The agreement sets out a framework for CNBMGM to become integrally involved with the development of Volt’s Namangale graphite project in Tanzania.
Volt now has a clear opportunity to be a producer by mid-2018 and gain direct entry to China’s fast-growing expandable graphite market.
Trevor Mathews, CEO, commented: “Management’s recent trip to China highlighted there is a ready market for Namangale concentrate to make expandable graphite, if the product trials with CNBMGM are successful.
“More pleasing, however, is having a clear three-month timeline in place that could result in project development funding and credit insurance support for the development of Stage 1 of the Namangale project by mid-2018.”
If certain condition precedents are met, CNBMGM can deliver a complete solution to develop the Namangale project Stages 1 and 2.
This potentially includes a 10,000-15,000 tonnes per annum initial off-take agreement from Stage 1 production, project engineering/construction, project finance and credit insurance.
Under the first phase of the agreement, which is planned to be completed within three months, Volt will provide CNBMGM the following:
- As soon as practical, Volt will send up to one tonne of Namangale graphite concentrate to CNBMGM to enable product trial tests to be conducted on its suitability to make expandable graphite for flammable retardant building materials; and
- Open a data room for CNBMGM to access the PFS, Stage 1 feasibility study and other relevant information.
If the product trials are successful, CNBMGM and Volt will commence discussions to enter into an off-take agreement.
Recent trip to China
Volt is following a two-pronged product distribution objective, delivering concentrate suitable for making expandable and spherical graphite.
Management’s recent trip to visit prospective customers in China and South Korea revealed the expandable graphite market is experiencing rapidly growing demand and creating significant opportunities.
During the China visit, feedback from prospective customers in the battery anode sector confirmed a specific requirement for spheroinised graphite, not concentrate.
The main reason is that very few groups, if any, in the battery anode sector in China or elsewhere in the world are backwards integrated to convert concentrate into spheroinised graphite.
Hence, the recent cooperation agreement with Aoyu Graphite Group, which potentially enables Volt to utilise excess capacity to produce up to 20,000 tonnes per annum of spheroinised graphite, provides an excellent platform to directly supply to the battery anode sector from mid-2018 onwards.
Namangale graphite project
Volt has completed a pre feasibly study which projected robust technical and financial viability of the Namangale project.
The project has an estimated a pre-tax net present value (NPV) of US$1.31 billion based on a 22-year mine life, with an 87% internal rate of return and pay-back period of only 1.4 years.
Volt has the largest JORC graphite resource in Tanzania with 461 million tonnes grading 4.9% total graphitic content.
This latest cooperation agreement highlights what has been a successful and productive China visit, with now two cooperation agreements with high profile groups being signed.
The agreements now cover expandable and spherical graphite, off-take agreements, project engineering and construction, finance and credit insurance for Stage 1 of the Namangale project.
This provides Volt with a strong framework to transition into a producer by mid-2018.
Discussions have also allowed Volt to gain a clear strategic competitive advantage over east Africa peers to enter the important spheroinised graphite market through its recent discussions with Aoyu.
The company continues to advance the development of its wholly-owned Namangale graphite project, the largest JORC deposit in Tanzania.
The project has outstanding large flake size distribution and is ideally located near to critical infrastructure.
Sealed roads run through the project area with ready access to the deep-water port of Mtwara located 140 kilometres away.