Graphite developer Kibaran Resources recently told shareholders that the recent legislative changes in Tanzania were unlikely to affect project funding for the Epanko project.
The company has held discussions with its international banking partners, which has supported Kibaran throughout the bankable feasibility study (BFS) process, and which now remain supportive of the debt financing process that was recently commenced.
Kibaran noted that both Germany’s KfW IPEX-Bank and South Africa’s Nedbank have confirmed their intention to continue to progress the debt financing programme, and remained of the view that a bankable debt financing structure could be developed for the development of the Epanko project.
A recent BFS has showed that the increased production rate of 60 000 t/y would require a capital investment of $88.9-million. The BFS estimated that the project will have a pre-tax net present value (NPV) of $211-million and an internal rate of return (IRR) of 38.9%, delivering yearly earnings before interest, taxes, depreciation and amortisation of $44.5-million.
In contrast, fellow-listed Black Rock Mining has warned its shareholders that the new legislative changes would make it difficult for the company to attract investment capital into its own Mahenge graphite project.
Black Rock warned that the proposed increase in the royalty rate would result in an increase in the all-in costs estimated in the prefeasibility study (PFS) for the Mahenge project, while other legislative changes, including the Tanzanian government holding a 16% free carried interest in all mining operations, would have an impact on the ability of the project to attract investment capital.
The Mahenge PFS estimated that the project would require a capital investment of $159-million. It would deliver a post-tax NPV of $624-million and a post tax IRR of 48.2%.
The project will be developed in two stages, with Stage 1 consisting of a processing plant and infrastructure with a design capacity of one-million tonnes a year, to produce some 83 000 t/y of graphite in concentrate over the first two years of production.
The Stage 2 development will see a second one-million-tonne-a-year plant and associated infrastructure, doubling throughput to two-million tonnes a year, and production to 167 000 t/y graphite concentrate from year three of operation.
The Stage 1 development is expected to require a capital expenditure of around $90.1-million.