BKT unveils two year payback plan

Published at Mar 22, 2016, in Mining

As it turns out, big is not always best – with Black Rock Mining (ASX:BKT) outlining a processing plant plan for its Tanzanian graphite project which has been kept deliberately on the smaller side to avoid a large capital crunch.

It has finished work on a scoping study which indicates that a small scale 52,000 tonne per annum processing plant would provide a two year payback period and an internal rate of return of 62%.

Outlining the results of the scoping study, which comes before a pre-feasibility study, it said that it had decided to keep the plant small to avoid a large up-front capital expense.

“We are excited that the Scoping Study indicates that a relatively straightforward and small-scale plant of 50,000tpa can offer potentially high returns due to the high-grade, near surface and coarse flake nature of the resource,” BKT managing director Steve Tambanis said.

“A smaller, relatively simple plant will require less capital and time to develop and in-turn decreases commissioning risk.”

Key specifications from BKT's scoping study

Key specifications from BKT’s scoping study

At this stage the project has cash costs of $US458/t ($A603.9/t) with a sales price of $1236/t, although these figures are likely to shift going forward.

The scoping study looked at plants at 30,000tpa, 40,000tpa, and 50,000tpa – finding the larger scale plant better for project economics, although it still remains on the smaller side.

BKT, however, is keeping its options open telling shareholders that it would look at a larger-scale plant in the next stage of project evaluation.

Thanks to the smaller scale nature of the processing plant though, BKT has managed to keep pre-production capex capped at just over $57 million at this stage.

This is just the first step in project evaluation, and there is still room to cut costs through process optimisation while it has flagged further drilling to come.

The drilling at its Ulanzi prospect, due to start next month, is aiming to upgrade more resources at the prospect into the surer Indicated Resources category by increasing the drill density at the site.

It is also aiming to drill the 1km long Cascades structure to deliver an Indicated Resource.

Largest contained graphite resource in the country

At the end of February, BKT declared that it had the largest contained graphite reserve in Tanzania, with a maiden resource of 131.1 million tonnes at an average grade of 7.9% total graphitic carbon.

Just over 78 tonnes of the resource is within the inferred category, with the drilling at Ulanzi and Cascades aiming to upgrade both the overall resource and the percentage of the resource within the indicated category.

BKT's current resource position

BKT’s current resource position

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