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New Energy Minerals highlights Caula study economics as it targets early cash flows

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The company spoke to its strength at its AGM this week in Sydney.

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Price: 0.016 AUD

ASX:NXE
Market: ASX
Market Cap: $2.45 m
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New Energy Minerals Ltd (ASX:NXE) securities gained 10.9% today after highlighting key financials from a scoping study for its flagship Caula Vanadium-Graphite Project in northern Mozambique as it targeted first cash flows in the second half of 2019.

The company previously known as Mustang Resources Ltd (ASX:MUS) held its annual general meeting in Sydney today, where all motions were passed by a majority vote.

READ: New Energy Minerals’ ambitions in Mozambique supported by Louis Ching’s UBezTT

South Perth-based New Energy shared its AGM presentation with the market today, highlighting its effort to develop its world-class vanadium-graphite project in Mozambique.

New Energy said in a presentation shared with the market, “The company is current fast-tracking its world-class Caula Vanadium-Graphite Project in Northern Mozambique with first cash flows expected in the December half of 2019.”

The company’s graphite deposit at Caula project has one of the highest grades in the world, with up to 28% total graphitic carbon.

Caula’s vanadium assets include a 22 million tonne measured resource grading 0.37% vanadium oxide at a 0.2% cut-off for 81,600 tonnes of contained vanadium.

Its vanadium measured resource sits at 21.9 million tonnes measured resource grading 13.4% total graphitic content (TGC) at an 8% cut-off for 2,933,100 tonnes of contained graphite.

The company articulated its hopes today, saying “New Energy Minerals has the goal for Caula to become one of a handful of global primary vanadium supply sources.”

It plans to become a supplier of vanadium as world demand for vanadium to be used in vanadium redox flow batteries (VRFBs) goes from 3,000 tonnes last year to between 25,000 and 30,000 tonnes by 2025.

READ: New Energy Minerals' scoping study reveals exceptional economics for Caula Vanadium-Graphite Project

The US$448.76 million Caula project is found within 200 kilometres of the port of Pembla which is also in the Cabo Delgado province.

Caula is along strike from the world-class Syrah Resources (ASX:SYR) asset but has “superior graphite metallurgy and integrated vanadium-graphite flowsheet” to its neighbour

A 25-kilometre access road meets sealed roads that would enable transport to the ports of Pemba and Nacala.

BIG PICTURE: New Energy Minerals eyes first cash flow from world-class vanadium-graphite project in 2019

Earlier this year the company shifted its focus to the battery minerals graphite and vanadium, changing its name in October 2018 to reflect its new energy focus.

Louis Ching-controlled investment UBezTT International Investment Holdings (BVI) Ltd subsequently made a $1.1 million strategic investment in New Energy three weeks ago.

New Energy highlighted in its presentation today the two-phased approach its scoping study takes to development.

Caula’s after-tax net present value (NPV10) for the entire project is US$448.76 million at a 10% discount, while its after-tax internal rate of return (IRR) is 58.8%.

Phase I would target annual production of 10,000-15,000 tonnes a year of graphite concentrate and 14,000-18,000 tonnes a year of vanadium concentrate.

Capital expenditure (capex)of the first phase would be US$7.368 million.

The peak funding requirement for the whole project would be US$77.54 million while ongoing capex would be US$18.14 million.

New Energy’s costings were based on a US$1,103.50 graphite basket price assumption and a vanadium price assumption of US$40,785 a tonne vanadium oxide concentrate at mine gate.

The operating cost per tonne is US$50.87, putting its revenue at US$135.52 a tonne.

READ: New Energy Minerals’ rebrand reflects focus on vanadium and graphite

The company highlighted its capital structure today, highlighting its registry on November 26, 2018 included 3,900 shareholders.

New Energy noted its directors had 6% of the company while its top 20 shareholders had 41%, and its remaining shareholders held 53%.

Company management has invested $428,000 over the year, in August 2018 and February 2018.

The figures highlighted there were 139,586,263 shares on issue two days ago, 22,173,772 options and 1.4 million unquoted performance rights.

The company’s next steps may include a product offtake and phase I financing activities in the June 2019 half-year as it works toward phase I mining in the December 2019 half.

New Energy added 0.5 cents, or 10.87%, to close at 5.1 cents today.

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