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Friday, 8 March 2013
Energizer Resources’ shares rise as investors look forward to feasibility study for Molo graphite deposit in Q2
Shares of Energizer Resources (TSE:EGZ) (OTCBB:ENZR) rose on Friday, as the company outlined its plans for the start-up of work on a full feasibility study for its Molo graphite deposit in Madagascar in the second quarter of 2013.
Shares of Energizer were ahead by 2.7% as at about 12 p.m. EDT, trading at 19 cents.
The company last month released the highly anticipated results of its preliminary economic study on the Molo deposit, showing a post-tax IRR of 41%, with Energizer noting that the results were still conservative.
The economics of the report, done by DRA Mineral Projects of South Africa, showed a post-tax net present value of $341.8 million on a 10% discounted basis, with a 41% IRR and a payback period of three years. Pre tax, the net present value was calculated at $421.5 million, with an IRR of 48%.
According to the preliminary report, the average specification of the graphite to be produced is 92% carbon (C), with average mill recovery estimated at 89%.
Energizer said work on the full feasibility study will include construction of two pilot plants, each at a different accredited lab, to produce the necessary quantity of samples for presentation to potential off take partners.
The work will also look to optimize flake size distribution and further upgrade its concentrates from purities between 98% and 98.6% graphitic carbon to battery grade target purity levels of greater than 99%.
The company is targeting completion of the full feasibility study for the fourth quarter of this year, with the start of mine construction expected in the second quarter of 2014, and production anticipated in the fourth quarter of 2015.
Energizer says it has assembled and contracted a mine development team with “world-class experience and proven expertise” necessary to rapidly move the project forward.
The company is also currently engaged in off take discussions with key graphite producers and manufacturers as well as with "leading financial institutions" for moving the project through to construction and production.
Energizer late last year unveiled an NI 43-101 resource estimate for Molo, part of its aptly-named Green Giant project. Indicated resources at the Molo deposit total 83.99 million tonnes, grading 6.36% C, above a 2% C cut-off grade, with inferred resources totalling 40.32 million tonnes grading 6.3% C.
The deposit is located in the Tulear region of southern Madagascar, 145 km southeast of the city of Toliara. The company says it is in a sparsely populated, dry savannah grassland area, which has easy access through a network of secondary roads that lead to both the regional capital and port city of Toliara, and to the port of Soalara.
The conventional open pit project is expected to mine 1.17 million tonnes per year of ore, at an average head grade of 8.5%, with a stripping ratio of 1.65 due to "minimal overburden pre-stripping requirements", the company says, as mineralization is exposed at surface.
The Green Giant project is part of the joint venture (JV) property with Malagasy Minerals Ltd. in Madagascar. Energizer has a 75% ownership interest and is the operator of the project.