Volt Resources Ltd (ASX:VRC, OTC:VLTRF) has delivered a favourable feasibility study update for its Bunyu Graphite Project Stage 1 in Tanzania, with new values representing significant improvements relative to the metrics of the 2018 feasibility study.
Stage 1 is based on a mining and processing plant throughput rate of 400,000 tonnes per annum (tpa) of ore to produce on average 24,780 tpa of graphite products, positioning Volt as a dominant participant in the global flake graphite market.
The feasibility study update has delivered favourable NPV (net present value), IRR (internal rate of return) and payback period:
- Pre-tax NPV 7.5% of US$58.9 million;
- pre-tax IRR of 31.5%; and
- payback period (before tax) of 2.9 years.
“Once funding is obtained, the company will proceed with rapid execution leading to the start of production.”
Volt chief executive officer and managing director Prashant Chintawar said: “Volt has not only successfully kept capital expenditure and operating costs under control relative to the 2018 study but has also dramatically improved project financials.
“The Stage 1 graphite project is intended to be established with a modest capital expenditure, and allow Volt to develop the necessary infrastructure, start graphite production at a rate of 24,780 tonnes per annum, generate initial revenues, and establish Bunyu as a world-class supplier of graphite products, particularly to the rapidly growing battery anode / electric vehicle market.”
Bunyu project layout.
“The updated capex value is $US33.1M, which will establish a project with a 13.7-year period, almost double that of the previous study. This underwrites a project delivering total EBITDA over the period of US$169.6M, an IRR (before tax) of 31.5%, an NPV (before tax) of US$58.9M and a payback period (before tax) of 2.9 years. These metrics are significantly improved across the board, which is a terrific achievement given the changed macro backdrop.”
Bunyu stage 1 feasibility study - financial performance summary.
“This modest capital requirement and strong project financials, in conjunction with the two binding offtakes announced earlier this year, and a strong long-term graphite demand profile, all position Volt well for securing Stage 1 financing, and further reinforces this two-stage approach to development and commercialisation.
“Having commissioned Bunyu Stage 1, Volt intends to move to Stage 2 later this decade with the goal of leveraging the platform established by Stage 1, and Bunyu’s status as one of the largest graphite resources globally, to dramatically scale production from 24,780 to 170,000 tonnes per annum and help meet the forecasted global increase in demand for graphite products.
Outline of ore movement from pit to market.
Implementation schedule
The two-stage approach to project development starting with a smaller-scale stage 1 start-up project will provide cashflow and enable establishment of local business relationships, project development and logistics paths.
This will provide commercial quantities for marketing of larger annual flake graphite production, developing downstream processing options and enhance the ability to fund the subsequent stage 2 development.
The DFS (definite feasibility study) for stage 2 is planned to proceed once FID (final investment decision) for the stage 1 project has concluded.
Project implementation schedule.
The projected timeline from the approval of funding to first ore is just over one year with the first shipment of product assumed during the commissioning and ramp up period.
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