{australien_flagge}EcoGraf Limited (ASX: EGR; FRA: FMK; OTCQX: ECGFF) has updated its six-year-old feasibility study for its Epanko graphite project in Tanzania, providing current capital costs, operating costs and graphite prices with all key assumptions. The new figures show that Epanko can become a world-class graphite project. The key financials for the project are: Unaudited pre-tax NPV10 of US$348 million (vs. US$211 million); unaudited internal rate of return (IRR) 36%, average annual EBITDA over the first 10 years2 of US$79 million; pre-production capital cost: US$134 million. Just a few days ago (on April 17, 2023), Ecograf signed the Epanko Framework Agreement with the Tanzanian government, which is a key requirement for financing and for a final investment decision for the project.
{australien_flagge}EcoGraf Limited (ASX: EGR; FRA: FMK; OTCQX: ECGFF) has updated its six-year-old feasibility study for its Epanko graphite project in Tanzania, providing current capital costs, operating costs and graphite prices with all key assumptions. The new figures show that Epanko can become a world-class graphite project. The key financials for the project are: Unaudited pre-tax NPV10 of US$348 million (vs. US$211 million); unaudited internal rate of return (IRR) 36%, average annual EBITDA over the first 10 years2 of US$79 million; pre-production capital cost: US$134 million. Just a few days ago (on April 17, 2023), Ecograf signed the Epanko Framework Agreement with the Tanzanian government, which is a key requirement for financing and for a final investment decision for the project.
The development of Epanko coincides with a strong economic environment in Tanzania under the new government, which is planning over $45 billion worth of new infrastructure and investment
In the first phase of development, Ecograf intends to implement an ‘Oxide First’ strategy. With minimal additional capital costs, this will increase production capacity by 22% to 73,000 tons per year. Operating costs are reduced due to less drilling and blasting, as well as lower handling and reagent consumption. The mine life in Phase 1 is extended to 18 years, with significant scope for further expansion. Metallurgical test work supports a simpler single-line flotation circuit, reducing capital costs and lowering process risk. Reducing the waste stripping ratio from 0.44 to 0.27 results in lower mining costs.
In addition, the deferral of US$6 million in capital expenditures for the Fresh Ore sulfide circuit and tailings pond, and further optimization through the planned connection to the power grid of the nearby town of Mahenge.
Evaluation of a multi-stage expansion of Epanko with the goal of producing 300,000 tons per year is underway.
SRK engineers had already confirmed in the 2017 feasibility study that all technical areas of the proposed Epanko development were advanced enough to meet the requirements of international project finance standards and that the environmental and social management planning and associated impact assessments were in compliance with relevant Tanzanian legislation, International Finance Corporation (“IFC”) performance standards and World Bank Group environmental, health and safety guidelines.
The signing of the Framework Agreement on April 18 was an important milestone towards the final investment decision. The main conditions are: A new joint venture company, Duma TanzGraphite, to develop and operate Epanko, with EcoGraf holding an 84% interest and the government a 16% interest (see April 18, 2023 announcement). Duma TanzGraphite will be granted a new special mining license for the life of Epanko, a key requirement for project financiers. The government and EcoGraf will work together to secure financing for the Epanko development. The government will facilitate permits and approvals for the development and operation of Epanko.
Figure 1: Signing the framework agreement, Minister of Minerals Hon. Doto Biteko (right), Chancellor of the Exchequer Nehemiah Mchechu (left), Her Excellency Samia Suluhu Hassan (center), Managing Director Andrew Spinks and Director Christer Mhingo.
Summary: Benchmark Intelligence experts predict that Tanzania will be the top graphite producer in Afirka in the next decade. This is due to the new openness of politics, but of course also to the excellent geological conditions along the African Rift Valley, where the Epanko project is located. Many graphite projects are owned by Chinese companies, or at least loosely tied to Chinese groups through financing commitments. The Epanko project is the only project that, according to its completed feasibility study, meets the strict international investment criteria of the so-called Equator Principles. Ecograf therefore offers itself as a world-class project to invest in for investors for whom high social and environmental standards are important in addition to economic viability.
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