Evion’s Maniry project in Madagascar is receiving plenty of attention from leading graphite users seeking bulk samples for testing, as demand for battery material continues to grow.
While half of the project’s planned production – 39,000tpa for Stage 1 growing to 55,000tpa in Stage 2 – is already earmarked to supply the Battery Anode Material plant it proposes to build with Urbix in Europe and another 10% to its Indian expandable graphite joint venture, the interest bodes well for the company’s plan to secure binding offtake deals for the remaining output.
Evion Group (ASX:EVG) noted that the growing requests for Maniry bulk samples by leading users looking to secure non-Chinese sources of graphite was fuelled by consensus forecasts showing that the market will move into deficit this year.
This is due to ever-growing demand from the lithium battery industry, which actually uses more graphite than lithium, nickel and cobalt by volume for each lithium-ion battery.
Managing director Tom Revy has also held highly productive talks with World Bank officials and Madagascar’s Mines Minister to secure licensing and infrastructure commitments in the short-term.
He added that having a large percentage of Maniry product covered by binding offtake contracts would strengthen the company’s position as it moved to finalise product funding.
“A high degree of binding offtake agreements will enable us to conduct funding discussions autonomously from sales arrangements,” Revy explained.
“This will in turn help ensure we secure favourable funding terms because we will be able to demonstrate secure, reliable revenue streams and we will not have to tie any funding offer to offtake.”
The company is also on track to complete the project’s Environmental and Social Impact Assessment in the June quarter of this year, a key step for securing its final permits and licences.
Rich graphite project
Evion’s Maniry Graphite Concentrate Definitive Feasibility Study released in November last year had outlined a fabulously rich project delivering Life of Mine Average EBITDA of A$60M per annum.
This is expected to deliver pre-tax net present value and internal rate of return – both measures of a project’s profitability – of US$263m and 32.65% respectively.
And while this is attractive in its own right, the planned BAM plant could take it up to another level.
The Evion generated BAM Scoping Study found that at a throughput of 30,000tpa, the plant would generate pre-tax NPV and IRR of US$392m ($563m) and 39.5% respectively while delivering pre-tax cashflow of US$2.8bn from an initial capital expenditure of US$117m.
And this is a conservative estimate which includes a 30% contingency given that Scoping Studies are a low level technical and economic assessment.
Evion now proposes to take its learning from the Scoping Study and work with other parties to prepare a DFS on the viability of a BAM plant in Europe. It’s an exciting prospect and the Company is confident of a positive outcome.
This article was developed in collaboration with Evion Group, 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.