Investor upbeat on Graphite mining
Australian Stock Exchange (ACX)-listed Sovereign Metals Limited says it has strong interest to proceed with mining activities at the world’s largest saprolite-hosted graphite deposit at Malingunde in Lilongwe.
The announcement follows a scoping study which shows that production from Malingunde is anticipated to have the lowest unit operating cost and a pay-back of two years.
The project is estimated to have total operating cost of around $301 (K215 000) per ton of concentrate, placing it at the bottom of the graphite supply cost curve.
The mine has potential to produce 44 000 tons of graphite annually for the next 17 years, the company said Tuesday.
In its quarterly report for the period ending June 30 2017 published on July 25, the mining firm said it would require an investment of about $29 million (K21 billion) to fully develop the mine.
“[The] project [can] generate significant cash margins even in severe downside graphite price scenarios,” reads in part the statement signed by Julian Stephens, Sovereign Metals Limited managing director.
“The results of the study demonstrate the potential for extremely low capital costs and capital intensity. The low capital costs enable extremely fast payback of development capital, even in extreme downside pricing scenarios. This is a significant advantage when seeking potential off-take partners and financing for development,” it adds.
In June this year, Sovereign Metals Limited confirmed that Malingunde graphite deposit was world’s largest reported saprolite-hosted flake graphite resource.
According to Stephens, the studies also unveiled beneficial features that show that Malingunde has the potential to be a world class asset.
He said: “Very soft saprolite is within 30 metres of the surface and will be free-digging with very low strip ratio, which should equate to much lower life of mine mining cost. The soft saprolite material does not require primary crushing or grinding which will result in substantially reduced processing costs compared to hard rock deposits.”
Expanded flake graphite has a wide variety of uses in fuel cell, seals and gaskets, fire retardants, flow batteries, thermal management for consumer electronics and many more other products.
As demand for environmentally-friendly vehicles soars, experts believe demand for graphite should double by 2040.
Sovereign Metals Limited, which holds the mineral tenement for the deposit, explored Malingunde area in 2015 and 2016.
Meanwhile, the Malawi Chamber of Mines has warned against myths and wrong perceptions about potential of mining ventures, saying it fuels unmet expectations against mining companies.
The chamber’s chairperson, Dean Lungu, expressed the sentiments in Lilongwe on Tuesday during the launch of the first Extractive Industry Transparency Initiative (EITI), which is a global standard for the good governance of oil, gas and mineral resources.
While welcoming calls for increased transparency among companies operating in the sector, he warned against wrong perceptions held by many sectors of the Malawian society.
“The mining sector has always been looked at with a suspicious eye. There are certain fallacies and myths which have been entrenched in our society. The Chamber of Mines is working hard to promote dialogue among all stakeholders. We believe there are solutions at the end of the day,” said Lungu. n
