In a potential game-changer for its flagship asset, Evolution Energy Minerals Ltd (ASX:EV1) has made a second graphite discovery at the Chilalo Graphite Project in Tanzania.
The Chilalo E2 discovery, which fortifies the project’s resource expansion potential, was made east of the main project and north of the recent Chilalo East find, extending EV1’s high-grade graphite run.
Some of the best intersections from this near-surface graphite hub include:
- 22 metres at 5.68% total graphitic carbon (TGC) from 80 metres;
- 18 metres at 5.18% from 16 metres;
- 20 metres at 5.42% from 80 metres;
- 20 metres at 5.76% from 2m metres; and
- 22 metres at 6.34% from 54 metres.
Chilalo footprint keeps getting bigger
Chilalo's recent E1 and East discoveries cast a promising light on the possibility of lower-cost mining and mine life extensions, and Chilalo E2 further underscores this potential, priming the company for resource expansion.
Based on current estimations, the Tanzanian project is host to more than 20 million tonnes of ore, weighing in at 9.9% TGC for just under 2 million tonnes of contained graphite.
While this resource built a solid foundation for a March definitive feasibility study (DFS), resource expansion remains a priority. As such, EV1 turned to electromagnetic surveys to identify conductive material at Chilalo.
The explorer’s latest drill program was designed to test some of the strongest conductors to discover additional graphite mineralisation and the E2 conductor hints that graphite could extend for 5 kilometres of strike, with mineralisation already confirmed over 1.1 kilometres.
The graphite stock has cased several drill holes ahead of downhole surveys, designed to pinpoint off-hole graphite layers and facilitate future drilling.
Production expansion on the cards
Evolution managing director Phil Hoskins said Chilalo’s impressive depth, width, grade and proximity to existing resources made it a significant find.
“These results clearly demonstrate the scope to materially grow the Chilalo mineral resource and thereby potentially enable a production expansion, extension to mine life and reduction in mining costs,” he said.
Beyond the mineral resource, Chilalo’s updated DFS was underpinned by an ore reserve of 8 million tonnes, weighing in at 10.5% TGC.
While the latest findings show there’s scope to grow Chilalo’s graphite and expand future operations, the key DFS outcomes remain unchanged.
The March feasibility study positions Chilalo to deliver a post-tax net present value of US$338 million and a 32% internal rate of return, with average graphite concentrate production of 52,000 over a 17-year mine life.
Financing discussions in the works
Amid development considerations, EV1 is fielding non-binding debt funding interest from major banks in Europe, Africa and Tanzania.
Last week, the company announced it was chasing the ideal financing mix to bring Chilalo into production, with investment funds, private equity and strategic investors all in the ring to fund the project’s development.
As part of their due diligence mission, prospective financiers have appointed independent technical, environmental and social consultants to release reports in the September quarter.
It’s important to note that EV1 already has offtake arrangements in place for Chilalo’s coarse flake material, which is used in expandable graphite products.
Meanwhile, the project’s fine flake graphite concentrate — which test-work has shown to be suitable for battery anode applications — is currently uncontracted to offtake agreements, thereby providing the company with strategic leverage in funding discussions.