Australian advanced materials technology company Talga Resources (ASX:TLG) has reported “highly positive” results – including a pre-tax net present value of $1.5 billion – from a preliminary feasibility study for its wholly-owned Vittangi graphite project in Sweden.
The study confirmed the project to be technically and financially robust with “outstanding economic returns”, based on a staged conventional open pit mine with onsite concentrator and coastal anode refinery to produce a high-performance lithium-ion product trademarked as Talnode-C for the global battery supply chain.
It has been designed as a low capex, toll processing operation over two years to feed a stage one anode refinery for the output of approximately 2,500 tonnes per annum of Talnode-C.
Stage two of the project – with an estimated capex of $214 million – is targeting an estimated annual revenue of $305 million from steady-state, full-scale production of 19,000tpa of fully-engineered and coated Talnode-C for direct sale to battery makers.
The staged approach has been proposed in an effort to lower initial capital expenditure and capture near term market opportunities.
A growing market
Vittangi’s pre-feasibility study is underpinned by a maiden ore reserve at the flagship Nunasvaara South deposit of 1.9 million tonnes at 23.5% total graphitic carbon content, representing just 18% of the deposit’s current global indicated resource of 10.7Mt at 25.7% graphitic carbon.
Key project metrics include an estimated pre-tax net present value of $1.5 billion at an 8% discount rate and a 55% pre-tax internal rate of return, with a rapid payback period of 18 months from commencement of stage two commissioning.
Talga managing director Mark Thompson said the study supports the move to produce fully value-added graphite products for a growing market.
“[We believe this] is the most immediate path to significant revenue for Talga and aligns with a vertically-integrated business that sets us apart from peers,” he said.
“We will now commence a stage one definitive feasibility study to further optimise scale in line with growing [market] demand, and progress discussions with customers and potential strategic partners toward a targeted 2020 start-up.”
Talga is in the process of preparing and submitting a detailed Environmental Impact Assessment of its proposed mining and processing operation.
Mr Thompson said the parameters outlined in the pre-feasibility study focused on a high-grade, low-volume operation designed to leave a “minimal environmental footprint” upon closure.
The Vittangi graphite project is located 50km east of Kiruna in northern Sweden, approximately 20km east of mining company LKAB’s open pit operations in the prospective Svappavaara field.
Vittangi is based on the development of a graphite mining and mineral processing operation at the Nunasvaara South deposit and an integrated anode refinery near the Port of Luleå, for the production of the coated, high-performance, lithium-ion battery graphite anode material known as Talnode-C.
Recent technical and commercial tests by Italy’s IV Electrics – manufacturer of the Lacama electric motorcycle – showed battery cells containing Talnode-C are capable of outperforming the endurance of market leading commercial cells by up to 36%.
The tests also confirmed the fast-charge, high-power and low temperature properties of Talnode-C anodes are capable of translating well to full cell level.
“In effect, this means a battery pack manufactured with Talnode-C may need less thermal management and materials, reducing cost and weight while increasing energy density – and therefore driving range – and safety of the battery pack,” Mr Thompson said.
According to research by Benchmark Mineral Intelligence, there is strong, long-term, global demand growth for graphite anode material for lithium-ion batteries.
The major growth area is for electric vehicles followed by stationary (grid) applications.
BMI’s base case scenario forecasts the demand will grow to 6,700 gigawatt hours by 2040, and graphite demand for lithium-ion applications will rise from 123,000 tonnes in 2018 to just over 13.5Mt by 2040.
Asia is currently a major supplier of battery anode materials and is planning to increase its graphite processing capacity by 2020 to meet industry demand.
Chinese firms Shanshan Technology, BTR New Energy Materials and LuiMao Graphite (in association with BAIC Automotive) are building lithium-ion battery graphite anode megafactories with a combined total processing capacity of 260,000tpa of anode product.
In Japan, Hitachi Chemical is planning another facility to process 100,000tpa to add to an estimated capacity of around 200,000tpa.
At midday, shares in Talga were trading 11.82% higher at $0.615.