Mining News: News Nuggets: Graphite One PEA details robust return for western Alaska project

Graphite One Resources Inc. Jan. 25 published the results of a preliminary economic assessment, or PEA, for the development of its Graphite One project in western Alaska. Formerly referred to as Graphite Creek, the project is conceived as a vertically integrated manufacturer of high grade coated spherical graphite with mining and processing facilities near Nome and an advanced material processing facility outside of Alaska. Due to its maritime links to Alaska, low-cost power and proximity to markets, Washington is being considered as a potential site for this facility. The PEA, prepared by Toronto-based TRU Group, envisions the Graphite One project producing 55,350 metric tons of coated spherical graphite and other specialty graphite materials by the sixth year of operation, when full production is scheduled to be achieved. Coated spherical graphite is the primary material for the anodes of lithium-ion batteries used in electric vehicles and hand-held electronics.

The graphite project outlined in the PEA is expected to have a net present value of US$1.037 billion, using a 10 percent discount rate, and an internal rate of return of 27 percent. This is anticipated to generate cash earnings of US$182 million per year on sales of US$280 million once full scale operations are achieved. A minimum of 40 years of indicated and inferred resources grading 7 percent graphite have been identified in the target exploitation zone to sustain full scale operations, notwithstanding additional potential resources immediately outside the target zone or the broader Graphite Creek property. "This PEA shows the strong potential of our project as America's emerging producer of lithium ion battery-grade coated spherical graphite," said Graphite One CEO Anthony Huston. "With the prospect of a low-cost, 40-year mine life using half of the identified graphite mineral resources, and given our projected production costs and conservative pricing assumptions, we are confident that Graphite One has the potential to become a reliable provider of graphite materials critical to clean-tech, high-tech and national security applications." Pending a detailed graphite market study, the PEA has opted for a conservative selling price of US$6,200 per metric ton of coated spherical graphite and an average selling price of US$1,500 per metric ton of purified graphite powders. Coated spherical graphite is expected to dominate output, accounting for 75 percent of sales volume and 93 percent of sales revenue. "The robust financials for vertically-integrated production of CSG at the projected unit pricing of US$6,200 per (metric ton) merits that the project proceed to a feasibility study to maintain an accelerated project schedule that would coincide with projected market demand in 2021," TRU Group wrote.

-Shane Lasley

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