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  • Kibaran Resources Reveals Robust Graphite Scoping Study For Epanko 0 comments
    Aug 18, 2014 9:51 PM

    Kibaran Resources (ASX:KNL) is expected to trade higher after revealing an upgraded Scoping Study for its Epanko graphite deposit in Tanzania.

    The study was based on the Indicated Resource of 12.8 million tonnes at 10% TGC for 1,281,200 tonnes of contained graphite.

    Results of the study provide the company sufficient confidence and a business case to advance the project to a feasibility study, for which it is in discussion with several engineering design and construction companies.

    The operating per tonne of concentrate is compelling at an estimate of $489, when the basket price for graphite product used in the scoping study is $1,258/t of concentrate.

    It assessed the viability of a simple open cut mine and conventional flotation process plant with throughput of 420,000tpa to produce 40,000tpa of graphite flake concentrate at between 94-97% carbon, with no acid treatment stage required.

    This study indicates that Epanko is an economically robust graphite deposit capable of producing premium quality large flake graphite, which has no limitations to its industrial use.

    Net Present Value is estimated at $213 million, with a capital payback period of just 2.5 years, and a substantial mine life of 27 years.

    The project boasts a low strip ratio, with the first 15 years at 1.3 to 1, and life of mine at 2.2 to 1.

    These estimations provide confidence for Kibaran to advance immediately to a Feasibility Study based on production of 40,000tpa, and the ability to increase production as market demand rises.

    This is based on a forecast Capital Expenditure of $56 million for processing 420,000 tonnes a year and an estimated Operating Cost per tonne of concentrate $489.

    And, the study was based on the treatment of only 50% of the current total mineral resources estimate for the Epanko deposit.

    This highlights the potential upside that remains in a Kibaran investment.

    Scoping study specifics

    Intermine Engineering Consultants completed the study based on the upgraded Resource estimated undertaken by CSA Global.

    Inputs from previous metallurgical test work and achievable market pricing estimates for large flake graphite fractions were used.

    It assessed the viability of an initial mining operation producing 40,000tpa of high-grade large flake graphite from a throughput of 420,000 tonnes per annum.

    Cost per tonne of graphite concentrate was estimated at $489, with a sale price of $1,258.

    Plant Recovery is assumed at 96%, with feed grade 9.64% and a $56 million pre-production capital outlay.

    The company intends to use the Scoping Study results to further progress the development of the Epanko Project, including a further drilling program to better define the Inferred Mineral Resource, along with additional evaluation work to determine whether inferred resources can be upgraded to an Indicated Mineral Resource.

    A process flow sheet was devised which resulted in a conventional flotation plant, and the capital cost for the plant is based on a two-stage liberation process to separate the graphite.

    The metallurgical results showed that the flotation concentrate averaged 94% Fixed Carbon and more importantly, that the testwork yielded large flake graphite.

    Graphite pricing

    The portion of very large size flake has a significant advantage, as at present there is a shortage of this product in the graphite market.

    The basket price for graphite product used in the scoping study is $1,258/t of concentrate, based the indicative pricing for 94-97% carbon.

    Notably, mid-term pricing for premium quality large flake graphite is forecast to substantially increase, according to recent forecast price modelling by independent research firm Stormcrow Capital.

    Stormcrow has forecast pricing for Jumbo flake to increase to US$6,170 per tonne in 2020, a near three-fold jump on 2013 prices.

    This graphite price forecast modelling is also consistent with reports published in Industrial Minerals.

    Analysis

    The results of the scoping study provide the company sufficient confidence and a business case to advance the project to a feasibility study, for which it is in discussion with several engineering design and construction companies.

    The operating per tonne of concentrate is compelling at an estimate of $489, when the basket price for graphite product used in the scoping study is $1,258/t of concentrate.

    Therefore on estimated scoping study metrics the return and margin is potentially very strong.

    Also - extremely low impurities are recorded, confirming that there is no limitation on the application and uses of Epanko flake graphite.

    Having secured a guaranteed offtake for 10,000tpa, discussions are underway with a major industrial group for a second off-take agreement for Epanko graphite.

    Confirmation of a second offtake agreement would be a major price catalyst.

    In addition, the Kagera Nickel Project remains underexplored and is located along strike of the Kabanga nickel deposit, owned be Xstrata, which is considered to be the largest undeveloped, high grade nickel sulphide deposit in the world.

    Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.

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