A new study has found in commercial favour of developing what is likely to be Australia’s only operating graphite mine when construction and commissioning work begins towards the second half of next year – – Lincoln’s high-grade Kookaburra Gully graphite project in SA.
The findings are from a feasibility Study by ASX-listed Lincoln Minerals Ltd into converting high grade graphite deposits at its 100%-owned Kookaburra Gully project on SA’s Eyre Peninsula, into a modern-era open-pit graphite mine.
The study found Kookaburra Gully – for which a State Government approved Mineral Lease is already in place – would be able to produce a range of high quality, globally sought-after graphite products, have room for further expansion beyond its initial 10-year mine life estimate, and, be established at a capital cost of around A$44 million.
The study used a processing rate of 250,000 t/y to produce approximately 35,000 t/y of flake graphite concentrate at a metals recovery rate of 90%.
The mine would deliver a pre-tax NPV of A$81 million over the life-of-mine (~10 years)
Kookaburra Gully’s IRR is estimated at 33%, with a payback period of 3-4 years, its establishment cost would be A$44 million and it would have an operating cost profile of A$395 (~$310) per tonne of concentrate in Year 1, increasing to A$700 (~$550) per tonne for life-of-mine.
The project could expect to attract an average sales price of A$880-$1,350/t for standard mesh graphite products including polymer/plastic additives, lubricants, drilling fluids, friction materials and other industrial uses.
Longer-term opportunities include sales into the high-growth lithium-ion battery market – value-add factors not included in the study results announced yesterday.
Metallurgical and pilot plant test work already undertaken by Lincoln confirm Kookaburra Gully’s ability to efficiently produce high grade graphite products up to purities of 98% Total Graphitic Carbon (TGC).
Lincoln’s Managing Director, Dr John Parker, said today the company already had in place a marketing strategy to produce a range of flake graphite mesh products, from 7,000 t/y in Year 1 building to the 35,000 t/y target by Year 4.
“The outcomes of the feasibility study demonstrate a robust business case for the Kookaburra Gully Graphite Project and have substantially enhanced and de-risked the project’s development,” Parker said.
The study also defined an upgraded graphite inventory, delivering a total Probable Ore Reserve for Kookaburra Gully of 1.34 Mt at 14.6% TGC at a cut-off grade of 8.5% TGC inclusive within a total Measured, Indicated and Inferred Mineral Resource of 2.03 Mt at 15.2% TGC (cutoff grade 5% TGC).
Only Measured and Indicated Resources within the proposed mine’s open-pit have been converted to an Ore Reserve. However, the current 10-year life-of-mine schedule also includes 0.53 Mt of Inferred Mineral Resource at a cutoff grade of 8.5% TGC.
Any new mine will also have access to Lincoln’s adjoining and nearby graphite deposits, the historic Koppio graphite mine area, and a large area of mineralisation known as Kookaburra Extended.
As well as securing the Mineral Lease, Lincoln recently lodged with the SA Government, the required Program for Environment Protection and Rehabilitation (PEPR) application.
This sets out the management plans for the construction, operation, rehabilitation and closure of Kookaburra Gully and is a key final step for Government approval to commence project development and graphite mining at the site. The Government’s response to this is expected before Christmas this year.
Mining will be undertaken via conventional truck and shovel open-pit mining methods, utilising the services of a mining contractor. It is expected the mine’s graphite concentrate will be packaged on-site into 25kg packets or 1-t bulka bags, loaded onto pallets or into 20-ft containers then transported via truck to Port Adelaide.
Lincoln has applied to the Government’s SA Future Jobs Fund to assist accelerate the mine’s development. The maximum amounts available under the Fund are up to A$5 million in grant funding and up to A$10 million in loans.
The Company is also assessing various value-adding processing options including spherical graphite production. (The current study is based on producing only standard mesh graphite products).
“There is no doubt that under the new findings and resource update, Kookaburra Gully is a world-class graphite deposit and is in an ideal position for a long-term operation to tap into the enormous growth forecast for graphite demand on the back of increased electrical vehicle and renewable energy battery sales and other high-tech uses,” Parker said.
“Opportunities for further along-strike exploration and development at both Koppio and Kookaburra Extended have the potential to extend the mine life beyond 10 years,” he said.
“Completion of the Kookaburra Gully feasibility study, lodgement of the PEPR with the SA Government, and successful completion by KPMG of the proposed mine’s business case, are the key catalysts to facilitate a positive credit assessment of the project by potential financiers.”
Lincoln has an agreement with Shanghai Jihai Investment Management Ltd, a finance company based in Shanghai, China, to involve project financiers, graphene nano materials application manufacturers, investment banks and institutions, in backing Kookaburra Gully’s establishment and future.
“China has dominated global graphite production for the past 20-30 years, producing about 70% of the world’s graphite (65% global flake graphite and 89% global amorphous graphite),” Parker said.
“However, the graphite supply chain is changing, due in particular, to potential start-ups in eastern Africa and tighter environmental controls in China. In the long-term, as China’s economy shifts towards higher value-adding manufacturing and increased demand for minus-100 mesh flake graphite used in batteries, it is forecast that China may become a net importer of flake graphite,” he said.
“Over the next 24-36 months, it is anticipated that two or three natural flake graphite mines will commence operation in Africa, North America and elsewhere to replace the expected loss of natural flake graphite from China. However, these new mining operations will not be able to meet the anticipated growth in demand from the battery market as well as new technologies including graphene, fire retardants, geothermal and conductive products,” Parker said.
