International Graphite Ltd (ASX:IG6) has released highly encouraging findings from its new Springdale-Collie Integrated Mine to Market Scoping Study, which indicates a globally competitive cost structure and robust project economics.
The study examines the company’s planned Springdale Graphite Mine and Collie-based downstream processing facilities in Western Australia, where IG6 intends to leverage its world-leading graphite asset to supply graphite products for the lithium-ion battery industry.
This updated scoping study is based on using concentrates produced at Springdale, instead of the original study’s imported graphite feedstock.
The company is confident Springdale will be a project of global significance for Australia once completed, providing vital battery and critical minerals into the international supply chain.
Compelling potential for growth
“We now have a clear economic and financial view of the breadth of the Springdale-Collie mine to market strategy,” International Graphite managing director and CEO Andrew Worland said.
“Springdale compares exceptionally well with its industry peers across a range of measures, particularly the forecast mine capital and operating costs.”
Springdale is the second-largest natural graphite deposit in Australia following its September 2023 mineral resource update, with 49.3 million tonnes at 6.5% total graphitic carbon (TGC).
Read: International Graphite holds second largest graphite deposit in Australia following 3.4-times upgrade to resource
That resource was generated from exploration covering only 10% of Springdale’s tenement area, with 80% of identified aeromagnetic anomalies yet to be tested.
The company believes this offers a compelling argument for expanding future operations beyond the current Springdale scoping study base case.
“Less than 15% of the current Springdale mineral resource estimate has been scheduled and modelled so far and the production plan has yet to be optimised at this early stage of investigation,” Worland explained.
“Our immediate focus is to move rapidly through the definitive feasibility phase for Springdale and to accelerate further infill resource and exploration drilling at Mason Bay, one of the newest graphite finds at Springdale, so we can continue expanding and upgrading the current mineral resource estimate.”
Robust economics
The Springdale-Collie Integrated Mine to Market Scoping Study’s base case covers the first 15 years of operation.
Operations during that period are expected to include a throughput of 500,000 tonnes per annum at the Springdale concentrator, offering a feed grade average of 9.5% and average concentrator production of 45,000 tonnes per annum at a waste ore ratio of 4.3 to 1.
The capital cost is expected to be about A$76 million, with an all-in-sustaining cost (ASIC) of US$485 per tonne of concentrate.
That concentrate would be used to produce an average of 20 million tonnes of Uncoated Spherical Purified Graphite (USPG) per annum or 18.6 million tonnes of Coated Spherical Purified Graphite (CSPG) per annum, with the addition of a further coating process.
The cost of the two plants (USPG and CSPG) would be A$124 million and A$217 million respectively, with ASICs of US$1,603 per tonne of USPG and US$2,699 per tonne of CSPG.
This boils down to a (financials integrated) USPG Project net present value (NPV10) of A$375 million with an internal rate of return (IRR) of 35.8% and a CSPG Project NPV10 of A$603 million with an IRR of 30.5%.
The company also believes there is extensive potential for resource expansion, which would allow for a significant scale-up from the base case offered here and a potentially multi-decade operating life.
Strong government support of all types
International Graphite was recently awarded ‘Discovery of the Year’ at the 20th annual Australian Mining Prospect Awards, which recognises the best in mining and minerals processing.
One of the most prestigious mining awards in Australia, 'Discovery of the Year' celebrates greenfield or brownfield sites acknowledged for their substantial impact on Australian industry.
Read: International Graphite awarded 'Discovery of the Year' for Springdale Graphite Project
In June last year, the company also received a grant of $4.7 million from the Commonwealth of Australia’s national Critical Minerals Development Program (CMDP).
IG6 has also enjoyed support from the Western Australian Government, and the local communities of Hopetoun, Ravensthorpe and Collie.
“Graphite for batteries is fast becoming the centre of geo-political tensions and highly sought after, particularly after the Chinese Government’s recent decision to restrict the export of its graphite products,” Worland explained.
“China currently supplies more than 80% of the world market. This leaves the global battery supply chain highly exposed.
“Firms across Europe, North America, Korea and Japan have made enormous commitments to build out battery gigafactory capacity and they all rely on a stable, reliable and consistent supply of raw materials, including graphite.
“Operating entirely in Western Australia strengthens the company’s position as a supplier of first choice for global markets.”
Graphite is one of the largest components of electric vehicle batteries by weight – accounting for on average 50-100 kilograms or about twice the amount of lithium – and considered a critical mineral by Australia, Japan, India, the US and the EU.
The electric vehicle industry’s demand for the vital battery metal has grown to such an extent that analysts predict some 8-fold increase in mining from 2022 levels will be required to meet it – a challenge IG6 is well-positioned to rise to.