Valence Industries has announced the completion of the Feasibility Study for the significant expansion of its currently operating Phase I graphite mining, processing and advanced manufacturing capacity.
The Feasibility Study reflects the continued focus by Valence Industries on a program of advanced manufacturing shifting the emphasis from bulk tonnages to value added product lines and increased margins.
It defines an advanced manufacturing program for Valence Industries with two aspects, including base flake graphite concentrate production at the Uley graphite site combined with advanced product handling facilities near the port of Adelaide.
With regard to the production and manufacturing strategy, the expansion of Valence’s facilities at the Uley Graphite site will provide additional processing capacity in 2,500tpa increments of graphite output to reach 6400tpa to effectively match market demand.
According to the ASX announcement by Valence, this Phase II plant is also designed to deliver significant advances in quality, output reliability and reduced processing costs compared to the existing Phase I plant.
The Feasibility Study demonstrates an Internal Rate of Return (IRR) of 46% based on current Ore Reserves – which exceed 2Mt – and sets the Phase II expansion capex at A$37m staged over three years.
“The Feasibility Study also brings forward some of Valence Industries’ Phase III programs with Capex of $13m. The need to provide for efficient and agile supply of multiple flake graphite products, with certainty of cost and supply time, has determined that an Advanced Product Handling facility be locate near the company’s export port at Adelaide. The location of such a facility is influenced not only by economic, but also Government, requirements and its support for value adding opportunities,” it says in the ASX announcement.
The feasibility Study expects the direct operating costs to reduce significantly from the current Phase I operations and places them in the range of between A$400-A$500 per tonne at the mine gate and in the range of A$750/t to A$950/t FOB in Port Adelaide.
It also forecast the average graphite sales prices of around A$1,669 to A$4,774 per tonne and envisages the adoption of advanced logistic management and product handling programs.
“Based on the diversity of market regions, industries and products targeted by Valence Industries, the weighted average sale price for the company’s flake graphite products fall in a range of A$1,669/t for general products to an average A$4,774/t for advanced processed products.”
“These capital costs, operating costs ad sale prices in conjunction with the ore reserves and taking account of general and administrative, royalty and corporate tax currently give the project and estimated Net Present Value (NPV) of A$65M and an IRR of 46%.”