The results are in for BlackEarth’s lucrative Definitive Feasibility Study (DFS) on its graphite gamechanger in Southern Madagascar – the Maniry Graphite Project.

The extensive study, based on work conducted by CPC Engineering and some of the most experienced  global, independent consulting experts ever gathered in Madagascar, brings together the completed flow sheet design and input across the full gamut of mining, sustainability and infrastructure requirements as well as a critical assessment of the capital requirements for this exceptional project.

BlackEarth Minerals (ASX:BEM) Managing Director Tom Revy said the final pieces of the Maniry puzzle are in place and just in time as global demand from EV battery markets ramps up.

“This DFS provides more firm evidence that we have all the ingredients required to take full advantage of what is rapidly shaping up to be a boom time for graphite producers”.

The timing is ideal, according to Benchmark Mineral Intelligence, which expects worldwide graphite production will need to at least double inside 2-3 years to just meet surging demand from EV automakers.

Bringing the DFS work to the exchange this week, BEM says the research has immediately resulted in strategic clarity and a set of actionable outcomes, including:

  • A detailed engineering design of the project including mining, processing and other operations
  • An optimised schedule that provides for selective mining of high-grade product in order to maximise near-term economic outcomes
  • Detailed cost estimates for all components of the operation
  • A detailed operational and development plan for the short term construction of all related infrastructure

“The DFS confirms that Maniry is on track to be a world-class graphite project which will generate strong financial returns underpinned by an exceptional resource and robust processing route,” Revy told Stockhead.

As a mining junior with a market capitalisation of around A$28M, the reported project financials are pretty impressive:

  • NPV@8% (Pre-tax) of A$415M / (post-tax) A$325M
  • Life of Mine Average EBITDA of A$60M per annum
  • Payback period: 3.8 years

We’re gonna need a bigger boat

Importantly, BEM says Stage 1 CAPEX has increased from back in November 2021, when the Scoping Study was handed down, largely due to these factors:

  • The significant increase in grade and production in Stage 1 requires a larger flotation circuit, dryer, screening and bagging equipment. The primary crusher has also been “upsized” to meet Stage 2 requirements.
  • A material increase in equipment and freight costs experienced over the past 12-24 months

The additional strategic investment in Stage 1 CAPEX has, the company believes, enhanced the project’s viability and will provide for significant and continual ongoing development and expansion.

“Overall CAPEX improvements have resulted in an increase to Stage 1 concentrate production output of 30% on average and over 12.5% per annum from Stage 2,” Revy says.

Moreover, the strength of the resource expansion so far this year has boosted life of mine, project returns and long-term project revenue.

With additional exploration programs underway within the high-grade Razafy North West area, BEM expects the high-grade resource to grow even further with the intention of adding significantly to project economics.

“The study supports our view that Maniry will be perfectly placed to capitalise on the enormous opportunity to supply graphite for use in lithium batteries.”

“The graphite supply shortfall is widely forecast to grow rapidly from next year onwards, increasing prices and profit margins for producers in the process.

Graphite Pricing: A dynamic step change

BlackEarth has adopted a weighted basket price of US$1,448 a tonne (FOB) for the life of its operation.

Revy says this is based on short-term market projections and – conservatively – doesn’t provide for the seemingly inevitable price spikes when the global graphite crunch comes and supply of natural graphite falls – as widely expected – well below projected demands.

For now, almost all battery anode material is processed in China from small flake graphite.

But as that supply wanes and fails to meet demand, the development of giga-factories in Europe will be driven by substantial state and cross-industry fiscal and regulatory support.

“Benchmark Mineral Intelligence estimates major automakers have committed over US$300 billion already into developing EVs and that there are over 200 LiB mega-factories in the pipeline.

“These factories represent over 3,000 GWh of LiB production capacity which in turn equates to over 1,000,000 tonnes of new annual graphite demand by 2025.  In short, graphite production has to more than double quickly to meet this demand.

As a result, the outlook for graphite prices is very bright and the need for secure western sources of supply is critical,” Revy says.

“Demand for non-Chinese graphite is expected to be even stronger as battery manufacturers and EV makers look to diversify their sources of supply.

“Lithium-ion batteries now account for almost 50% of graphite demand and we believe this will increase as the world continues to embrace the use of Electric Vehicles and clean energy solutions.

Mad about Madagascar

Madagascar has a strong history of graphite mining over the last century with consistent development occurring throughout the Country. During the last year, a substantial development adjacent to our Maniry site has progressed and further projects have increased production in the north and north- east of the country.

It is projected that Madagascar producers could export well in excess of 300,000 tonnes of concentrate in 2023, which would make it the largest exporter of concentrate outside China.

Madagascar also enjoys the strategic advantages of very competitive labour rates and mining laws, and is well positioned geographically with logistics and freight costs materially more appealing than other parts of the world.

“Maniry’s location in Madagascar is also an important strategic advantage. The Government there is highly supportive and the country’s production and export of graphite is projected to expand rapidly over the next few years.

“Madagascar is uniquely positioned to lead the global supply of ethically produced graphite to meet world demand.”

 

 

 

This article was developed in collaboration with BlackEarth Minerals, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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