Australian exploration and development company Graphex Mining has secured up to $85m from global private investment firm Castlelake to fully fund its Chilalo graphite project in Tanzania through to production.
Graphex will initially receive $5m from the issue of secured interim loan notes.
The company has also signed a term sheet with Castlelake under which it can raise up to $40m in equity and up to $40m from the issue of senior secured loan notes.
The investment will be used to fund the construction and development of the Chilalo project.
Graphex Mining managing director Phil Hoskins said: “We can now proceed with completion of the bankable feasibility study (BFS) with a view to Graphex becoming a leading supplier of premium, coarse flake graphite.
“We believe this transaction affirms the quality of the Chilalo project, the premium product it will produce, the graphite market opportunity identified by the company and confidence in the company’s ability to reach a satisfactory resolution in Tanzania.”
The company will use proceeds from interim loan notes to satisfy the conditions precedent for securing the funding package, worth up to $80m.
The conditions include the completion of a BFS for the project and resolution of issues related to Tanzania’s mining legislation, receipt of relevant approvals, completion of due diligence.
In addition, Graphex is required to execute material contracts including off-take, mining and EPC to be able to secure the package.
Based on pre-feasibility study (PFS) released in this year, the project has post-tax net present value (NPV) of $349m, post-tax internal rate of return (IRR) of 131%, and life of mine of eight and a half years.
The PFS considered a two-stage development for the project, with the first stage expected to have pre-production capital expenditure of around $43.6m. Meanwhile, the second stage would cost $32.5m.
In the first stage, the project will have average annual production of nearly 58,000t of graphite product for a period of two years. The second stage is expected to have average annual output of about 108,000t for 4.3 years.
