Volt moves to lock in Chinese graphite off-take

Emerging graphite developer Volt Resources has exchanged binding off-take agreements with its Chinese counterparties in a bid to get the finer details of the agreements signed off and set in stone ahead of initial production at the company’s Bunyu project in Tanzania.

The company said this week it had met with existing and potential new offtake partners in China who have shown strong interest in the company’s premium coarse flake graphite product to be sourced from Bunyu.

The quality and size of this deposit appears to have flown under the radar a little in the 3 years since Volt signed an option to acquire the tenement package from the Tanzanian Ministry of Energy and Minerals.

According to the company, up to 81.3% of the Bunyu graphite product is classified in the highly sought-after Super Jumbo, Jumbo or Large flake category, making it attractive to the expandable graphite market in particular.

Natural graphite is also used in hundreds of applications within the steel and manufacturing sectors – mostly due to its unique ability to retain strength and rigidity under temperatures exceeding 3,600 degrees Celsius.

Those sectors actively seek out high purity graphite due to its resistance to oxidation, with the mineral itself self-lubricating and resistant to chemicals.

With both metallic and non-metallic properties, graphite’s primary metallic features include its thermal and electrical conductivity. These features have resulted in the mineral’s burgeoning use as the anode material in lithium-ion batteries and hence, the resultant increase in commodity prices.

Against this backdrop, Volt has quietly gone about tripling its mineral resource for Bunyu since acquisition and it has generated an ore reserve that now sits at 127 million tonnes grading 4.4% total graphitic carbon.

Volt recently completed a PFS for the project that shows a pre-tax NPV of US$1.31B at an impressive 87% internal rate of return.

The study outlined a capex payback period of just 1.4 years, based on a 22-year life of mine at the project.

The scale of the proposed project is helping drive the marketing and in an ever increasing trend, Volt will stage its development in a strategy to fast track a 20,000 tonne per annum initial project.

The cost of the first stage of development to achieve that output is an embarrassingly low US$30M. A decision on this Stage 1 development is expected from Volt in the June quarter.

Stage 2 of the project will ramp-up to 170,000 tonnes per annum by late-2020.

This staged approach will de-risk expansion of the project for Volt and eventually catapult the company into the ranks of top global graphite producers over the coming years.

The total mineral resource estimate for Bunyu stands at 461 million tonnes grading 4.9% total graphitic carbon, which provides plenty of potential opportunity for expansion.

Volt has made significant progress with its licence to operate the project in Tanzania, with a number of key approvals on schedule, potentially allowing the stage 1 development, production and cash flow within a year.

Stage 1 will be funded by an interesting US$40M bond issue on the local Stock Exchange in Dar es Salaam.

The offer via prospectus, is aimed at Tanzanian and Ugandan pension funds, who responded favourably to a recent investor site visit to the Bunyu project.

Volt plans to release the stage 1 feasibility study for Bunyu this quarter which will no doubt make for interesting reading for shareholders and new investors alike.

In July 2017, Volt announced that it had already signed binding offtake agreements for all of the stage one production, significantly de-risking the project.

With graphite markets hotting up right now for a plethora of unrelated reasons, Volt looks to be in the right space at the right time with Bunyu.