Zenyatta Files Graphite PEA
On June 1/15 Zenyatta Ventures Ltd. (TSXV: ZEN | OTCQX: ZENYF) announced the positive results of the Preliminary Economic Assessment (“PEA”) on its Albany Graphite Project in Ontario. The PEA was filed at SEDAR this week and can be read in its entirety here.
The PEA was prepared by the independent engineering firm RPA Inc. in Toronto, with mill design input from SGS Canada Inc. The report concluded the PEA is positive and the Albany Graphite Project, a possible low-cost source of high purity graphite using an innovative “green” purification process, should be advanced to the pre-feasibility stage. (Note: They may call it RPA now, but just as the Rogers Centre will always be really known as The Skydome to sports fans, RPA will always really be known as Roscoe Postle to the mining community.)
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RPA’s conclusions were based on their findings, including a 22 year mine life (based on less than 50% of the Indicated & Inferred Mineral Resources); a total life of mine gross revenue of roughly $4.8 Billion; an after-tax cash average annual cash flow of $110 Million; and, a base case after-tax Net Present Value at a 10% discount rate of $438 Million for an after-tax IRR of 24%.
Graphite is described by its mesh size (the physical dimensions of the grains) and by its carbon content (as a percentage). The value of the graphite generally rises when either or both of those characteristics increases. More valuable graphite de-risks the project and offers more comfort to the shareholders, which is why the high-purity level of Zenyatta’s graphite is so important. As described by Aubrey Eveleigh, Zenyatta’s President & CEO, the Albany Graphite Project,”…has gained global recognition for its unique purity and crystallinity.”
The outlook for the global graphite market is very promising with demand growing rapidly from new applications. Once Albany is in production, Zenyatta anticipates producing 30,000 tonnes of purified graphite product annually, with the three largest uses of its “green” graphite being batteries, lubricants and carbon brushes, with other applications in powder metallurgy, fuel cells, conductive polymers, nuclear, super-capacitors, and electronics.
Zenyatta expects a variable revenue per tonne, depending upon the usage, the mesh size and the carbon content. Looking forward to the 2017 market, the PEA used an average of $7,500 per tonne, against projected operating costs at site of $2,046 per tonne, for a gross margin of $5,454 per tonne. These revenue numbers also feed into RPA’s calculations above.
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