Modern Mining

Australia’s Sovereign Metals, an ASX-listed company, has announced the results of the Scoping Study for its Malingunde saprolite-hosted graphite project in Malawi. Preliminary economics show the project has capital and operating costs per unit at the very bottom of the graphite supply cost-curve, at production rates supported by existing market fundamentals.

The results of the Scoping Study demonstrate the potential for the project to support a very low capital and operating cost operation with annual graphite concentrate production of approximately 44 000 tonnes over an initial mine life of 17 years. Total operating costs are estimated at approximately US$301 per tonne concentrate (FOB Nacala Port) – the lowest of any reported ASX-listed peer company of scale <300 kt/a. The total capital cost is US$29 million (including a 35 % contingency) with a payback of under two years using conservative graphite pricing assumptions.

Study reveals low capexDrilling rig at Malingunde during Sovereign's December 2016 resource drilling campaign.

Very low mining costs are anticipated with the soft saprolite being free-dig with a low strip ratio of 0,5:1. In addition, the process flow sheet is simple, leading to low processing costs and lower capital requirements. The plant design uses ‘off the shelf’ equipment allowing rapid and cost effective initial construction whilst allowing for future expansion options.
The project will deliver a high-quality product with excellent concentrate grades and a very large proportion in the SuperJumbo and Jumbo categories.

“The Scoping Study clearly demonstrates the project’s very strong commercial potential which is centred on very low operating and capital costs, and revenues derived from a premium product,” comments Sovereign’s MD, Dr Julian Stephens. “Importantly, the project is not reliant on an unrealistically large scale to reduce operating costs and/or overly optimistic graphite pricing forecasts. The very low operating cost nature of the project provides protection even against extreme downside pricing scenarios.”

The deposit is located at Malingunde, just 15 km south-west of Lilongwe, Malawi’s capital city, with access – says Sovereign – to “enviable infrastructure”. It is 25 km from operating rail, 20 km from a major power sub-station and has plentiful fresh water sources nearby.

The discovery was made in 2015 by Sovereign’s in-country geological team using hand auger drilling techniques in an area of no outcrop. In April 2017, Sovereign reported a maiden mineral resource estimate (MRE) of 65,1 Mt at 7,1 % TGC (Total Graphitic Content) at a 4 % TGC lower cut-off grade (saprolite, saprock and fresh rock). The MRE, prepared by CSA Global, includes a high-grade saprolite component of 8,0 Mt at 10,0 % TGC which has been the focus of the Scoping Study.

The geometry of the Malingunde deposit is one of several high-grade, shallow to moderate north-east dipping mineralised zones. Sovereign is targeting the near surface, soft saprolite portion of the resource to a maximum of approximately 25 m vertical depth. This results in a number of long, shallow open pits in the mining plan.

Pit optimisations were completed by AMEC Foster Wheeler, the study manager, based on maximum production of 45 000 tonnes of concentrate per annum rather than on an optimised throughput analysis. A cut-off grade of 7 % was selected which results in a production target of approximately 44 000 tonnes of graphite concentrate per annum over a 17-year life of mine. This equates to an average of approximately 475 000 tonnes of ore processed per year, totalling circa 8,0 Mt at 10,0 % TGC over the life of mine.

A schedule was developed that progressively mines material from north-west to south-east. Importantly, over the initial four years of production, 96 % of material processed is in the indicated category. Over the life of mine, 83 % of material processed is in this category.

A contract mining strategy was selected to mitigate project risk, although operational management will be retained by Sovereign personnel.

Sovereign engaged SGS Canada to conduct an initial bench scale laboratory flotation test-work programme on samples obtained from the Malingunde deposit. The primary objective of the programme was to investigate the metallurgical response of the shallow saprolite-hosted mineralisation as part of the early stage project evaluation.

The design of the processing plant is based on the SGS test-work and best practice in similar operations. Importantly, the process requires no upfront crushing or grinding of the ore, a material advantage over hard-rock graphite deposits.

The Tailings Management Facility (TMF) for the project is designed to safely contain the life of mine estimated tailings of 7,3 Mt. The characteristics of the tailings produced have not yet been confirmed and therefore a conservative approach to the deposited density has been adopted assuming a final settled density of 1,15 t/m3.

For the Scoping Study, it was decided to adopt a conservative strategy that includes a fully HDPE lined facility leaving the option for a non-HDPE lined facility or in pit deposition as opportunities that could be adopted should future testing of the materials prove that contamination is not an issue.

Photos courtesy of Sovereign Metals

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