AMN - MADAGASCAR: Phased build-out plan for Molo

NextSource Materials has released a new feasibility study for its 100%-owned Molo Graphite Project in southern Madagascar that incorporates a phased buildout. The study has been completed in preparation of mine financing.

Phase 1 would produce 17,000 tonnes per annum over the first two years of production and Phase 2 would annually produce a total of 45,000 tonnes by year 3.

Over the 30-year modelled life of mine the production plants will have a pre-tax internal rate of return (IRR) of 43.1%, and a post-tax IRR of 36.2%. The pre-tax Net Present Value (NPV) at 8% discount rate will be US$237.1 million, and the post-tax NPV will be US$184.3 million.

The capital mine cost for Phase 1 will be US$21 million with Phase 2 CAPEX being an additional US$39.1 million for a total project cost of US$60.1 million.

Both phases will utilize the company’s unique, fully-modular build approach, which greatly reduces build time and associated costs in relation to conventional mine construction.

The 2019 study takes into account updated mine capital equipment and mining costs, as well as current 12-month rolling flake graphite pricing on a FOB China basis, supplied by UK-based battery mineral commodities research firm, Benchmark Minerals Intelligence.

The study was based on a Front End Engineering and Design study (FEED) and subsequent Detailed Engineering studies. It incorporates the procurement of all mining equipment, off-site modular fabrication and assembly, factory acceptance testing, module disassembly, shipping, plant infrastructure construction, onsite module re-assembly, commissioning, project contingencies and working capital.

In order to ensure that the company maintains a first-mover competitive advantage over the competition and to appropriately plan for future market demand, the study was designed to provide a flexible mine development approach that comprises a unique, all-modular build solution yielding optimal cashflow and return metrics with suitable flexibility to enable a rapid response to the anticipated market demand for graphite.

The company has an offtake agreement in place with a prominent Japanese trader, who is a major supplier of flake graphite to Japan’s largest battery processor and manufacturer of graphite anode material in lithium-ion batteries for electric vehicle applications.

NextSource is in the process of formalising an additional sales agreement with a leading European trader.

As such, the study was undertaken to include two phases in order to account for off-takers’ demand for NextSource’s SuperFlake® graphite concentrate.

NextSource president and CEO Craig Scherba said, “Our feasibility study will greatly assist us in our current discussions with mine financiers, and reconfirms to the market the economic viability of the Molo project under current market conditions.

"Our all-modular build strategy has low capital and operating costs, and rapid build time.

"With our phased build-out, this will allow our graphite to be easily absorbed into the current market while maintaining NextSource’s flexibility and competitive advantage to quickly penetrate the market and generate revenue, establish strong relationships with as many key buyers as possible, and verify our product for highly technical markets with production-run material.”

www.nextsourcematerials.com