Renascor Resources (ASX:RNU) has released a prefeasibility study (PFS) for a spherical graphite operation that would use graphite concentrate from the company’s Siviour project.

Siviour, located on South Australia’s Eyre Peninsula, has been primarily focused on flake concentrate as it moves towards development. However, the newly released PFS explores the potential for manufacturing spherical graphite in order to “extract further value” and form an integrated operation.

The PFS returned results including an annual spherical graphite production rate of 29,085 tonnes and a 30-year mine life for the project. Capital costs came in at AU$89.9 million, while the net present value (NPV) after tax rang up to AU$487 million; the integrated operation has a NPV of AU$889 million.

Renascor also highlights that operating costs for the spherical operation are docketed at AU$1,883 per tonne; this is against a projected selling price of AU$4,800 per tonne.

“Siviour is uniquely advantaged in its potential to produce a high-quality spherical graphite product for the growing market for lithium-ion battery anodes,” said Renascor Managing Director David Christensen.

“The low operating cost we expect to achieve at the graphite concentrate operation underpins a very high margin spherical graphite operation and offers more direct exposure to the lithium-ion battery market,” he continued in the statement, released Thursday (February 21).

The company estimates that the spherical operation will see earnings before interest, tax, depreciation and amortization (EBITDA) of AU$2.3 million and an after-tax net profit of AU$1.5 billion. The integrated operation will have an EBITDA of AU$4.4 billion and an after-tax net profit of AU$2.9 billion.

Renascor is relying on the ever-growing market for lithium-ion batteries to support its operation, and notes that much of the battery market’s current supply of spherical graphite is sourced from China.

Along with the benefit of gaining a closer vantage point to the bustling lithium-ion battery market, the company sees this opportunity as a way to support its original graphite concentrate operation through potential sales contracts and offtake agreements.

Going forward, Renascor intends to test Siviour spherical graphite in lithium-ion battery anodes and will take on programs to optimize the new PFS results, including testing alternative milling and purification technologies.

The company is also still working to develop Siviour and plans to complete a definitive feasibility study next quarter. Additionally, Renascor is working towards offtake and finance discussions regarding Siviour’s graphite products — both concentrate and spherical — along with advanced feasibility planning and completing permits and approvals needed to start production.

Renascor’s share price made moves in the right direction on Thursday as it grew 5.88 percent on the ASX to close at AU$0.018.

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