Back in March, Black Rock Mining (ASX:BKT) released the results of an independent scoping study on the Mahenge graphite project which currently contains in excess of 131 million tonnes at 7.9% C (based on a cutoff grade of 4%. When using a cutoff grade of 9%, the project still contains 37.6 million tonnes at 10.2% TGC).
The initial capital expenditures are estimated at US$57.3M and depending on which production scenario the company will end up with, the cost per tonne of concentrate will be anywhere between $598/t (for the 31,000 tpy scenario) and $458/t (when reaching the optimal 52,000 tpy scenario). This mine plan is based on a throughput of 500,000 tonnes per year at a TGC of 10.5% (so this is higher than the average grade of the resource estimate). Using a sales price of $1236/t and a 25 year mine life, Black Rock estimates the project has an IRR of 62% and a NPV10% of $286M (but it’s unclear whether this is pre-tax or post-tax).
As the economics of the project are clearly better when using a higher production rate, Black Rock is also considering to increase the total output even further, but only if it makes sense from an economic point of view.