Magnis Resources has released its bankable feasibility study in relation to the Nachu graphite project located in Tanzania.
A key feature of the study was an implied post-tax NPV10% of US$1.69 billion and an internal rate of return of 98%.
Capital payback is projected within 14 months of first production. Reserves support an initial 15 years of operation.
A differentiating factor in relation to the Nachu project is the high-quality size, purity and crystal structure of the contained graphite flake.
The bankable feasibility study outlined how premium graphite concentrate products of exceptional size and purity can be generated using low-cost floatation processes. Management highlighted these products are sought after by fast-growing graphite markets such as the lithium ion battery sector.
Management is in discussions with potential off-takers and now that the BFS is completed agreements are likely to be negotiated sooner rather than later.
Magnis Chief Executive, Frank Houllis said that these developments should support the case for significant investment to be made into Nachu via debt markets.
Funding agreements will be central to the group’s share price performance in the near to medium term.
While Magnis represents a speculative investment particularly given that there has been significant fallout in the graphite sector in the last 12 months, the quality of the resource can’t be understated and now that the BFS has identified positive financial dynamics it could receive support.
However, this hasn’t been evident in the first hour of trading with the company’s shares coming off slightly. It is worth noting though that they spiked more than 10% yesterday, perhaps suggesting there is a ‘buy the rumour, sell the news’ element to the story.