MONTREAL, July 10, 2018 /CNW Telbec/ - SRG Graphite
Inc. (TSXV: SRG) ("SRG" or the "Company") is pleased to
announce results of a Preliminary Economic Assessment study ("PEA")
for the development of its Lola graphite project in the Republic of
Guinea, West Africa. The PEA was prepared by
Montréal-based Met-Chem, a division of DRA Americas Inc.
("Met-Chem/DRA"). All dollar figures are in United States dollars.
Highlights of the Lola graphite PEA:
- Production of 50,200 tons of graphite concentrate per year over
a 16-year mine life
- Capital costs of $105 million
("M') including contingency of $15M
- Operational costs of $372/tonne
("t") of concentrate and $130/t of
transport
- Pre-tax NPV(8%) of $204M
(post-tax NPV(8%) of $121M) at an
average sales price of $1,328/t
- Finished grade of over 94% and up to 98% over all size
fractions
- Strip ratio of 0.39
"These results highlight the value of the Lola graphite asset
for the company" said Ugo
Landry-Tolszczuk, President and Chief Operating Officer of
SRG, "that said, the team will continue to work on improving the
design and economics of the project. During our trade-off
assessment work, we have found several key points of improvement to
incorporate in the feasibility study. Early works which will
contribute to the next stage in the development of the project is
underway and we are dedicated to meeting our objectives for the
year."
The PEA follows the Mineral Resource Estimate published on
June 18, 2018. A technical report
detailing the PEA, and completed in accordance with National
Instrument (NI) 43–101 guidelines, will be filed and available on
SEDAR within 45 days from June 18,
2018, the release date of the mineral resource update
published by the Company. Effective date of the estimate is
June 14, 2018.
COMMERCIAL SALES, REVENUES & PROJECT ECONOMIC
SENSITIVITIES
The Lola mine will produce an average of 50,200 tonnes of
saleable graphite annually. At an average sale price
of $1,328 per tonne, this represents $66.6M annual
revenue. Given the volatility of graphite prices in recent years
and the bilateral nature of sales contracts a sensitivity analysis
of the project economics is presented below in Table 1.
Table 1
Project economics sensitivity analysis (pre-tax)
|
|
|
|
|
|
|
Average Sale Price
($/t)
|
1,195
|
1,261
|
13281
|
1,394
|
1,460
|
Average annual
revenue (million)2
|
60.0
|
63.3
|
66.6
|
70.0
|
73.3
|
Pre-tax
returns
|
Average annual cash
flow (million) 2
|
31.2
|
34.5
|
37.9
|
41.2
|
44.5
|
NPV (million) @ 8%
discount
|
151
|
177
|
204
|
231
|
257
|
IRR (%)
|
28.5
|
31.7%
|
34.8%
|
37.9%
|
41.0%
|
Payback
(years)
|
3.1
|
2.8
|
2.6
|
2.4
|
2.3
|
Post-tax
returns
|
Average annual cash
flow (million) 2
|
22.7
|
25.0
|
27.3
|
29.5
|
31.8
|
NPV (million) @ 8%
discount
|
84
|
102
|
121
|
139
|
157
|
IRR (%)
|
20.3%
|
22.7%
|
24.9%
|
27.2%
|
29.4%
|
Payback
(years)
|
4.2
|
3.9
|
3.5
|
3.3
|
3.0
|
|
|
1
|
Base case
|
2
|
Does not include year
16 as it is not a full year
|
MINERAL RESOURCES UPDATE
The PEA was prepared using data from the Mineral Resource
Estimate published on June 18, 2018,
and including the latest drill campaign. To maximize the life of
mine of the project, the PEA uses the resource at a cut-off grade
of 1.64% graphitic carbon ("Cg"), which includes measured resources
of 2.1 million tonnes ("Mt") grading 4.31% Cg, indicated resources
of 17.0Mt grading 4.39% Cg and inferred resources of 2.1Mt grading
4.79% Cg. The resource has been pit-constrained at $1,300/t. Figure 1 depicts the resource locations
on the deposit and represents approximately 30% of the deposit
outline.
Figure 1 Map of the Deposit With Resource
Classification
The mineral resources update was estimated as at June 14, 2018, in accordance with the definitions
adopted by the Canadian Institute of Mining Metallurgy and
Petroleum and incorporated into National Instrument 43-101 –
Standards of Disclosure for Mineral Projects (NI 43-101). Mineral
resources estimate update for the Lola graphite project was carried
out by Dr. Marc-Antoine Audet,
P.Geo., Lead Geologist and SRG's Qualified Person.
MINING
The Lola deposit is characterised by its saprolite surface
mineralisation, which continues at depth into the fresh rock bed.
For the PEA, mining operations were exclusively focused on the
weathered zone, ensuring operation efficiency and competitive cost
of operations. The first 30 metres of the deposit represent the
weathered material. Constraining mining to the weathered portion of
the deposit ensures minimal utilisation of blasting, and results in
a strip ratio of only 0.39.
The average grade fed to the processing plant over the 16-year
mine life is 4.43% Cg, and the total material mined per year is
1.8Mt (mineralised material and waste). Mining costs were
established at 2.13$/t, considering preliminary pit design and
access roads.
Table 2
Mining highlights
|
|
|
Mining costs ($/t
material mined)
|
2.13
|
Average graphite
grade (% Cg)
|
4.43%
|
Stripping ratio
(waste/mineralised)
|
0.39
|
Average graphite
bearing material mined per year (t/y)
|
1,294,763
|
Average waste mined
per year (t/y)
|
510 178
|
Mine of Life
(years)
|
16 years
|
PROCESS
The processing plant and waste dump are located on a plateau,
west of the main pit, where the land is already conveniently flat
and barren of trees. It is currently less than one kilometre from
the visual mineralisation. This proximity will ensure short cycle
times and contribute to the control of production costs.
Efforts were made to keep a simple flowsheet with limited
polishing and flotation stages. Concentrate grade higher than 94%
Cg is expected, with a recovery of 79%. Reagents used for
processing are diesel as a collector and methyl isobutyl carbinol
("MIBC") as a frother, both commonly available and routinely used
reagents in the graphite sector. The processing costs are
$9.24/t of processed material
resulting in $248/t of graphite
concentrate produced. Table 3 provides a summary of
results.
Table 3
Process highlights
|
|
|
Processing costs ($/t
plant feed)
|
9.24
|
Processing costs ($/t
concentrate)
|
248
|
Average concentrate
grade (%Cg)
|
>94%
|
Graphite plant
recovery
|
79%
|
Average material fed
to the plant (t/year)
|
1,294,763
|
Process description:
Mineralised material handling, crushing, scrubbing, grinding and
de-sliming circuits were designed considering the saprolitic
properties of the deposit. The relatively low competency of the
material allows the design to use two mineral sizers at the front
end instead of a jaw crusher or cone crusher. These processing
units are known for their low operational cost and reliability
compared with conventional jaw and cone crushers.
The crushed material is fed into a scrubber which promotes flake
preservation and consumes less energy compared with conventional
milling methods. The scrubber discharge is screened, where the
coarse fraction is fed to a closed-circuit ball mill, before being
recombined with the screen fines. The combined slurry is then fed
through a de-sliming stage, where ultra-fines, including slime,
clay and organic material are removed. This leads to an upgraded
and cleaner material feeding the flotation circuit, resulting in an
overall simpler flowsheet.
After de-sliming, the material is fed to the rougher flotation
bank producing a rougher concentrate. A first polishing stage
further liberate the graphite flakes. The polished rougher
concentrate goes through a first cleaning stag and is then fed into
a splitting screen, dividing the fine from the coarse graphite, in
order to apply the relevant specific polishing energy to each
stream. After their respective polishing and cleaning stages, the
two streams are recombined, thickened, filtered and dried. The
dried concentrate is then screened into four different size
fractions before being bagged, and finally stored and shipped to
clients.
Figure 2 Process flowsheet
Quality Control and Assurance
Silvia Del Carpio, P.Eng., MBA
Met-Chem/DRA., independent Qualified Person as defined by National
Instrument 43-101, for the purposes of the PEA has reviewed the
technical content of this press release. Raphaël Beaudoin P. Eng., Director of Operations and a
Qualified Person for SRG has read and approved this press
release.
Cautionary Note
The PEA completed for the Company is preliminary in nature
and includes inferred mineral resources, considered too speculative
in nature to be categorized as mineral reserves. Mineral resources
that are not mineral reserves have not demonstrated economic
viability. Additional trenching and/or drilling will
be required to convert inferred mineral resources to indicated or
measured mineral resources. There is no certainty
that the resources development, production, and economic forecasts
on which this PEA is based will be realized.
About Met-Chem/DRA
Met-Chem, a division of DRA Americas Inc., was originally
established in 1969 as a consulting engineering company,
headquartered in Montreal, and
provides a wide range of technical and engineering services.
Met-Chem is well recognized for its capabilities in mining, geology
and mineral processing and has a talented team of engineering,
technical and project management personnel with experience in
North America, Latin America, Europe, West
Africa and India. DRA is a
multidisciplinary global engineering group that originated in
South Africa and delivers mining,
mineral processing, energy, water treatment and infrastructure
services from concept to commissioning, as well as comprehensive
operations and maintenance services for the mineral resources,
water, agriculture and energy sectors. DRA has offices in
Africa, Australia, Canada, China, India
and the United States.
ABOUT SRG
SRG is a Canadian-based company focused on developing the Lola
graphite deposit and the Gogota nickel-cobalt-scandium deposit,
both located in the Republic of Guinea, West
Africa. SRG is committed to operating in a socially,
environmentally and ethically responsible manner.
For additional information, please visit SRG's website at
www.srggraphite.com.
Neither the TSXV nor its Regulation Services Provider (as
that term is defined in the policies of the TSXV) accepts
responsibility for the adequacy or accuracy of this
release.
Forward-Looking Statements
This press release contains "forward-looking information" within
the meaning of Canadian securities legislation. All information
contained herein that is not clearly historical in nature may
constitute forward-looking information. Generally, such
forward-looking information can be identified by the use of
forward-looking terminology such as "positive", "result",
"improve", "dedicate", "will", "sale", "revenue", "includes",
"continue", 'ensuring", "low", "demonstrate", "potential", or
variations of such words and phrases or state that certain actions,
events or results "may", "could", "would" or "might".
Forward-looking information is subject to known and unknown risks,
uncertainties and other factors that may cause the actual results,
level of activity, performance or achievements of the Company to be
materially different from those expressed or implied by such
forward-looking information, including but not limited to: (i)
volatile stock price; (ii) the general global markets and economic
conditions; (iii) the possibility of write-downs and impairments;
(iv) the risk associated with exploration, development and
operations of mineral deposits; (v) the risk associated with
establishing title to mineral properties and assets; (vi)
fluctuations in commodity price; (viii) the risks associated with
uninsurable risks arising during the course of exploration,
development and production; (ix) competition faced by the Company
in securing experienced personnel and financing; * access to
adequate infrastructure to support mining, processing, development
and exploration activities; (xi) the risks associated with changes
in the mining regulatory regime governing the Company; (xii) the
risks associated with the various environmental regulations the
Company is subject to; (xiii) risks related to regulatory and
permitting delays; (xiv) risks related to potential conflicts of
interest; (xv) the reliance on key personnel; (xvi) liquidity
risks; (xvii) the risk of potential dilution through the issue of
common shares; (xviii) the risk of litigation; and (xix) risk
management as well as other risks and factors described or referred
to in the section entitled "Risk Factors" in the MD&A of the
Company and which is available at www.sedar.com, all of which
should be reviewed in conjunction with the information found
in this news release.
Forward-looking information is based on assumptions management
believes to be reasonable at the time such statements are made,
including but not limited to; the capacity of the Company to
execute on its plans for production of 50,200 tons of graphite per
year over a 16-year mine life, to have capital costs of
$105M for the project including
operational costs of $372/t of
concentrate, $130/t of transport
cost; to produce at a finished grade of over 95% and up to 98%; a
strip ratio of 0.39; to sell its products at an average selling
price of $1,328; continued
exploration activities and no material adverse change in mineral
prices, exploration and development plans to proceed in accordance
with plans and such plans to achieve their stated expected
outcomes, receipt of required regulatory approvals, and such other
assumptions and factors as set out herein. Although the Company has
attempted to identify important factors that could cause actual
results to differ materially from those contained in the
forward-looking information, there may be other factors that cause
results not to be as anticipated, estimated or intended. There can
be no assurance that such forward-looking information will prove to
be accurate, as actual results and future events could differ
materially from those anticipated in such forward-looking
information. Such forward-looking information has been provided for
the purpose of assisting investors in understanding the Company's
business, operations and exploration plans and may not be
appropriate for other purposes. Accordingly, readers should not
place undue reliance on forward-looking information.
Forward-looking information is given as of the date of this press
release, and the Company does not undertake to update such
forward-looking information except in accordance with applicable
securities laws.
SOURCE SRG Graphite