Renascor’s 25pc resource boost confirms world’s #2 graphite reserve still has plenty of room to grow
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Renascor’s Siviour project in South Australia is already the largest graphite ore reserve outside of Africa but, as the latest 25% resources increase shows, it is not done with growing yet.
This is impressive given that the company had in late August upgraded ore reserves at the project by 13% to 16.8Mt at 8.2% total graphitic carbon and high confidence proven resources by 8%.
A mineral reserve is the economically mineable part of a measured and/or indicated mineral resource.
Notably, this is enough to comfortably support a 40-year mine life at Siviour with graphite concentrate production of up to 150,000tpa.
Renascor Resources (ASX:RNU) plans to integrate Siviour with a downstream manufacturing facility that will produced purified spherical graphite (PSG) that is used in the anodes of lithium-ion batteries.
As part of this plan, the company recently completed a Battery Anode Material (BAM) study that highlighted post-tax unleveraged NPV of $1.5bn, unleveraged IRR of 26%, and average annual EBITDA of $363m.
This will be achieved by delivering PSG at a relatively low gross operating cost of US$1,782 per tonne over the first 10 years and US$1,846 per tonne over the intial 40-year mine life, which owes thanks to the use of its own graphite concentrates as feedstock and introducing operational efficiencies into the PSG facility.Being able to deliver a compelling alternative to Chinese PSG supplies will provide the company with a competitive advantage with potential offtakers seeking to diversify their existing supply channels.
The Australian government has already approved a loan facility of $185m for the development of the BAM facility, whilst the company intends to fund initial upstream expenses of $214.5m through a combination of its existing cash ($129m as at 30 June 2023) and debt facilities.
Renascor’s recent resource expansion drilling sent total resources up 25% to 123.6Mt at 6.9% TGC, or 8.5Mt of contained graphite.
Adding further interest, 61% of the resource is classified in the higher confidence Measured and Indicated categories.
The company expects the upgraded resource to provide support for further extensions and potential optimisation to the current pit design for future capacity expansions beyond those being considered in the BAM Study.
“The resource upgrade offers continued evidence of the world-class quality of the Siviour graphite deposit and demonstrates the viability of an abundance of near-surface, high-grade graphite in a single ore body,” managing director David Christensen said.
“As the demand for graphite grows, long-life, high-quality sources of new supply like Siviour are becoming increasingly important to the developing lithium-ion battery supply chain.
“We expect the increase in the size of the Siviour resource will not only assist with future capacity extensions beyond those being considered in the recently completed battery anode material study but will also further establish Siviour as amongst the most significant new sources of graphite globally.”
This article was developed in collaboration with Renascor Resources, 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.