A scoping study into the Lindi jumbo graphite project, in Tanzania, has revealed that it could produce between 25,000 t/y and 40,000 t/y of graphite concentrate over a mine-life of more than 20 years.
ASX-listed Walkabout Resources revealed that the project would require a capital investment of between $35 million and $40 million, with operating costs estimated at between $290/t and $350/t, making the Lindi project the second lowest-cost producer amongst its peer group, and the lowest-cost producer in Tanzania.
The scoping study estimated that the project would have a net present value of some $169 million, based on a 25,000 t/y production, increasing to $304 million on the 40,000 t/y production case.
Estimated pre-tax internal rate of return was also estimated at 63 per cent for the base case production scenario, and at 97 per cent for the upside case.
The Lindi project was estimated to deliver an average yearly free cash flow of between $24 million and $43 million, while earnings before interest, tax, depreciation, and amortisation varied between $26 million and $45 million.
The company said that the very high-grade nature of the mineral resource provided a competitive advantage in cost reduction and in metallurgical performance, enabling the production of a premium graphite product able to secure premium sales prices in a highly competitive market.
Walkabout is currently in discussions with a number of parties regarding potential off-take agreements or funding opportunities for the project.
Given the forecast high growth in demand for natural large-flake graphite and the nature of the product produced at Lindi during the test work, the Walkabout directors have elected to fast track the project to production.
A definitive feasibility study is now under way and due for publication in the first quarter of this year.