Northern Graphite Looking at Doubling Bissett Creek Production Rate
May 07 2014 - 9:44AM
Marketwired
Northern Graphite Looking at Doubling Bissett Creek Production Rate
OTTAWA, ONTARIO--(Marketwired - May 7, 2014) - Northern Graphite
Corporation (TSX-VENTURE:NGC)(OTCQB:NGPHF) announces that the
Company intends to update the Preliminary Economic Assessment (the
"PEA") for its 100% owned Bissett Creek graphite project to double
the planned production rate at the outset rather than after three
years of operation as originally contemplated. The current PEA is
based on twinning the mill circuits and was undertaken to show the
project's ability to meet future growth in graphite demand.
However, building one large plant is much more efficient and should
lead to lower capital and operating costs. The Company has also
been encouraged to assess the economics of the larger plant by
recent developments in the lithium ion battery industry and by
strong interest in the high purity concentrates that will be
produced using Northern's proprietary purification technology.
The PEA already
indicates that the Bissett Creek project has very attractive
economics even at or below current depressed graphite price levels.
The pre-tax internal rate of return is 26.3% (22.0% after tax) and
the pre-tax net present value is $231.1 million ($150.0 million
after tax) using an 8% discount rate and a weighted average price
of US$1,800/tonne of concentrate.
Gregory Bowes, CEO,
commented that: "Bissett Creek is the only true large flake deposit
and the only one with a bankable Feasibility Study (the "FS") and
its major environmental permit. It also has the best infrastructure
of any new graphite project, the lowest capital costs and the
highest operating margin."
Capital costs in the
current PEA have been estimated at $146.8 million to produce an
average of 42,700 tonnes of graphite annually over the first 10
full years of operation compared to capital costs of $101.6 million
and annual production of 20,800 tonnes in the FS. Almost 90% of
graphite production will be large and extra large flake and battery
grade which is the highest ratio in the industry. There are also
27.3 million tonnes of measured and indicated resources and 24
million tonnes of inferred resources that are not part of the PEA
mine plan and the deposit has not yet been closed off by drilling,
all of which indicates that further expansions are possible.
P&E Mining Consultants Inc. have been engaged to complete a new
mine plan for the PEA update and WorleyParsons Canada will estimate
the capital and operating costs of the larger mill.
Expandable
Graphite
Expandable graphite
is used for thermal management in consumer electronics as well as
in gaskets and fluid sealing solutions, fuel cells, redox flow
batteries, and fire retardants and other construction materials. It
is one of the fastest growing market segments along with li ion
batteries. Expandable graphite is made from extra large flake (+50
mesh) graphite which will make up almost 50% of Bissett Creek
production, by far the highest in the industry. The Company has
developed a proprietary purification process which will enable it
to produce and sell high purity expandable graphite at a
significant premium. Representative samples have been provided to a
number of potential customers and substantial interest has been
generated.
Graphite Markets and
Pricing
After more than
tripling from 2005 to 2012, graphite prices have fallen back 50% or
more due to the slowdown in China and a lack of growth in the US,
Europe and Japan. Recently it has been reported that Chinese flake
production has fallen 30% as uneconomic and polluting mines are
closed. Current prices are at the marginal cost of production for
many producers which should limit further price declines. The
weighted average price that would be realized by Bissett Creek
concentrates in the current market is estimated at US$1,800/t which
is the highest in the industry as almost 90% of production will be
large or extra large flake. Current pricing is approximately
$2,100/t for +50 mesh concentrates, $1,300/t for +80 large mesh,
$1,100/t and $900/t for -100 and -150 medium and small flake
respectively, and less than $500/t for -150 mesh fines.
Qualified Person
Mehmet F. Taner,
Ph.D., P.Geo., a Consulting Geologist who is independent of the
Company, has reviewed and approved the technical content of this
press release.
Northern Graphite
Corporation
Northern Graphite
Corporation is a Canadian company that has a 100% interest in the
Bissett Creek graphite deposit located in eastern Ontario. Graphite
demand is expected to rapidly increase in the future due to
strengthening economies and the growth in new technologies such as
lithium ion batteries, particularly due to their use in hybrid and
all electric vehicles. Northern Graphite is the only public
graphite company with a true large flake deposit, a bankable
Feasibility Study and its major environmental permit and is well
positioned to benefit. Additional information on Northern can be
found at www.sedar.com and www.northerngraphite.com.
Due to market
conditions, Northern no longer retains the services of Renmark
Financial Communications Inc. effective May 1, 2014.
This press release
contains forward-looking statements, which can be identified by the
use of statements that include words such as "could", "potential",
"believe", "expect", "anticipate", "intend", "plan", "likely",
"will" or other similar words or phrases. These statements are only
current predictions and are subject to known and unknown risks,
uncertainties and other factors that may cause our or our
industry's actual results, levels of activity, performance or
achievements to be materially different from those anticipated by
the forward-looking statements. The Company does not
intend, and does not assume any obligation, to update
forward-looking statements, whether as a result of new information,
future events or otherwise, unless otherwise required by applicable
securities laws. Readers should not place undue reliance on
forward-looking statements.
Neither TSX Venture
Exchange nor its Regulation Services Provider (as that term is
defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Northern Graphite CorporationGregory Bowes, CEO(613)
241-9959Northern Graphite CorporationStephen Thompson, CFO(613)
241-9959
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