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Thanks BBN. I'm sure everyone appreciates both the time and effort re your posts. Hopefully DFS and uptake of offtakes are in the (very) near future! Looks like we could get another tick up shortly today as well
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Whats more the same 4th Sept RNS stated the following ;
"Notably, ASX listed Black Rock Mining (ASX: BKT), which also operates in the region, released excellent downstream test-work results on 14 August 2019 that exceed the industry standard for battery anode materials."
Chairman Nick Johansen's comments at the time ;
"With others in the region, such as Black Rock Mining, achieving their own excellent downstream test-work results, we are optimistic that Mahenge Liandu will deliver similar results to further enhance its already robust economics.”
Those Black Rock Mining results are included below.
"The trial has demonstrated a yield to final product of 48% and 53%, and final purity of 99.98% TGC* using commercial scale equipment in commercial processing and in dedicated research facilities"
"These outcomes significantly exceed Chinese Industry Benchmark yields of 35-45% and purity of 99.95% while using standard equipment and techniques."
There sits that "stringent requirements of prospective Chinese off-take partners."
The results are still outstanding but if ACP can deliver what Black Rock did, which they are certainly confident of, then the value of the finished products basket of goods should rise even further and those (Chinese related) binding offtakes should be brought home successfully.
https://blackrockmining.com.au/wp-content/uploads/BKTSPGProductionTrialDeliversIndustryLeadingResults12Aug19.pdf
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I would be a little cautious with such numbers and I still believe that the 62,300 tpa figure is more realistic, given it delivers 10 years front end production and not just a few years.
What is more important, is what this front end higher grade mining will mean for the project's ability to extract higher worth larger flake.
On 8th August 2019 ACP released an RNS on the metallurgical test work. In that update the company published a table stating that Jumbo and large flakes made up 30% of the total basket of finished goods.
This same test work delivered the news that a consistent +97% purity was achievable.
However, "the average grade of the composite was 8.65% TGC and this produced an average purity of 96% across all flake sizes with an average of 97.0% in the high value jumbo, large and medium flake size ranges." (ACP RNS dated 8th August 2019).
Furthermore,
"Test-work on a higher grade composite of ~15% TGC is currently underway with a focus on maximising the proportion of higher value larger flake sizes while maintaining high purity levels."
As far as I can see, ACP has to date not reported back on this additional test work but at 15%, we are talking a 73% improvement in the quality of the TGC being employed. In my view that has to lead to a higher jumbo and large flake content.
As an example, Walkabout Resources at 5.51Mt at 17.9% TGC have 74% of their total basket in the +180 range, of which 49% is +300.
A reminder again, ACP have 30% above +180 and just 9.4% above +300. The 15% TGC employed for the more recent test work, is a lot closer to those Walkabout grades, so law of averages says we are going to see the large and jumbo flake content increase, which will impact positively on the total basket price of $1,272/t.
More importantly, if nothing else, there should be sufficient uplift in larger flake content to allow any drops in prices since the Scoping Study analysis, to be offset. I suspect it will be much better than that because the 73% uplift in sample grading is so significant.
Then we have the 4th Sept 2019 update to announce further downstream test work ;
"Armadale has commissioned Batterylimits in Perth, Australia, to expand the scope of the DFS to include downstream analysis on high-quality, high-purity flake graphite concentrate produced from Mahenge Liandu during the metallurgical test-work programme to verify it meets the stringent requirements of prospective Chinese off-take partners."
By this point the downstream test work on the 15% TGC was well underway because the 8th August update stated as much. Whether this announcement combined the two or not is for debate, but whatever happens, I cannot see how there will not be a significant upgrade in large and jumbo sized flakes, which will further improve the project economics of the DFS.
$1,272/t used by Armadale in the scoping study for Mahenge
So using that figure gives us -
68,000tpa x $1,272/t
= $86,496,000 Revenue
Wow.. $86. 5 million per annum
What's not to like dave.
Dfs will definitely be improving on the scoping study figures.
you did not count all the fees, asset purchase, bouns, rents, travels, events, brokers, relationship costs, lands, company uses etc... not much left.
Rough calculation -
68,000tpa x Large flake graphite $830/t(+80 mesh)
= $56,440,000 Revenue
$56 Million per annum
Hmph!!
Two fantastic posts there fella .. thanks for explaining ur rationale so eloquently ... it puts everything into true context imho and hopefully the DFS will help to move this on big time , any time soon GLA
If that weren't enough, within that 4.3Mt resource, there is 1.2Mt of resource at 17.3%, which could in theory deliver 203,000 tonnes of extractable graphite (98%) over the first 3 years, which would be nearly 68,000tpa, which is even better.
However, I am more inclined to concentrate on the total 4.3Mt higher grade resource, because if my interpretation is correct, then the DFS should reveal a much bigger operation over the first 10 years, with the chance to deliver far stronger returns than the current Scoping Study headline numbers, lend themselves towards.
Hello Backwoodsman apologies for the late response. Yes I am very much invested in ACP and am looking forward to 2020 here because there is much to like.
I find it most intriguing that ACP secured a further 3rd offtake just 10 days after the 15th Oct RNS, that delivered the resource upgrade and that this offtake brought ;
"the total offtake under an MOU to 60,000tpa representing 122% of the 49,000tpa average annual production target."
(RNS 25th Oct 2019)
If the first 2 offtakes remain relevant, which the 25th October RNS states they are, then why have ACP committed to a further 25,000tpa, at such a late stage?
The key it would seem is in the throughput, which in the Scoping Study is set at 400,000 tpa, which makes sense as the processing plant will be sized as such.
However, the "average of 49,000tpa of high quality graphite products during a 32 year life of mine". . . "is based on an average life of mine grade of 12.5% Total Graphitic Carbon (‘TGC’)" (Scoping Study RNS 27th March 2018).
The resource upgrade that was released on 15th October 2019 and which was highlighted in what was ACP's first tweet of 2020 (a point worthy of observation when one considered they tweeted 25 times in December 2019 alone), delivered 4.3Mt of resources at an average 15.9% head grade. That is a very noteworthy 27.2% higher average head grade than the Scoping Study average, over what should be the first 10 years of the mine's life.
According to the scoping study, the average 49,000tpa is based on 13Mt of resource at 12.5%. That equates to 1,625,000 tonnes of contained graphite of which 1,592,500 tonnes is extractable over the 32 year mine life. That equates to 98%.
What that means is that in the first 10.75 years (4.3Mt/400,000tpa), the same throughput should gain access to 683,700 tonnes of contained graphite, which at 98% extraction, equates to a front end (c. 10 years) 670,000 tonnes of graphite, at circa 62,300tpa.
The latest MOU, signed as I say, 10 days post the resource upgrade, which delivered the confirmation that the front end resource was there, took the total offtakes to 60,000tpa.
That sum fits very nicely into the above figures and is for me why ACP are so keen to talk about that resource upgrade.
Furthermore, all 3 offtakes are for "an initial term of five years," which makes perfect sense given the higher output can only come in that first phase of far superior head grades.
The DFS may well still deliver a 32 year mine life at 'average' 49,000tpa, but the October update states that the mine is capable of operating at 20% higher. If so then the operating cost in those first 10 years will be much lower, EBITDA much higher, and cash flows to expand the throughout for when lower grades come through, much stronger.
The above is hidden in plain sight in the Scoping Study, but I don't believe a great many investors actually appreciate it yet.