AMN - MOZAMBIQUE: EPC agreement for graphite project

Triton Minerals has signed a Letter of Intent (LOI) with MCC International Incorporation Limited (MCC) for the award of an engineering, procurement and engineering (EPC) contract for the mineral processing facility and other infrastructure at the Ancuabe Graphite Project in Mozambique.

MCC is the overseas business platform for Metallurgical Corporation of China Ltd.

The LOI for Triton's flagship project follows extensive technical clarification meetings in China in recent weeks. It allows Triton and MCC to accelerate execution of the formal EPC contract, which is anticipated in the current quarter.

The EPC contract will be on a fixed price basis, providing certainty in relation to capital costs and construction schedule.

Signing the EPC contract will allow detailed design and the placement of orders for long lead capital items to begin during the December quarter of 2018.

The 2017 Ancuabe DFS demonstrated that the project was technically robust with strong project economics. The DFS was based on an evaluation period of 27 years with pre-production capital expenditure (capex) of US$99 million, pre-tax unleveraged NPV of US$298 million, a pre-tax Internal Rate of Return (IRR) of 36.8% and a payback period of 3.8 years.

Following the tender evaluation process the pre-production capex estimate is now anticipated to be between 20% and 25% lower than that estimated in the DFS. This would be a significant reduction and may materially enhance project economics. Importantly, the company believes it will provide benefits to the project financing discussions currently underway.

Triton managing director Peter Canterbury said: “Executing this LOI completes the EPC tender process and is a critical step forward for the development of the Ancuabe Graphite Project. "Current estimates of capital costs developed through the tender process indicate potential for significant capex reductions which would enhance the already strong project economics for Ancuabe.

"We are pleased to enter this partnership with MCC who have demonstrated a detailed understanding of the technical aspects of the Ancuabe project, in-depth knowledge of Mozambique and a commercial awareness of project financing requirements.

"MCC has been proactive throughout this process leveraging their significant banking relationships in China to progress Triton's financing discussions.

"The Triton development team is looking forward to finalising the contractual discussion in the coming weeks and working closely with MCC to deliver the Ancuabe project, safely, on time and on budget.

"We continue to meet our development milestones and deliver on our strategy to become the next ASX producer of high purity large flake graphite in East Africa."

Founded in 1982, China Metallurgical Group Corporation (MCC) is a Chinese state-owned enterprise headquartered in Beijing, engaged in EPC, natural resources exploitation, papermaking, equipment fabrication and real estate development.

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