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Monday, 9 September 2013
Energizer Resources says better economics expected from full feasibility study underway at Molo deposit
Energizer Resources (OTCQX:ENZR)(TSE:EGZ) updated investors Monday on its Molo graphite project in Madagascar, saying it has achieved a number of milestones in the property's development so far, including the recent metallurgical results that are expected to boost economics.
Shares of the company were rising more than 16 per cent this morning, to 18 cents. Its stock has gained over 20 per cent in the last three months.
The company's maiden resource on the property, made up of 84 million indicated tonnes at 6.36% carbon (C) and 40.3 million inferred tonnes at 6.29% C, has established Molo as one of the largest graphite deposits in the world.
A preliminary economic report on the asset estimates the pre-tax net present value is $421 million at a discount rate of 10%, with a 48% internal rate of return. Capital costs are pegged at $162 million, with a three-year payback period.
"The recent metallurgical results indicating that nearly half (47.4%) of the graphite concentrate produced from the Molo composite material submitted for analysis at SGS consists of large and jumbo flake graphite at a grade of 96.8% C, was certainly a pleasant surprise as the highest quoted natural flake graphite prices, are those for +80 (large flake) at purities greater than 95% C," said president and COO Craig Scherba in a statement released Monday.
In addition, the company has also managed to score an ultra-high purity concentrate of 99.9% C with first-pass single-stage hydrometallurgical purification, with all of Energizer's graphite concentrate able to be upgraded to this purity level. "We are also pleased to note that we can achieve high purity grades through flotation or physical processing alone, which has significantly less expensive operating costs than achieving ultra-high purity through chemical or pyrometallurgical methods," added Scherba, saying this potentially positions the company as one of the lowest cost producers of "ultra-high purity" graphite.
The latest metallurgical results are expected to positively impact the economics in the preliminary report, particularly the operating costs, IRR and net present value, with a full feasibility study anticipated in the fourth quarter. The company has hired consultants to generate new capex and opex figures based on the new metallurgical analysis, versus the existing numbers in the PEA study.
"We feel that the Molo is well positioned to be a significant contributor to the global graphite supply, and we are striving to reach that goal despite the challenging capital market environment," said Scherba in the release.
Energizer initially discovered vanadium at the Green giant project in 2007, and even established an NI 43-101 compliant vanadium resource, but decided that due to the higher energy requirements and capital costs of developing a vanadium mine, that developing a graphite mine was the best route to take to build shareholder value in the short term.
"As we did with vanadium, we set about to understand the graphite market beyond our insights already established with vanadium. We found a rapidly evolving graphite market," said the company. A pilot plant is being started this month at Molo, with graphite concentrate on track to be delivered to potential offtake partners in November. The start of mine construction is expected in the third quarter of 2014, and production is anticipated in the fourth quarter of 2015 at an output capacity of 84,000 tonnes per annum.
The deposit located near Fotadrevo in the southern region of Madagascar is held 100 per cent within the joint venture entity with Malagasy Minerals Limited. Energizer has a 75 per cent ownership interest and is the operator of the project.