Triton Minerals may in the near future be one of the
hottest graphite investments in Africa. Full-scale construction at its 100%
owned, Mozambique-based Ancuabe graphite project is scheduled to start in April
2020. This will unlock a large flake, high purity deposit that will benefit
from the imminent shortfall in Chinese production of expandable graphite
material, MD Peter Canterbury tells Laura Cornish.
The majority of graphite juniors in Africa, most of
which sit in the politically unstable Tanzania, are looking to jump on the
battery metals bandwagon – which for now has been negatively impacted by lower
prices as the EV market revolution continues to move slower than expected. This
puts Triton Minerals in a rather unique position. Thanks to its large flake,
high quality Ancuabe project situated in the northern Cabo Delgado Province,
the company is focusing on supplying its material into the expandable
graphite/refractory markets in China, and more specifically Shandong Province.
“Shandong is historically the only large-flake
graphite producer in China and is expected to see significant drops in graphite
production as their assets age and mines are closed due to environmental
impacts which the government are looking to reduce,” Canterbury explains.
As such, Triton Minerals has already secured off-take
agreements for 52% of its production with companies in the Chinese Province.
With end user market demand essentially on tap,
Ancuabe has already upped its investment attraction but this is just one
element that makes the project hot property. Mozambique is one of the few
countries in Africa that don’t require a free-carry interest in their mines,
and whose regulatory codes are transparent. “We are also situated only 80 km by
sealed road to the Pemba port, eliminating any challenges around exporting our
product,” Canterbury notes. Ancuabe is also situated adjacent to an existing
graphite mine owned by Germany’s largest graphite products producer. The mine
has been in operation since 2016. “Consequently, the area has developed a good
reputation for its high quality graphite.”
Ancuabe will at full capacity produce 60 000 tpa of
graphite material, which may seem small but is in fact on the larger size of
graphite production Canterbury confirms. At this rate, the mine will operate
for 28 years although the MD notes there is a substantial 49 Mt resource which
once converted could either ramp up the facility’s operating rate or
drastically increase the project’s lifespan. The deposits (there are two that
will be mined for now) have a 6.6% total contained graphite (TCG) content –
which although not the highest is still significant, especially when taking the
unchallenging mineralogy and geological setting into account.
“Importantly, we have determined a four-year payback
on the project and a 37% IRR,” Canterbury highlights. With the project fully
permitted and the necessary investment in place, Triton Minerals is set to move
into full-scale construction on the project in April 2020 (onsite early works
had previously commenced). “We have planned for a 15-month construction period
which will take us to July 2021 to produce our first graphite.” Diversified
Chinese state-owned enterprise MCC International is the appointed EPC
contractor, and will be supported by an owner’s team from South Africa-based
Lycopodium ADP. MCC International is based in Beijing with business units
spanning natural resources, manufacturing, equipment fabrication and real
estate. In 2015, the company merged into China Minmetals to become China’s largest
mining company. The group has a number of complementary proficiencies including
engineering and civil construction. In addition, MCC has strong relationships
with major Chinese banks and has introduced Triton Minerals to potential
financiers, one of whom has provided a loan facility which will fund up to 85%
of the EPC contract at competitive concessional rates. Through the EPC tender
process, Triton Minerals was able to flag potential pre-production capex
savings of 10 to 15% on the US$99.4 million DFS estimate to around $85 million.
Returning to the project itself, Canterbury explains
that Ancuabe will comprise two pits – the T16 deposit and then later on the T12
deposit – situated just 3 km apart. “With our graphite situated no deeper than
130 m, the deposits will be open cut, drill and blast operations. The material
will be transported to a ROM pad which will be followed by three crushing
stages after which it will be moved into a temporary holding bin, ready for
processing.” A 1 Mtpa mill will start the process after which flotation and up
to four stages of cleaning (vertical attrition, separation of large flakes)
will take place. Waste thickening will follow after a filtration circuit. The
filtered material will be kiln dried and then bagged into three or four
different size fractions in 1 m³ bags which will be transported from site to
the port to be containerised and shipped.
Logistically, Ancuabe has no challenges. Its water and
electricity needs pose no difficulties either. The government has granted
Triton Minerals approval to build a 1.5 million cubic litre dam which should
fill within a month of the rainy season onset. Situated close to the processing
plant, the dam will provide all of Ancuabe’s process water needs. “We will also
benefit financially from a 110 kVa power line that runs through our tenement
after it has been upgraded in 2022.” Until then, an 8.5 MW containerised diesel
power plant will fuel Ancuabe’s power needs. Last, but not least, Triton
Minerals is looking to employ around 200 people on a full-time basis once
construction is complete – most of which will be Mozambique residents. The
workforce will peak at about 500 during the mine’s construction period. “With
50% of our product already secured by end users, and the necessary funding in
place to take Ancuabe through to production, we believe we are a stand-out
graphite junior and are positioned to soon move from developer to producer. “In
doing so we will deliver value through returns which will give us the
optionality of returning cash to our shareholders through dividends or
developing the additional assets in our portfolio,” Canterbury concludes.
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