Lindi Jumbo Graphite Project: Aligned With A Favourable Market Outlook
A recent report by market research firm Allied Market Research states that the graphite market, which generated $14.3-billion in 2019, is set to reach $21.6bn by 2027 at a compound annual growth rate of 5.3%.
This is great news for emerging graphite developer ASX-listed Walkabout Resources, which is poised to begin construction on its high-grade Lindi Jumbo Graphite Project located in south-east Tanzania.
The company expects to be in production before the end of 2021, MD Allan Mulligan tells SA Mining in an exclusive interview.
Walkabout Resources holds a 100% stake in the mining licence which hosts the Lindi Jumbo Graphite Deposit, located within the highly prospective Mozambique Belt. The area is considered to host some of the world’s highest-grade coarse flake graphite deposits.
“A definitive feasibility study (DFS) updated in August 2017 in response to changing Tanzanian government legislation, and again in March 2019, confirms that the project is technically sound with excellent economic returns even at potential softening price regimes for premium graphite flake material. Payback period for the project is less than two years. The DFS is based on an annual production of 40 000 tonnes of graphite concentrate with a high-grade feed to the plant at an average of 230 000 tonnes per annum of the life of mine (LOM) of 24 years,” says Mulligan.
Project highlights from the DFS include:
■ Lowest operating costs in Tanzania of $347/t in concentrate Free on Board (FOB) at the Port of Mtwara.
■ Lowest upfront capex in Tanzania of $27.8-million.
■ Highest ore reserve grade in Tanzania at 17.9% (total graphite content) TGC.
■ Ore reserve based only on 37% of the measured and indicated portion of the mineral resource.
■ Short development time frame of seven months from financing.
The Lindi Jumbo Graphite Project is shovel-ready, with earthworks and clearing well under way and long-lead items, including two mills, a scrubber and the flotation cells already complete and ready for shipment to site.
“Before the onset of the COVID-19 pandemic, our Engineering, Procurement and Construction (EPC) partner in China manufactured the long-lead items, which are awaiting dispatch to Tanzania,” says Mulligan.
Walkabout Resources EPC partner in China is Jinpeng Mining Machinery, a privately owned processing and plant manufacturing company, which has been awarded the EPC contract for the development of the manufacturing plant.
The emerging miner has also finalised most of the contracts which are awaiting signoff. During the project construction phase it will employ around 200 people and about 100 people when in production.
Walkabout Resources is looking to replicate Aquarius Platinum’s strategy of an outsourced model adopted at its Kroondal operation located on the Western Limb of the Bushveld Complex. “This model has a number of advantages, such as reduced upfront capital, reduced operational risk and the immediate integration of an elevated local content programme.”
“We have placed a corporate bond for $40m into the market and are in negotiations with a number of institutions, including large international African development banks across the continent and banks in Tanzania, to access a combination of debt and equity for project development. African-based banks seem to have a much better appetite under the COVID-19 period to fund African projects,” says Mulligan.
As soon as it has secured the relevant funds, Walkabout Resources will start the seven- to eight-month construction programme.
China currently dominates the graphite market; but owing to the industrial slump brought on by the COVID-19 pandemic, China’s deepening graphite mines and the adoption of stringent environmental legislation, Mulligan believes the world’s second largest economy will struggle to supply its own production facilities, post COVID-19, and look to outside production to supplement its production facilities. This stands the Lindi Jumbo Graphite Project in good stead given that it delivers large flake sizes that are more valuable and appeal to both traditional and niche markets.
Larger flake size graphite concentrate receives a premium and a higher price per tonne. “Similarly a higher grade concentrate also receives a higher price. DFS test work on the Lindi Jumbo Graphite Project validated the production of graphite concentrate with a flake size distribution of up to 74% above 180 microns (µm).”
Graphite is used in traditional industries including refractory and foundry, expandable graphite, carburisation, graphite shapes and lubricants.
The jumbo graphite size, meanwhile, will enable the African-focused energy minerals developer to target niche market opportunities beyond battery metals development to applications related to fire retardants and 3D printing.
“The Lindi graphite project is a standout project given its attractive head-grade which will make money even when the markets are suppressed; and deliver handsome returns during the boom which is great for the shareholders.”
Opportunities beyond graphite
Walkabout Resources has an extensive exploration programme targeting geographies beyond Africa and commodities other than graphite.
Its exploration portfolio consists of:
United Kingdom – Northern Ireland and Scotland Projects
Walkabout is currently managing two main exploration joint ventures in the United Kingdom – one in Northern Ireland and the other in Scotland. The company has expanded exploration operations into this “highly prospective but under-explored region” with the acquisition of prospective high-grade gold and base metal licences. The company has a permanent technical presence there and has been progressing a number of projects within the licence areas throughout the COVID-19 lockdown period and is now in a position to drill-test the very exciting high-grade base metal and gold targets within the last quarter of 2020.
Amani Gold Project – Tanzania
The company was recently granted an extensive exploration area within a highly prospective gold region in south-western Tanzania that has never been exposed to a modern, systematic exploration programme for hard-rock gold. The area is well endowed with numerous alluvial gold workings and recent work done by academic institutions on the gold nuggets in the alluvial diggings have indicated that they are proximal to source and the company has embarked on an exploration programme specifically targeting the hard-rock source of the alluvial gold occurrences.
Eureka Lithium Project
Walkabout holds 100% of prospecting rights for two lithium-bearing pegmatites located close to the Orange River, Namibia. Infrastructure (roads, rail, power and water) around the project area is well developed with the town of Karasburg about 40km to the north-east.