITDA stands at US$44.5 million. Kibaran based the BFS on an increased production rate of 60,000 tonnes per year, and says Epanko will have a payback period of 3.4 years and a mine life of 18 years.
Kibaran Managing Director Andrew Spinks said, “passing this milestone was the key catalyst to advance debt financing and allows Kibaran and its sales partners, industry groups and private equity groups that have previously expressed interest, to commence project financing discussions in detail.”
The firm is currently in discussions with German industry groups for the sale of downstream products, and expects to release a separate feasibility study on the production of battery-grade spherical graphite in Q3 2017. Kibaran already has sales and offtake agreements in place for 44,000 tonnes per year of planned graphite production from Epanko; its discussions with the German industry groups are in regards to the additional 16,000 tonnes per year that will be produced there.
The company’s existing offtake agreements include:
- 20,000 tonnes per annum for ThyssenKrupp (ETR:TKA) to be sold to the steel industry
- 10,000 tonnes per annum for an unnamed European graphite trader for other high-end uses
- 14,000 tonnes per annum for Sojitz (TSE:2768) to be sold to the battery market
Despite the positive news, Kibaran’s share price fell $0.015 percent on Wednesday to close at $0.175. The company’s share price is down 7.89 percent year-to-date.
Kibaran preparing to meet rising graphite demand
The value of the global graphite market is expected to reach $29.05 billion by 2022 based on a compound annual growth rate of 5.2 percent from 2017 to 2022. The Asia Pacific region is forecast to drive much of the demand.
Graphite has applications in the aerospace, defense, wind energy and automotive industries. Graphite will also be required to supply emerging demand from green technologies, including lithium-ion batteries and fuel cells for electric vehicles and graphene-based industrial products.
A recent report from Research and Markets identifies several large players in the graphite space. The companies mentioned in the report include: Northern Graphite (TSXV:NGC), Alabama Graphite (TSXV:CSPG), Mason Graphite (TSXV:LLG) and Focus Graphite (TSXV:FMS).
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Securities Disclosure: I, Melissa Shaw, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Focus Graphite is a client of the Investing News Network. This article is not paid-for content.