Aug 05, 2023

International Graphite’s battery anode material facility could generate ‘outstanding financial returns’

A scoping study has confirmed International Graphite's (ASX: IG6) proposed Collie graphite battery anode material facility could generate "outstanding financial returns".

The study estimates the Collie facility could produce up to 40,000 tonnes a year of graphite concentrates.

Using a flowsheet involving graphite micronising, spheroidising and non-HF chemical purification, International Graphite will produce an uncoated spheroidised purified graphite (USPG) product.

This would then undergo carbon coating to create a coated spheroidised purified graphite (CSPG) material.

The proposed plant is designed in two modules as two parallel lines – enabling it to be implemented in stages.

Initially, the plant would produce USPG, and when coating facilities have been added CSPG can be generated.

To build a plant capable of producing up to 20,000tpa of USPG and 17,000tpa of micronised by-products, the scoping study assumes capital expenditure of US$87 million (A$124 million), which includes contingency costs.

This would then bring in about annual average revenue of US$95 million and earnings before interest tax depreciation and amortisation of US$43 million.

In establishing a plant capable of producing 18,602tpa of CSPG and 17,000tpa of micronised by-products, capital expenditure of US$222 million (A$317 million) is estimated.

The higher-end CSPG product is predicted to generate US$172 million in annual average revenue and US$100 million in EBITDA.

Commenting on the results, International Graphite managing director and chief executive officer Andrew Worland said the economics are "outstanding", and there remain many opportunities to further improve on the cost structure.

Mr Worland said the company was working with a number of stakeholders in the Western Australian town of Collie to agree on a site for the proposed plant.

The company initially plans to secure graphite concentrate from third parties and this was reflected in the scoping study pricing.

However, Mr Worland said the company's strategy is to integrate its Springdale graphite project with the facility.

"When we have advanced Springdale to a sufficient level of detail to allow forecasts to be published, we will be able to update the scoping study accordingly."

"Springdale is located only 450km by road from Collie and we are seeking to build a streamlined and efficient ‘mine to market’ supply chain in the world's most reputable and attractive jurisdiction for minerals investment," Mr Worland added.

The study assumes products from the Collie facility will then be exported through Fremantle port.

A definitive feasibility study on the Collie processing plant is targeted for completion in the third quarter of next year, with construction and commissioning of the USPG line expected to be achieved within 24 months.

The CSPG side is anticipated to take an extra six months.