Projects

Nachu Graphite Project

The Nachu Graphite Project, covering an area of approximately 199km², is located west of the coastal city of Lindi and approximately 200km from the port city of Mtwaram, in south-east Tanzania.

Producer of

High-quality flake graphite

Owner

Magnis Resources

Estimated Investment

$171.4m

Reserves

Measured, indicated and inferred resources: 174Mt grading 5.4% graphitic carbon (Cg) at 3% Cg cut-off grade

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The Nachu Graphite Project, covering an area of approximately 199km², is located west of the coastal city of Lindi and approximately 200km from the port city of Mtwaram, in south-east Tanzania. Magnis Resources is the sole owner of the graphite project, which is estimated to have a production life of roughly 40 years.

The project’s pre-feasibility study (PFS) was completed in December 2014, while the bankable feasibility study (BFS) is scheduled for completion in the first quarter of 2016.

Environmental certificate for the project was issued in August 2015, and a special mining licence (SML) 550/2015 was granted in September 2015.

Geology

The Nachu graphite project is located within the greater Mozambique Metamorphic Belt. Mineralisation at the project site is hosted within layers of meta-sedimentary graphitic schists. The project hosts five deposits namely Block B, Block D, Block F, Blocks FSL and Block J, with majority of the mineralisation located within approximately 150m from the surface.

Reserves at the Nachu graphite project

As of February 2016, the African graphite project is estimated to contain a combined measured, indicated and inferred resources totalling 174Mt grading 5.4% graphitic carbon (Cg) at 3% Cg cut-off grade.

Mining and processing

The deposits will be mined using the open-pit mining method, while the proposed 200,000 tonnes a year (t/y) processing plant will integrate conventional crushing, rod mill grinding and flotation circuits.

Infrastructure at Magnis Resources’ graphite mine

The water required for the project will be sourced from the tailings facility and three bore wells, which were drilled approximately 4.5km from the project site, whereas the electricity requirements are proposed to be met by installing heavy fuel oil (HFO) or diesel-powered generators.

Product storage and handling facilities will be built near the port of Mtwara, from where the products will be exported. Other major infrastructure will include an accommodation camp, a tailings facility, access roads and a raw water storage dam.

Off-take agreements for the Tanzanian graphite project

Two off-take agreements were signed for the project in December 2014. China National Materials Industry Import and Export Corp (SINOMA) will off-take 80,000t/y of high-quality flake graphite under a five-year agreement, which includes an extension option, while Sinosteel Liaoning will off-take 100,000t/y under a ten-year agreement, with an option to extend for five years.

Financing agreements

The project is proposed to be developed with an estimated budget of $171.4m. In March 2015, SINOMA signed a binding term sheet agreement with Magnis Resources to provide a $150m funding for the project.

“Magnis Resources is the sole owner of the graphite project, which is estimated to have a production life of roughly 40 years.”

A memorandum of understanding (MoU) was signed in October 2015 between Magnus Resources and POSCO E&C, for the latter to serve as the lead arranger for the senior loans to be secured from financial institutions, as well as the engineering, procurement and construction (EPC) consultant for the project.

Key players involved

China Railway Construction Corporation (CRCC) subsidiary China Railway 24th Bureau Group signed a MoU in January 2015, to serve as the EPC and future contract mining contractor for the project.

The PFS was compiled by the BatteryLimits and Logiman joint venture, with assistance from Orelogy Group for the mining cost estimates and the mining schedule, while Knight Peisold provided the initial design for the tailings facility.

Digby Wells Environmental was appointed to manage the environmental and social impact assessment (ESIA) process. The BFS is being compiled by Sedgmen in collaboration with Logiman, whereas Orelogy Group is undertaking the mine planning and ore reserve estimate, the results of which will be fed to the BFS.

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