Mason Graphite released a preliminary economic assessment for the Lac Guéret graphite project in Northeastern Quebec, which boasts a $283-million pre-tax NPV at a 10-percent discount and pre-tax IRR of 33.7 percent.
In the race to bring the first graphite project online, Mason Graphite (TSXV:LLG) taken steps towards production with the announcement of results from the Preliminary Economic Assessment for the wholly-owned Lac Guéret graphite project in northeastern, Quebec.
Highlights from the study include initial direct capital costs of $89.9 million. With the inclusion of contingency, indirect, and closure costs, Mason is looking at just under $135 million in costs. Production costs are expected at of $390 per tonne of finished product. Furthermore, Lac Guéret has a 22 year mine life with a pre-tax IRR of 33.7% and a $283 million pre-tax NPV at an 10% discount.
“The completion of the PEA is a significant milestone for the project and demonstrates that the Lac Guéret mine has the potential of becoming a reliable and long term global supplier of high quality graphite,” The company’s CEO, Benoît Gascon, said in a statement. ” We are very pleased with the excellent results of the PEA, which demonstrates a low cost project with robust economics.”
The Forbes and Manhattan company boasts a team of highly experienced graphite professionals who are working towards bringing North American’s highest grade graphite deposit online. Located in one of the most attractive exploration and development districts in Canada, Mason’s Lac Guéret also falls under Quebec’s “Plan Nord” program, an economic development strategy launched by the provincial government in 2011 to help the progress of Quebec’s mining projects above the 49th parallel.
What makes the Lac Guéret project stand in comparison to its peers out are its inordinately high native grades, which are easily identifiable in surface grab samples. On April 3, 2013, Mason Graphite reported high grade results from the remaining 2012 drill program holes. The program, aimed at testing for mineralization extension outside the July 2012 resource envelope and a prospective secondary target, returned similar high grades of graphite.
In a Midas Letter commentary, higher than average grades of graphite is highlighted as key to successfully competing in the ever-growing battery market.
With annual production expected at 50,000 tonnes of graphite concentrate, at an average sale price of $1,525 per tonne, Mason is looking at about $76.2 million dollars in revenue when the project takes off.
Luc Veilleux, CFO of Mason Graphite, commented, “The conservative price assumptions used in the PEA could represent a potential opportunity for improved economics. Integrating the 24-month average IM price of $1,974/tonne in the financial model could yield a potential improvement with a pre-tax NPV (8% discount) of $558M and an IRR of 44.7%.”
To put things into a little perspective, Industrial Minerals has graphite prices currently sitting at a range of $1,200-$1,400 per tonne for flake +80 mesh. A slip of 7 percent.
Following the release of today’s PEA, Mason Graphite share prices rose, climbing 5.45 percent so far on the day. Mason Graphite is currently trading at $0.580 per share.
Securities Disclosure: I, Vivien Diniz, hold no investment interest in the companies mentioned.