Renascor Resources Limited (ASX: RNU) has announced the results of the Definitive Feasibility Study (DFS) for its 100%-owned Siviour Graphite Project near the coast of South Australia’s Eyre Peninsula.
Renascor Managing Director David Christensen said the DFS confirmed Siviour’s potential as a low-cost, long-life graphite project that can achieve consistently attractive profit margins even in the current lower graphite price environment.
“The DFS confirms Siviour’s status as a low-cost, tier one graphite project that can achieve consistently attractive profit margins even in the current lower graphite price environment,” Mr Christensen said.
We believe this cost advantage, coupled with our location in the low sovereign risk jurisdiction of South Australia, will enable Siviour to become a premier provider of graphite for the growing lithium-ion battery market, as this sector becomes the dominant end-user of natural flake graphite.
“With the DFS now complete, we look forward to advancing towards securing binding offtake agreements and working with our finance partners to secure funding for Siviour’s stage-one development.”
The DFS results confirmed a projected life of mine (LOM) operating cost of A$508 or US$355 per tonne (A$471 or US$330 per tonne over first ten years).
The preference is for a staged development to reduce up-front capital cost.
The DFS is based on staged development, with average production of 80ktpa during first stage (years one to four), before expansion in year five to be funded through expected project cashflows. Average projected production in years five to ten is 144ktpa.
Mr Christensen said the DFS results confirm compelling project economics, including:
- Post-tax NPV10 of A$388m or US$271m;
- Post-tax IRR of 33%;
- Start-up capital requirement of A$114 million
- Average EBITDA of A$83m, EBITDA margin of 57%.
Mr Christensen said that up to 60% of the start-up capital requirement is expected to qualify for in- principle support from Atradius, the Dutch export credit agency (ECA), subject to finalising the procurement strategy in the front-end engineering design (FEED) phase.
Renascor is now working to secure binding offtake agreements, final project permitting and commencing financial due diligence.
