Volt readying for graphite production in Tanzania
Volt Resources’ flake graphite development in Tanzania is on the threshold of a number of key approvals and on schedule for a fast-tracked development that could see cashflow being generated within 12 months.
The ASX-listed company is at an advanced stage with plans for a low capex, stage 1 development of its 461 million tonne Bunyu graphite resource, the largest of its kind in the richly endowed East African graphite belt.
Stage 1 of the 100%-owned Volt project has a capex cost of just US$30 million and is designed to supply 20,000 tonnes of high-purity flake graphite a year under deals already signed with a number of offtake partners.
Volt’s staged approach is designed to de-risk its ambitious expansion plan to 170,000 tonnes a year by 2020, catapulting the Perth based company into the ranks of the world’s top tier graphite producers.
In an update to the ASX this week, Volt reported that Bunyu was on track and very close to securing a number of project approvals and project financing.
The stage 1 development is being funded by an innovative US$40 million bond issue on the local Dar es Salaam Stock Exchange. The issue is designed to appeal to Tanzanian and Ugandan pension funds, many of which have already responded well to a site visit to the Bunyu project.
Volt said the Tanzanian Capital Markets and Securities Authority and the local stock exchange were reviewing the company’s prospectus for the bond issue and were expected to provide feedback later this month.
The company also reported that environmental approvals were progressing in line with expectations. The National Environment Management Council conducted a site visit in February, followed by a technical advisory committee meeting in March.
Additional information will be submitted by Volt in the next week, which is expected to lead to a decision by government within 30 days. Environmental approvals will feed into the approval process for Volt’s mining licence application, which is also on track.
The company has received approval from the Government’s Chief Valuer for a resettlement action plan, which sets out compensation to be paid to locals affected by the Bunyu project. The plan is now nearing approval at the district and regional level.
Investors will get an updated look at the project economics at Bunyu when the stage 1 feasibility study is completed this quarter. The timing of the study has been slightly affected by delays earlier this year with exports of RC samples for lab analysis, however Volt said this would have minimal to no impact on the development schedule.
Edison Investment Research last month published a report that calculated Bunyu stage 1 could be worth 7.93 cents a share, comparing favourably to Volt’s recent market price of just over 3 cents a share. This is a handy premium considering stage 1 is essentially a pre-development exercise for the main game in stage 2.