Issue link: http://resourceworld.uberflip.com/i/198816
It's rare to find even small flake graphite deposits. Madagascar may well be one of the few places left where a large discovery of valuable large flakes might be made. For Energizer, the economic benefits of such a unique find made it worth sticking out Madagascar's political bumps. A recent preliminary economic assessment (PEA) of an 84,000 tonne-per-year mining operation at Molo found a nearly-unprecedented 48% internal rate of return for the project. That's a consequence of Molo's high net present value – $421 million – relative to its very low capital cost of just $162 million. That sort of low-cost construction isn't available in most places for any type of mining. Notably, these economics were calculated using a flake graphite price of only $1,564 per tonne. Should prices begin to rise again toward their 2012 highs, Molo would go from a great project to a stellar project. There may yet be further value enhancements that can be won at Molo. An initial benefit may come from the deposit's unique geology. Energizer's PEA was completed prior to running optimized metallurgical testing on Molo. With the recent discovery that higher graphite purities and flake sizes can be achieved in mineral concentrates, the per-tonne value of the mine's output should come in higher than forecast. Another advantage for the project is a result of Madagascar's accelerating economic growth. The Molo Project lies only 30 km from the country's largest coal field, the Sakoa coal field. So close in fact, that these two mineral-rich areas are accessed by the same road, running 160 km west to ports in southwest Madagascar. With companies like Thailand's PTT pushing the development of mining at Sakoa, coal-fired power could become a viable source of electricity for an operation at Molo. Such supply would undoubtedly reduce anticipated operating costs for the project given that the current PEA priced in expensive diesel-fired power over the life of the mine. The combination of world-class rocks with a nation that's starting to make the right political moves is a recipe for success. If Madagascar does become the world's next mineral frontier, Molo may well be the place where the first new mine gets built. n november 2013 www.resourceworld.com 39