Volt closes in on next Bunyu graphite offtake deal

ASX listed flake graphite company Volt Resources continues to progress its push to secure more offtake deals for its Bunyu graphite project in southern Tanzania with the signing of a cooperation agreement with a major Chinese graphite company.

HAIDA Graphite is one of China’s largest graphite companies with extensive mining, processing and sales experience. It produces and supplies a range of graphite products to customers in China and international markets including Japan, Korea, the US and Western Europe.

Under the cooperation agreement, HAIDA and Volt’s 100%-owned in-country subsidiary, Volt Graphite Tanzania Ltd, will exchange information and conduct testing on Volt’s graphite product samples.

The two companies will also look to build a working relationship for the future supply and purchase of Bunyu graphite product.

This agreement comes just weeks after Volt signed its second binding off-take agreement for its graphite product with Chinese graphite processor and distributor, Qingdao Tiangshengda Graphite.

Volt agreed to sell 9,000 tonnes of graphite per annum from Bunyu to Qingdao Tiangshengda for at least the next 5 years.

The company is also advancing further discussions with other potential offtake partners.

Volt Chief Executive Officer Trevor Matthews said: “Whilst in the early stages, our cooperation agreement with HAIDA serves as a precursor to the signing of a potential offtake agreement in due course.”

“It is clear that Volt is continuing to receive very positive feedback from a number of parties regarding demand for Bunyu’s coarse flake graphite product which holds us in very good standing as we target the start-up of Stage 1 production and subsequent large-scale Stage 2 expansion.”

Volt has lodged an amended prospectus for its USD$40m note issue with the Tanzanian Capital Markets and Securities Authority and the Dar es Salaam Stock Exchange.

This is the first resources-based Note to be listed on the DSE and was updated to include the recent Stage 1 Feasibility Study results that were released in July and the binding offtake agreement with Qingdao Tianshengda.

Proceeds from the bond issue will help raise capital to complete the 20,000tpa, stage 1 development of Bunyu.

The Stage 1 project development will churn out an average of 23,700 tonnes of graphite product per annum over an initial seven year mine life at the proposed Tanzanian mine.

The Pre-tax NPV has been estimated by Volt at around US$18.6m on the back of a 21% IRR and total EBITDA of USD$93.6m with a payback of 4.4 years.

Start up CAPEX costs are estimated at just USD$31.8m.

Volt expects to produce the first ore from Bunyu within 12 months of the capital raising being completed.

It will then look to establish infrastructure and a market position to support the development of a significantly larger Stage 2 expansion project that will see it produce 170,000 tonnes of graphite product a year over a 22 year mine life.

The Stage 1 works incorporate a significant amount of infrastructure and utilities that can potentially fast-track a future decision to expand into the proposed Stage 2 development.

Bunyu has a mineral resource of 461 million tonnes @ 4.9% total graphitic carbon and a JORC-compliant ore reserve estimated at 127 million tonnes @ 4.4% TGC.

Notably, up to 81.3% of the graphite is in the highly sought-after Super Jumbo, Jumbo and Large flake categories.