NextSource announces updated FS for Madagascar graphite project

Toronto-based NextSource Materials (TSX:NEXT) has published
results of an
updated feasibility study
for its flagship Molo graphite
project in Madagascar, showing increased project build cost due to
equipment inflation.

An update on the feasibility study published in 2017, the new FS
takes into account updated mine capital equipment and mining costs,
as well as current 12-month rolling flake graphite pricing on a
free-on-bard (FOB) China basis supplied by commodities research
firm Benchmark Minerals Intelligence.

To maintain a first-mover competitive advantage and to
appropriately plan for future market demand, the FS was designed to
provide a flexible mine development approach that comprises an
all-modular build solution, the company says.

NextSource currently has an offtake agreement in place with a
Japanese trader and is in the process of formalizing an additional
sales agreement with a European trader. The FS was undertaken to
include two phases in order to account for offtakers’ demand for
the company’s SuperFlake graphite concentrate.

NextSource currently has an offtake agreement in place with a
Japanese trader and is in the process of formalizing an additional
sales agreement with a European trader

Phase 1 of the project will consist of a fully operational and
sustainable graphite mine with a permanent processing plant capable
of processing 240,000 tonnes of ore and producing about 17,000
tonnes of high-quality SuperFlake annually. The updated build cost
of the fully modular process plant has increased to $21 million
from the $18.4 million reported in 2017.

Phase 2 incorporates the processing of 240,000 tonnes of ore for
each of the first two years and then ramping up to 720,000 tonnes a
year in the third year to accommodate additional sales, resulting
in a total of 45,000 tonnes of SuperFlake concentrate being
produced annually over a 30-year mine life.

Costing for Phase 2 is based on the addition of two modules of
the beneficiation plant with a proportional increase in mining and
infrastructure costs. The capital mine cost of Phase 2 will be
$39.1 million, for a total project cost (Phase 1 and Phase 2) of
$60.1 million.

In addition, the company notes that discussions with buyers have
indicated their preference is to purchase Molo graphite concentrate
at the local Madagascar port at FOB China prices.

As such, the FS operating costs (opex) have included the all-in
FOB cost to ship concentrate to the local Port of Fort Dauphin. The
project’s Phase 1 opex is currently estimated at $565.93/t and
Phase 2 at $514.17/t.

Shares of NextSource Materials were up over 14% on Monday. The
graphite miner has an approximate market cap of C$20.3 million.

Source: FS – Mining B.
NextSource announces updated FS for Madagascar graphite project



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