Triton Minerals delivers impressive project economics at Nicanda Hill Graphite Project
In November, Australia’s Triton Minerals (‘Triton’, ASX: TON) completed its 2014 drilling campaign at Nicanda Hill last month featuring drill core intercepts have been in excess of 15% graphitic carbon (GC) the Nicanda Hill property, part of its Balama North Graphite project in Mozambique. Triton also published the Independent Scoping Study for Nicanda Hill, predicting a before tax net present value (NPV) of USD$ 1,230 million and internal rate of return (IRR) of 137%. The project has also identified high grade (0.75%) vanadium pentoxide concentrate as well as a 7% zinc concentrate, derived from the graphite tailings through flotation. These results suggest even better economics than first predicted, highlighting the Project’s commercial viability; indeed, Triton Minerals may have discovered the world’s largest deposit of graphite after six months of operation in Nicanda zone, Balama district south of Cabo Delgado province. The site is said to contain more 115.9 million tonnes of ore and, a world-class potential, 3.93 million tons of vanadium oxide such that Triton has been shaping up to becoming a market leader thanks to low capital and operational costs, improved by the presence of vanadium.
Triton Minerals believes it has identified the world’s largest deposit of graphite after six months of operation at the Nicanda Hill Project; laboratory tests have shown the graphite to deliver an impressive purity of 99.9%. Triton plans additional drilling to get a better understanding of the extent of the high grade graphite areas, warranting the preparation of a feasibility study in order to develop the Project and launch production as early as in 2017. The scoping study suggests that Triton could sell a high quality graphite product at a ready to ship cost of USD$ 315/ton, which promises an appealing profit margin, given the assumption of an average, and very conservative, graphite price of USD$ 985/ton. And that accounts for the graphite alone, because there are also 3.9 million tons of vanadium oxide – the largest vanadium deposit in the world – and sufficient quantities of zinc to prompt a study of their commercial viability. Moreover the graphite mineral, rather than being interspersed with hard rock material intrusions like quartz or granite, is of a very soft composition, which will make it far easier and cheaper to process. The ‘soft’ mineralization suggests Triton will be able to save on energy costs, because arduous processing can make projects overly expensive and inefficient. The resource at Balama is rich in volume and it is of a consistently high grade, medium to coarse flake variety of graphite that should be readily upgraded to the kind of purity levels to address the fast rising number of battery and alternative energy applications, driving demand for flake graphite.
Triton is moving as fast as possible and considering the presence of an estimated 1.5 billion tons of mineral, the resource itself contains at least 10% of that amount at 156 million tons of pure graphite and nearly four million tons of vanadium pentoxide. The deposit is spread out across a long and wide area (6 km by 1 km), which gives Triton a wide number of potential drill zones from which to choose as the Project proceeds. Triton has been fortunate that the identified mineralization is consistent along the surface and at depth, which is a rare combination of features for any kind of mineral deposit. Triton’s property provides an excellent example of ‘closeology’, being located right beside Syrah Resources, which had been the largest graphite resource in the world until Triton’s breakthrough.
Triton also benefits from the availability of pre-existing infrastructure and of a large port – just 200 km. away – as well as to access to electricity and good roads. Moreover, in 2013, Australia and Mozambique signed a “minerals development partnership agreement” in order to develop the African country’s mining sector in capacity and human capital. Under the agreement, Australian companies working in Mozambique are encouraged to help train Mozambicans in the more technical aspects of mining, such that this sector can become more sustainable, providing benefits for the local population. It was in the wake of this agreement that Triton launched the first phase of its Balama North graphite project as part of a joint venture with the Mozambican company Grafex Limitada. Even as Triton remains committed to the intent of the Australian-Mozambican mining partnership – which helps to mitigate sustainability related risks – the greater control, will enable the Company to proceed faster at Balama North, thus offering greater value to investors. The additional funding will allow Triton to maintain an ambitious drilling program at Nicanda Hill, which presents a number of high grade graphite mineralization targets.