Natural resources-focussed investment company Armadale Capital announced the start of a feasibility study on the Mahenge Liandu Graphite Project in Tanzania on Thursday, ahead of an anticipated decision to mine in early 2019.
The AIM-traded company said the feasibility study would be undertaken by BatteryLimits, which recently completed the scoping study at Mahenge Liandu.
It said the feasibility study was being started following the successful completion of the scoping study in March, which delivered a pre-tax internal rate of return of 122%, a net present value of $349m, with a low development capex of $35m and low operating costs of $408/t.
The feasibility study was designed to confirm the commercial viability of the deposit, which Armadale said was one of the highest grade large flake projects in the world with a JORC resource of 51.1Mt at 9.3% TGC.
Study parameters would be centred on 400,000tpa, over a 32-year mine life.
Product quality test work and marketing of the high purity high quality graphite concentrates would be a focus of the feasibility study, Armadale explained, adding that a diamond drilling programme would commence as soon as weather conditions permitted, which would be used for a more detailed metallurgical work programme and for geotechnical sampling.
Permitting activities were said to be continuing with the recently-announced formation of a Tanzanian Mining commission, expected to improve the permitting process.
The company said it was fully-funded to completion of the feasibility study, after the recently-completed £0.96m capital raising.
Completion of the feasibility study was expected in the fourth quarter, allowing a decision to mine early in 2019.
"We are moving up through the gears of development at Mahenge Liandu, accelerated by the highly positive scoping study results delivered in March, which highlighted the project's significant potential value, most notably through the delivery of a net present value of $349m and an internal rate of return of 122%," said Armadale director Nick Johansen.
"The commencement of a feasibility study, launched in conjunction with the relevant permitting activities, ensures that the Armadale team should be in a position to make a decision to mine in early 2019, looking to translate this significant potential value into real returns for shareholders.
"We look forward to updating investors on the development of the feasibility study, together with our additional operational and marketing activities over the coming months."