Sovereign targeting 2020 for commissioning of Malingunde graphite mine
…company planning to produce 44,000 tonnes graphite concentrate annually over 17 years
By Marcel Chimwala
ASX-listed Sovereign Metals, which is currently conducting a feasibility study for its Malingunde graphite project in Lilongwe, says mine construction at the site may commence next year with commissioning set for 2020.
Commencement of mining at the site would be contingent on completion of a successful feasibility study, approval of the environmental and social impact assessment (ESIA), granting of a mining licence, product marketing agreements, award of a mining licence and procurement of the necessary financing for construction, among other items.
Sovereign Metals’ Country Manager for Malawi, Andries Kruger, says the company is on course to complete the ongoing feasibility study and ESIA for the project toward the end of this year, or early in 2019.
We will likely be applying for a mining licence after we successfully complete the feasibility study and the Environmental Affairs Department issues us with a certificate for the ESIA. If all goes to plan, we will start mining graphite in 2020,
Sovereign completed a scoping study on Malingunde deposit in 2017 and Kruger says the study delivered the world’s largest reported soft saprolite-hosted graphite resource with capital and operating costs per unit at the very bottom of the graphite supply cost-curve.
The study results indicate that the project’s total operating costs are estimated at US$301 per tonne concentrate (FOB Nacala Port) which is the lowest of any reported ASX-listed peer company of scale <300ktpa.
The results also show that the total capital cost of US$29 million, (includes 35% contingency) for production of ~44,000 tonnes of concentrate per annum is the lowest capital intensity of all peers.
They demonstrate a very rare combination of low capital and operating costs for Malingunde at a realistic scale of production and a payback of under two years using conservative graphite pricing assumptions.
The results also indicate very low mining costs with the soft saprolite being free-dig with a low strip ratio of 0.5:1, and the project supports a simple process flow sheet with no primary crush or grind, leading to low processing costs and lower capital requirements.
The study shows that Malingunde will have simple plant design which uses “off the shelf equipment” allowing rapid and cost effective initial construction and future expansion options.
With such low production costs compared to its peers, the other interesting aspect of Malingunde is that it has high quality product with excellent concentrate grades and a very large proportion in the Super Jumbo and Jumbo categories.
Therefore, the project should still generate significant cash margins even in severe downside global graphite price scenarios.
The Malingunde deposit is large and relatively high grade, with visually coarse and jumbo flake graphite identified throughout.
Saprolite-hosted mineralisation has been identified in drilling over 3.4km of strike with cumulative across strike widths locally exceeding 200m and averaging about 120m.
Grades of mineralised saprolite average around 7% TGC (nominal 5% TGC cut-off) with a number of coherent higher grade zones well above 10% total graphitic carbon (TGC) identified.
Kruger says the company recently raised US$5 million from the Australian Stock Exchange, which it is using to finance the ongoing Malingunde feasibility study and ESIA.
The feasibility study involves gathering baseline data, metallurgical work, costing, mine design, logistics and other technical aspects of the project.
We have a team of specialists with extensive international experience working on this study,
The ESIA process has three phases, namely compilation of the project brief, environmental scoping and ESIA process.
The project brief has been submitted to the Environmental Affairs Department (EAD) and the environmental scoping phase has now commenced. The EAD indicated that an ESIA will be required,
says Sovereign Metals’ Stakeholder Engagement Officer Annelle Lotter.
The scoping phase of the study running from December 2017 to March 2018 includes project announcement through distribution of a project background information document and some meetings with stakeholders, production of a Draft Environmental Scoping Report to be available this month, meetings with stakeholders to be held this month to identify issues and concerns and production of a Final Environmental Scoping Report to be submitted to the EAD after stakeholder review and comments.
The ESIA phase will involve specialist assessments, production of Draft ESIA Report to be available in in the fourth quarter of 2018, meetings with stakeholders to be held early September 2018 to present findings from the ESIA, and submission of the Final ESIA Report to the EAD.
The Malingunde Project is likely to have a range of impacts on the environment and the people living in the area.
The expected positive developments include creation of job opportunities, growth in the economy, improved infrastructure and social development.
However, some negative impacts may also be experienced including that some people may lose farmland or may have to be resettled, and the project may result in changes in the quality and quantity of water, levels of dust experienced, disturbance of vegetation and animals, and changes in noise and traffic levels may be experienced.
The specialists will investigate potential impacts and develop measures and plans to manage the impacts to ensure that they are minimized,
Open pit mining with traditional excavator and haul trucks will be used to mine the ore at Malingunde but no drilling and blasting activities will be required for the operation as the material is relatively soft and suitable for free digging.
Mining will be undertaken in shallow open pits, with maximum depths of 25 m and maximum widths of approximately 150 m and once excavated, the ore will be loaded onto 40 tonne trucks and hauled from the pit to either the processing plant or if it is waste material, to the waste rock dumps.
After treating the ore in the plant (scrubbing and flotation), the tailings material will be pumped to the tailings storage facility site for final disposal.
The processed product will be transported on flatbed trucks by road over approximately 26 km to the Kanengo train station in Lilongwe, from where it will be sent by rail to the port of Nacala in Mozambique for export.
Meanwhile, Sovereign Metals is negotiating an infrastructure term sheet agreement with Malawi’s rail operator Central East African Railways (CEAR) to use the rail network to transport graphite to the port of Nacala.
Sovereign’s Managing Director Julian Stephens says a binding agreement between the two companies is expected to be signed by June this year.
Under the agreement, services will be provided over a 20 year period for the movement of up to 100,000 tonnes per annum of concentrates, providing upside to Sovereign’s initial target of 44,000 tonnes per annum.
Given that a single train can transport up to 84 containers at one time, the project will only require one train movement every two weeks,
The Malingunde scoping study considered production of approximately 44,000 tonnes per annum of graphite concentrates, equating to the movement of approximately 2000 twenty-foot shipping containers per year.
Under the agreement, CEAR will supply and maintain all infrastructure, equipment and personnel required to provide the services.
The Malingunde scoping study logistics cost estimate was circa US$65 per tonne free on board (FOB), based on indicative pricing for the services.
Minister of Natural Resources, Energy and Mining, Aggrey Masi, comments that the government of Malawi fully supports the project as it has always been the desire of the country’s Head of State Professor Arthur Peter Mutharika to attract foreign investment to shore up the economy.
Malawi has taken significant action to provide an attractive environment for investors in the mining industry.
We have successfully joined the EITI, a global standard for the good governance of oil, gas and mineral resources, which will provide accountability and transparency around mining and petroleum revenues.
To this end, the Government of Malawi offers its full support and assistance to Sovereign Metals in order to develop Malawi’s first flake graphite operation at Malingunde.
Sovereign Metals welcomes the reforms that Malawi is undertaking to improve the investment climate in the minerals sector including joining of EITI and repealing the outdated Mines and Minerals Act.
We only ask the government to ensure that the new law is enacted as soon as possible as it is an integral part of our feasibility study for the project since it will determine the government and community expectations from the project. Potential investors would always want clear guidelines on their operations,
The ongoing Malingunde feasibility study also involves a marketing study, and Sovereign is expected to sign off-take agreements with potential graphite buyers.
Sovereign Metals’s other graphite tenements in Malawi include Duwi in Eastern Lilongwe where high-grade, coarse flake graphite mineralisation has also been identified over a cumulative ~24km strike length.
Around 2km of this trend has been drilled by Sovereign, resulting in the definition of the Duwi Main, Duwi Bend and Nyama graphite deposits, with a combined Mineral Resource Estimate of 85.9Mt at 7.1% TGC for 6.13Mt contained graphite.
Sovereign Metals has also been undertaking corporate social responsibility projects at Malingunde and the initiative saw the firm donating two boreholes to the people of the area.
This piece was initially published in Malawi’s Mining & Trade Review Issue Number 59 (March 2018).