Market prospects buoyant for Malingunde graphite
…Firm eyes lucrative Li-ion battery market
…Project has over 17-years mine life
By Marcel Chimwala
ASX listed, Sovereign Metals, which is currently exploring for flake graphite at its Malingunde tenements in Lilongwe in Central Malawi has reported strong market prospects for the mineral saying test-work shows that Malingunde has potential to meet specifications for all major graphite end-markets including lithium ion (Li-ion) batteries.
The report has heightened Malawi’s prospects to have a big mine for flake graphite in operation as the development of potential mines for other minerals such as rare earths, titanium and niobium is being delayed due to lack of funding as a result of the prevailing low commodity prices which a couple of years ago also knocked off production at Kayelekera Uranium Mine in Karonga.
Recent spheroidisation test-work results highlight a compelling opportunity for entry into developing graphite markets such as the Li-ion battery supply chain, providing attractive future value upside for the Company,
says Managing Director for Sovereign Metals, Julian Stephens.
He, however, explains that though there is a future possibility to break into the lucrative Li-ion battery market, Sovereign’s primary focus is sales to high-volume, high-value, traditional markets such as refractories, foundries and other industrial applications, enabled by Malingunde’s exceptionally low operating cost.
Future entry to the Li-ion battery market provides further value upside, with property testing highlighting that Malingunde products have strong potential to be suitable as Li-ion battery feedstock. In this case, The Malingunde Scoping Study business case centres on near term cash flows from existing traditional markets with future access to Li-ion battery markets.
He says laboratory test-work program conducted by an independent German industrial minerals specialist demonstrated that spherical graphite with suitable benchmark specifications for lithium-ion battery anodes can be produced from Malingunde concentrates.
Stephens says the promising results are based upon Sovereign’s first spheroidisation tests on Malingunde concentrates, and warrant significant further battery suitability development test work, which the company has planned to commence shortly.
The Company is in the enviable position of being able to compete with traditional graphite supply by virtue of our very low cost of production, whilst also retaining significant upside to the exciting future growth in energy storage. When combined with Sovereign’s very low capex, this strategy provides the lowest-risk path to development and most compelling investment case amongst all peers,
In its quarterly report ending June 2017, Sovereign announced that it had defined the world’s largest saprolite-hosted graphite deposit and delivered the Malingunde Scoping Study.
Preliminary economics in the Scoping Study highlight Malingunde as a Tier 1 graphite project, with capital and operating costs per unit at the very bottom of the graphite supply cost-curve, at production rates supported by existing market fundamentals.
The Scoping Study demonstrates the potential for the Malingunde Project to support a very low capital and operating cost operation with annual production of 44,000 tonnes over an initial 17 year period.
The study puts total operating costs of the project at approximately US$301 per tonne concentrate (FOB Nacala Port) – which is at the very bottom of the graphite supply cost curve and the lowest of any reported ASX-listed peer company of scale <300ktpa.
It pegs total capital cost of US$29 million, (including 35% contingency) for production of ~44,000 tonnes of concentrate per annum – which Stephens says is the lowest capital intensity of all peers.
The study says with a very rare combination of low capital and operating costs at a realistic scale of production and a payback of under two years using conservative graphite pricing, Malingunde has very low mining costs assumptions.
The project also favours a simple process flow sheet and plant design with no primary crush or grind, using “off the shelf equipment” allowing rapid and cost-effective construction with very low processing costs and capital requirements.
Malingunde product is of high quality with excellent concentrate grades and a very large proportion in the Super Jumbo and Jumbo categories and the project is expected to generate significant cash margins even in severe downside graphite price scenarios,
says the report.
This piece was initially published in Malawi’s Mining & Trade Review Issue Number 53 (September 2017).