THE BOURSE WHISPERER: Renascor Resources (ASX: RNU) delivered results of a Definitive Feasibility Study (DFS) for the company’s 100 per cent-owned Siviour graphite project near the coast of South Australia’s Eyre Peninsula.
Renascor Resources declared the DFS confirms Siviour’s potential as a low-cost, long-life graphite project that can achieve consistently attractive profit margins even in the current lower graphite price environment.
The study determined Siviour to be a world-class, low-OPEX project with a projected life of mine (LOM) operating cost of $508 or US$355 per tonne (A$471 or US$330 per tonne over first ten years), placing it amongst the lowest projected operating costs globally.
The project will be developed in stages to reduce up-front capital cost with the DFS based on a staged development, with average production of 80,000 tonnes per annum during first stage (years one to four), before expansion in year five to be funded through expected project cashflows.
Average projected production in years five to ten is 144,000 tonnes per annum with the DFS adjusted for current graphite market conditions with pricing from Benchmark Mineral Intelligence. This resulted in a decrease from previous basket price through 2025 of 22 per cent to $1,149 or US$804.
The results confirm compelling project economics, including:
Post-tax NPV10 of $388 million or US$271m;
Post-tax IRR of 33 per cent;
Start-up capital requirement of $114 million or US$79 million plus a mining pre-strip of $4 million or US$3 million; and
Average EBITDA of $83 million or US$58 million, EBITDA margin of 57 per cent.
The Study expects up to 60 per cent of the start-up capital requirement to qualify for in-principle support from Atradius, the Dutch export credit agency (ECA), subject to finalising the procurement strategy in the front-end engineering design (FEED) phase.
Renascor identified its next immediate steps are expected to include securing binding offtake agreements, final project permitting and commencing financial due diligence.
“The DFS confirms Siviour’s status as a low-cost, tier one graphite project that can achieve consistently attractive profit margins even in the current lower graphite price environment,” Renascor Resources managing director David Christensen said in the company’s announcement to the Australian Securities Exchange.
“We believe this cost advantage, coupled with our location in the low sovereign risk jurisdiction of South Australia, will enable Siviour to become a premier provider of graphite for the growing lithium-ion battery market, as this sector becomes the dominant end-user of natural flake graphite.
“With the DFS now complete, we look forward to advancing towards securing binding offtake agreements and working with our finance partners to secure funding for Siviour’s stage-one development.”