TIDMGROC
RNS Number : 7851R
GreenRoc Mining PLC
31 October 2023
GreenRoc Mining Plc / EPIC: GROC / Market: AIM / Sector:
Mining
31 October 2023
GreenRoc Mining plc
("GreenRoc" or the "Company")
Amitsoq Update
PEA Confirms Robust Economics for Amitsoq Graphite Project
GreenRoc Mining Plc (AIM: GROC), a company focused on the
development of critical minerals projects in Greenland, is pleased
to announce the extremely positive results of the Preliminary
Economic Assessment ("PEA") of its 100% owned Amitsoq Graphite
Project in southern Greenland ("Amitsoq") (Figure 1). The PEA was
completed to internationally recognised NI 43-101 standards by SLR
Consulting Ltd ("SLR"), an independent UK consulting firm with
considerable global expertise in the field of mining and mineral
processing, including in Greenland.
Highlights
-- Pre-Tax Net Present Value at 8% discount rate (NPV(8) ) of
US$235M with Internal Rate of Return (IRR) of 31.1%.
-- After-tax NPV(8) of US$179M with IRR of 26.7%.
-- Life of mine (LOM) is 22 years with potential to extend through resource expansion.
-- 4-year payback period on capital from start of production.
-- Average Net Revenue of US$89.8M per year throughout the 22-year LOM.
-- Total gross revenue of US$2.1Bn over a 22-year LOM, with
total undiscounted net pre-tax cash flow totalling US$794.7 M.
-- Initial capital cost (Capex) of US$131M inclusive of 25% contingency.
-- Average operating cost (Opex) of US$121 per tonne of milled ore.
-- Average annual production of 77,000t of concentrate at a minimum 94% grade.
-- Mine plan assumes mining from the Lower Graphite Layer (LGL)
only, leaving considerable resources from the Upper Graphite Layer
(UGL) available for future production expansion or extension to the
LOM.
The strong economic results from the PEA provide independent
validation of the Project's potential to become a globally
significant producer of graphite concentrate. Simultaneously,
GreenRoc continues to advance its objective of developing the
processing capabilities to upgrade its future graphite concentrate
production into anode material for electric vehicle ("EV")
batteries, which the Company believes will add substantially to the
positive economics of the Amitsoq Project.
With a substantial graphite supply deficit being forecast for
the coming decades, and the risks associated with the global EV
supply chain's overreliance on Chinese graphite highlighted by
China's recent announcement of export restrictions on battery-grade
graphite, Amitsoq is positioned to become a key source of the high
purity spherical graphite required to produce anode material for
the European car industry.
Stefan Bernstein, GreenRoc's CEO, commented :
"We are extremely pleased with the outcome of the PEA, which
confirms robust economic figures for mining activities at Amitsoq.
A pre-tax NPV of US$235M with an IRR of 31.1%, initial CAPEX of
US$131M (inclusive of a conservative 25% contingency) and average
Opex of US$121 per tonne of milled ore equates to a four-year
payback on capital from start of production, a healthy return on
investment when set against an undiscounted net pre-tax cash flow
totalling US$794.7 M over a 22-year life of mine.
"The mine plan set out in the PEA is relatively straightforward
thanks to Amitsoq's simple ore body geometry. All of the on-site
processing equipment is based on the use of standard and proven
techniques, but with potential upside through the use of some new,
and more efficient, processing technologies that we are currently
exploring.
"The entire mining operation is planned to take place in the
Lower Graphite Layer, thus reserving the Upper Graphite Layer for
production expansion, or to extend the mine life. About 75% of the
mined ore in the PEA is sourced in the Measured and Indicated
category and, given the simple ore body geometry, we are confident
that the remaining ca. 25% can be upgraded into the higher
confidence resource categories.
"The proposed use of a Drift and Fill mining method, coupled
with the exceptionally high grades of the Amitsoq ore, will mean
that as much as 86% of the tailings will be used as backfill, with
a mere 14% required to go to a tailing storage facility. This is
excellent news as it will minimise the environmental impact of the
mine, whilst also saving the cost of transporting tailings.
"While the PEA is based on the use of conventional
diesel-generated power, we are looking into a variety of
emission-free energy solutions to replace the diesel-generated
power plants as soon as that is feasible.
"China's announcement in the past few days of its imminent
imposition of export restrictions on Chinese battery-grade graphite
provides the perfect backdrop to the release of the Amitsoq PEA and
flags up the increasing strategic importance of Amitsoq to the
European and North American battery supply chain. This PEA provides
independent validation of our focus and determination to get the
Amitsoq mine up and running in the shortest time possible while, at
the same time, developing graphite anode material processing
capability through our recently initiated Anode Feasibility Study
in conjunction with the UK's Advanced Propulsion Centre. I am
confident that the Anode Feasibility Study will, in due course,
provide further upside to Amitsoq and for our investors."
Figure 1:
Location of Amitsoq deposit, with GreenRoc's mineral exploration
licences shown in blue (MEL 2013-06) and yellow (MEL 2022-03).
Details
The PEA report contains a detailed description of the ore bodies
at Amitsoq and incorporates the Competent Person Report (CPR) on
the resource estimate, an analysis of processing work and basic
design of an on-site processing plant as well as mine plan,
workforce needs, capital cost (Capex) and operating costs (Opex)
and a discounted cash flow (DCF) model.
Mine Plan
The mine plan is based on 22 years of production with the full
mining rate of 400,000t per annum reached after two years of
ramp-up.
The total mined inventory is 8.26Mt of ore with an average of
21.3% graphite (Cg). This is based on the mining resource category
given in Table 1 showing that the higher resource categories
(Measured and Indicated) account for about 75% of the mine mass.
Cut-off grades are calculated at 18.7% Cg. The higher grades of
21.3% Cg versus the average grade of 20.41% reported as average in
the global resource estimate of January 2023 reflect that all
mining takes place in the LGL, where higher average grades have
been recorded to date than those in the UGL.
The fact that the mine design in the PEA assumes production from
the LGL only and is modelled on a total mining inventory of 8.26Mt
compared to a total January 2023 global resource estimate of
23.05Mt, is indicative that there is significant potential for
future production expansion and/or extension to the LOM at
Amitsoq.
Table 1: LGL Mining Inventory by Mineral Resource Category
The proposed mining method is Drift and Fill, which requires
backfill as the working platform. One central spiralling decline
will provide access to all mining levels from the deepest level of
320m below sea level to the highest at 10m above sea level. The
mining will be completed using a fleet of diesel-powered,
electro-hydraulic drill jumbos, bolters, load-haul-dump machines,
and underground fitted trucks.
Mine Design
The underground workforce will be comprised of three crews on a
four-week on, two-week off roster. The on-shift workforce at
Amitsoq will total 45 persons (so, 135 workers in total across the
three crews) and mine support and administrative staff at the
nearby town of Nanortalik will total a further 19 persons per shift
(for a total of 37 personnel).
Mined ore will be transported to a processing plant on site,
crushed by a conventional three-stage crushing circuit and then
ground by ball mills to produce a slurry with optimum size
distribution for concentration in flotation units. The final
filter-pressed concentrate product will have a minimum content of
94% graphite. It will be stored in 1t bulk bags before
transportation to Nanortalik town for later shipment to the
designated overseas port of destination.
Tailings from the processing plant will primarily be used for
backfill in the mine. With an annual nominal mining rate of
400,000t, ca. 3.8M m(3) of tailings will be produced throughout the
life of the mine (LOM), of which ca. 3.3M m(3) will be used as
backfill with ca. 0.5M m(3) remaining for surface storage. A number
of options have been considered for the storage of the relatively
modest volume of tailings, including both dry-stack and wet storage
facility in a nearby dead (not life-supporting) lake. Transport to
the storage facility is planned to take place on barges.
Project infrastructure
Most of the infrastructure required to run the mine will be
situated at the mine site. In addition to the processing plant,
backfill paste plant, workshops and storage space, the
infrastructure will include a T-shaped pier for accommodating
ships, accommodation for day and night shifts, a catering and
recreation complex (for a total of up to 110 people at any given
time), freshwater treatment for water supply based on reverse
osmosis, wastewater treatment, tailings load-out area, power
generation plant, short-term fuel storage and an emergency
treatment medical facility.
Electric power for the mine, process plants, and infrastructure
on the island will be produced from diesel-fuelled generator sets.
The estimated power demand for the island is 11 MW. Five operating
2500 kVA generators plus one stand-by unit will provide the power.
Electric power for the tailings area will be provided from a small
300 kW diesel generator. At the same time, the Company is
investigating the means to transition to zero-carbon electricity
generation as soon as it is feasible to do so.
The main fuel depot will be located at the nearby town of
Nanortalik (20km from the mine), where warehouse and office space
will be rented partly, or wholly, using existing structures for
marshalling, storage and administrative purposes. Nanortalik
harbour, which has ice-free conditions through the winter, will be
the base for the shipping of graphite concentrate to the designated
ports of destination, which are expected to be either northern
Europe (4-5 days of shipping) or North-East America (5-7 days of
shipping).
Project Economics
Initial Capex (for construction and commissioning) amounts to a
total of US$131M which includes 25% contingency of US$26M (Table
2).
Operating costs amount to US$111/t milled ore and break down
into mining costs of US$53.9/t, processing costs of US$24.5/t and
general & administration (G&A) (supporting costs
(transport, backfill paste etc) of US$32.7/t (see Table 3), plus
US$10/t to cover shipping of concentrate to port of destination for
a total of US$121/t.
Total gross revenue amounts to US$2.1Bn over a 22-year LOM, with
the total undiscounted net pre-tax cash flow (i.e., total revenues
less total Capex, Opex and other costs and charges) totalling
US$794.7 M. This is based on an average basket graphite price of
US$1250/t of 94% concentrate, based on the forecast average for
2028-2033 published by Fastmarket in May 2023.
This results in a pre-Tax Net Present Value at an 8% discount
rate (NPV8) of US$235M with an Internal Rate of Return (IRR) of
31.1%. The after-tax NPV8 is US$179M with an IRR of 26.7% (see
Table 4, which also gives the NPV at 6% and 10% discount
rates).
Table 2: Specification of Capital Costs
Table 3: Specification of Operating Costs
Table 4. Amitsoq project economic performance with varying
discount rates at 6, 8, and 10%. The After-Tax NPV and IRR includes
2.5% royalties to the Greenland Government.
Discount rate Units Value
Pre-Tax IRR % 31.1%
-------------- ---------- ---------
Pre-tax NPV at 6% discounting 6.0% US$ '000 $314,441
-------------- ---------- ---------
Pre-tax NPV at 8% discounting 8.0% US$ '000 $235,308
-------------- ---------- ---------
Pre-tax NPV at 10% discounting 10.0% US$ '000 $177,115
-------------- ---------- ---------
After-Tax IRR % 26.7%
-------------- ---------- ---------
After-tax NPV at 6% discounting 6.0% US$ '000 $243,663
-------------- ---------- ---------
After-tax NPV at 8% discounting 8.0% US$ '000 $179,353
-------------- ---------- ---------
After-tax NPV at 10% discounting 10.0% US$ '000 $132,224
-------------- ---------- ---------
Forthcoming work activities
In the light of the resoundingly positive independent economic
assessment provided by the PEA, GreenRoc remains committed to
pushing forward the Amitsoq graphite project to production as fast
as possible.
A large bulk ore-sample of 10-20t will be collected from the old
underground workings at the Amitsoq mine and shipped to independent
processing laboratories in Europe. This will enable further design
processing parameters to be determined and provide material both
for pilot-scale active anode material processing and for ongoing
analysis by interested offtake and strategic partners.
A Phase III drilling programme is planned for 2024, which will
provide further expected upgrades to the graphite resource as well
as key geotechnical data to feed into the Pre-Feasibility Study
(PFS) which is planned to commence in H2, 2024. The PFS will build
upon the PEA by undertaking detailed engineering in order to
optimise mine and processing design and further constraining the
mining inventory, capital and operating cost estimates and other
economic design parameters.
2024 will also see the completion of the Environmental and
Social Impact Assessments for Amitsoq and the submission of an
application for an Exploitation Licence, further key milestones in
the route to commercial production.
Lastly, in parallel with the development work at the Amitsoq
graphite mine, GreenRoc is conducting a Feasibility Study on a
graphite anode material processing plant, using specialist
subcontractors Benchmark Mineral Intelligence, ProGraphite, SLR and
Decision Risk Analytics and supported by a GBP250k grant from the
Advanced Propulsion Centre (see RNS Oct 9, 2023). The Feasibility
Study is planned to be concluded in Q2, 2024.
This announcement contains inside information for the purposes
of the UK Market Abuse Regulation and the Directors of the Company
are responsible for the release of this announcement.
Forward Looking Statements
This announcement contains forward-looking statements relating
to expected or anticipated future events and anticipated results
that are forward-looking in nature and, as a result, are subject to
certain risks and uncertainties, such as general economic, market
and business conditions, competition for qualified staff, the
regulatory process and actions, technical issues, new legislation,
uncertainties resulting from potential delays or changes in plans,
uncertainties resulting from working in a new political
jurisdiction, uncertainties regarding the results of exploration,
uncertainties regarding the timing and granting of prospecting
rights, uncertainties regarding the timing and granting of
regulatory and other third party consents and approvals,
uncertainties regarding the Company's or any third party's ability
to execute and implement future plans, and the occurrence of
unexpected events.
Actual results achieved may vary from the information provided
herein as a result of numerous known and unknown risks and
uncertainties and other factors.
Competent Person Declaration
The independent Competent Person for the disclosure of the
results of the Amitsoq Project Preliminary Economic Assessment
(PEA) is Mr Bryan Pullman, P.Eng. of SLR Consulting Limited. Mr
Pullman has reviewed and approved the technical content of this
news release insofar as it reflects the PEA, in the form and
context in which it appears. Mr Pullman completed a site visit to
the Amitsoq Project on 27 May 2023 and visited locations relevant
to the Project including the underground workings, and potential
process plant, and other infrastructure sites within the licence
area.
**S**
For further information, please contact:
GreenRoc Mining plc
Stefan Bernstein, CEO +44 20 3950 0724
Cairn Financial Advisers LLP (Nomad)
James Caithie / Sandy Jamieson / Louise
O'Driscoll +44 20 7213 0880
--------------------------------
SP Angel (Broker)
Ewan Leggat / Charlie Bouverat +44 20 3470 0500
--------------------------------
St Brides Partners Ltd (Financial +44 20 7236 1177
PR & IR) greenroc@stbridespartners.co.uk
Paul Dulieu / Isabel De Salis / Isabelle
Morris
--------------------------------
About GreenRoc
GreenRoc Mining plc is an AIM-quoted company which is developing
mining projects in Greenland in critical, high-demand and
high-value minerals.
Key points about Amitsoq:
-- Greenroc Mining plc holds the Amitsoq exclusive exploration
licence MEL2013_06 of a total of 72.52km2 in the South of
Greenland.
-- The combined resource estimate given above has been achieved after two drilling phases.
-- Several samples have been extracted for the purpose of
testing the quality of the Amitsoq graphite.
-- Independent micronisation and spheronisation test work has
proven that Amitsoq graphite can be easily upgraded to high-grade
anode-quality graphite, otherwise known as high purity spherical
graphite or cSPG, a key raw material in the manufacturing of
EVs.
-- In GreenRoc's test work programmes, Amitsoq spheronised
graphite has achieved higher than 99.95% purity with relatively
little energy input and processing and using the milder alkaline
purification method compared to the industry standard hydrofluoric
acid, boding well for future production costs and sustainability
commitments.
-- Significant further upside exists at Amitsoq as the Amitsoq
Island Deposit is open in at least two directions with potential
for considerable further expansion via the similarly high-grade
Kalaaq Mainland Deposit as well as a series of other high-grade
targets on GreenRoc's licence package.
-- The deposit was in small-scale production about 100 years
ago, and there remains considerable underground mine development in
place from that time, which will be of considerable benefit to
GreenRoc in the mine construction phase.
-- Following a detailed evaluation process, the European Raw
Materials Alliance has expressed its support of GreenRoc and its
Amitsoq graphite project, stating that "GreenRoc's graphite
resource is of global importance and, together with the Company's
strategy, will enable the European Union to achieve a certain level
of independence for the electrical vehicle supply chain. ERMA has
approved the Amitsoq Graphite project and will engage to support
its development and financing to produce these critical raw
materials for the benefit of the European Union goals." (see RNS
dated 8 February 2023).
-- On 9 October 2023, GreenRoc was awarded a grant of approximately GBP250,000 by the Automotive Transformation Fund in the UK to part-finance a feasibility study into the establishment of a graphite spheronisation processing plant in the UK to produce active anode material from graphite concentrate delivered from GreenRoc's Amitsoq Graphite Project.
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