Highlights
- Feasibility Study completed for the initial Stage 1 start-up operations at flagship Bunyu
Graphite Project in Tanzania – key outcomes include:- Stage 1 based on a mining and processing plant annual throughput rate of 400,000
tonnes to produce 20,000 to 24,000tpa of graphite products - Average FOB operating cost of US$658 per tonne and start-up capital cost
estimate of US$31.6M - Pre-tax NPV10 of US$19.5M
- Pre-tax IRR of 21.6%
- EBITDA of US$94.5M over 7-year project life
- Stage 1 based on a mining and processing plant annual throughput rate of 400,000
- Key approvals granted during the quarter for Stage 1 and 2 developments at Bunyu:
- Environmental and Social Impact Statement approved
- Mining Licences for Bunyu secured post-quarter end
- Binding offtake agreement signed with major Chinese graphite company Qingdao
Tiangshengda Graphite for 9,000 tpa of Bunyu product over five years - Amended prospectus for the US$40 million Tanzanian Note Issue lodged with the
Tanzanian Capital Markets and Securities Authority (CMSA) and the Dar es Salaam Stock
Exchange (DSE) – note issue process advancing.
Volt Resources Limited (ASX: VRC) (“Volt” or, the “Company”) is pleased to provide shareholders with its quarterly activities report for the period ended 30 September 2018.
September Quarter Activities Review
Stage 1 Feasibility Study Completed
During the quarter, the Company completed the Feasibility Study (“FS”) into the Stage 1 development of the flagship Bunyu Graphite Project (“Bunyu”) located in Tanzania.
The Stage 1 development is focused on the development of a 20,000 to 24,000tpa graphite mine and processing facility in Tanzania with exports of graphite products planned into the USA, China and other markets.
The development incorporates a significant amount of infrastructure, utilities and mine development work that will deliver significant benefits to the Stage 2 expansion including the site access road, plant laydown area, tailings storage facility, waste dumps, stockpile areas, open pit development and mining, accommodation village and water supply.
The proposed Stage 2 development is an expansion of Stage 1 production based on the market demand for Bunyu’s graphite products and leveraging the large-scale graphite mineral resource and Bunyu’s close proximity to critical infrastructure.
Stage 2 is targeted to meet expected significant increases in demand for coarse flake graphite in the expandable graphite market and fine flake size products for battery anode material and other existing and evolving industrial uses for micro carbon products.
Key Bunyu Project Approvals Granted
The Company was also pleased to advise that during the quarter it received confirmation that two key project approvals had been granted for Bunyu. This ensures that all requisite environmental and regulatory approvals have now been accounted for in relation to the respective Stage 1 and 2 developments at Bunyu.
With the development of Bunyu now fully-approved, Volt is well placed to fast-track the start-up of production at the Stage 1 development.
Bunyu Environmental Approvals
In August, the Environmental Impact Assessment (EIA) Certificate for Bunyu was granted by the National Environment Management Council of Tanzania to the Company’s 100%-owned subsidiary Volt Graphite Tanzania (“VGT”).
The EIA certificate represented the final pre-requisite for the granting of Volt’s Mining Licence (granted post-quarter end) and one of the final remaining major milestones in terms of Government permitting for Bunyu.
Volt’s Environmental and Social Impact Study submission was prepared in accordance with the requirements of relevant Tanzanian legislation, including the Environmental Management Act 2004; the Environmental Impact Assessment and Audit Regulations 2005 as well as the Mineral Sector Environmental Impact Assessment Guidelines 2014.
Bunyu Mining Licence Applications Granted
Post-quarter end, Volt was granted two Mining Licences (MLs) ML 591/2018 and ML 592/2018 covering Bunyu’s respective Stage 1 and Stage 2 developments from the Mining Commission of the Ministry of Minerals of Tanzania.
The Company formally received the MLs on 22 October 2018.
The granting of the MLs represented a major step forward, as the Company focuses on advancing the Bunyu Project towards Stage 1 production.
Community Relations
Volt Graphite Tanzania (VGT) management systems continue to mature with local communities being updated on the ongoing and planned project development activities through monthly update reports, Relocation Working Group meetings and meetings with the ward and village leaders.
The Lindi District Council’s Economic, Work & Environmental Committee visited the Bunyu 1 site in September and were impressed with the planned developments and continue to be supportive of the planned development. VGT initiated and sponsored the development of a formal Village Land Use Plan (VLUP) with the report generated last quarter and approved by the District Council on 31 July 2018.
Amongst VGT’s local financial contributions as part of its social investment program, the Company continued to pay a monthly allowance to Nursery School teachers at Utimbula village, donated desks for Utimbula Nursery School and financially contributed to the repair of storm damage at Namangale Primary School.
Offtake Agreements Signed
During the quarter, VGT signed a binding sales agreement with Qingdao Tianshengda Graphite Co. Ltd. (“Tianshengda”) for 9,000 tonnes per annum of Bunyu Graphite Product over five years.
Importantly, this represents the second binding offtake agreement signed by VGT, following the agreement signed in March 2017 with US based graphene company Nano Graphene Inc (NGI) for a minimum 5,000 tpa of flake graphite product over 5 years.
An integrated graphite processor and distributor across China and internationally, Tianshengda has a substantial annual capacity to further process graphite by producing value added products including expandable graphite, flake graphite and powder, as well as supplying graphite to the lithium ion battery market. There is an option for a further five-year term by mutual agreement as part of the sales agreement.
Furthermore, during the quarter VGT signed a cooperation agreement with one of China’s largest graphite companies, HAIDA Graphite (“HAIDA”).
Under the agreement, VGT and HAIDA exchange relevant information and conduct testing on VGT’s graphite product samples in order to build a working relationship between the two parties for the future supply and purchase of Bunyu Graphite Product.
Further discussions are continuing with additional parties in respect to additional offtake opportunities and the Company looks forward to updating shareholders on these discussions in due course.
Corporate Activity
US$40 million Tanzanian Prospectus Update
As previously advised, Volt has partnered with Exotix Capital to undertake a Tanzanian Note issue to raise the required funding for the Stage 1 development at Bunyu (see ASX Announcement dated 25 October 2017).
During the quarter, the Company continued to advance the US$40 million Note Issue, for which an updated Prospectus was lodged with the Tanzanian Capital Markets and Securities Authority (“CMSA”) and the Dar Es Salaam Stock Exchange (“DSE”) on 17 August.
A further updated Prospectus was lodged with the CMSA on 28 September following feedback and requests for additional information. Correspondence with the CMSA has been ongoing and positive, and the Company expects this process to be finalised this quarter enabling VGT to proceed with the issue of the Note prospectus and commence the raising of development funding for the Stage 1 Bunyu project.
Resignation – Non-Executive Director
On 9 July 2018, Matthew Bull resigned as Non-Executive Director of the Company.
Cash Position and Mid-Term Funding
The Company finished the 30 September 2018 quarter with $420k in cash. Expenditure during the quarter included the repayment of convertible loans and accrued interest, payments to complete the Stage 1 Feasibility Study, Tanzanian related expenditure to complete the environmental approvals, advisor fees for the note prospectus and community relations activities.
The Company has progressed an assessment of its Research and Development claim for the 2017/18 fiscal year and is pleased to advise it will progress a loan with Radium Capital of approximately $510k to be received this quarter. This is an advance against the future proceeds to be received from the R and D claim once the Company completes and lodges its 2018 tax return.
In addition, the Company is currently reviewing proposals for bridge funding through to Q2 2019 while it completes the Tanzanian note issue in the short term.
Management Commentary
Volt Resources CEO Trevor Matthews commented:
“I am very pleased to report that a number of key milestones, both on a corporate and operational front, were delivered during the September quarter, collectively positioning Volt closer towards becoming a leading near-term producer of natural flake graphite from Bunyu.
“A noteworthy highlight was the completion of the Stage 1 Feasibility Study which outlined a set of robust parameters for the Stage 1 start-up operations, albeit on a significantly smaller scale in relation to our proposed Stage 2 expansion project which represents the big picture and future upside for Volt and its shareholders.
“Our funding initiatives, led by our Tanzanian note issue, are progressing well and following the satisfaction of a number of regulatory requirements we are confident of progressing with the note issue during this current quarter. Once finalised, Volt will narrow our focus towards commencing Stage 1 construction and production at Bunyu.
“I would also like to thank the relevant Tanzanian authorities for their continued support during the quarter in assisting Volt towards securing the approvals needed to advance Bunyu’s development. We maintain a very positive and transparent dialogue with our Tanzanian stakeholders and look forward to further solidifying this relationship.”
For and on behalf of Volt Resources Limited
Trevor Matthews
Chief Executive Officer
FOR PERSONAL USE ONLY
For further information please contact:
Trevor Matthews – Chief Executive Officer
Tel: +61 8 9486 7788