Click here to close now.

Welcome!

News Feed Item

Northern Graphite Announces Update of Expansion Case PEA

Project shows robust economics despite low graphite price environment

OTTAWA, ONTARIO -- (Marketwired) -- 06/24/14 -- Northern Graphite Corporation (TSX VENTURE:NGC)(OTCQX:NGPHF) announces that it has updated the Preliminary Economic Assessment (the "PEA") on its 100% owned Bissett Creek graphite project to assess the economics of building a process plant with twice the capacity of the plant contemplated in the Company's Feasibility Study ("FS"). The larger process plant was evaluated due to recent developments in the lithium ion battery industry and strong buyer interest in the extra large flake, high purity concentrates that will be produced using Northern's proprietary purification technology.

The updated PEA indicates that the Bissett Creek Project has very attractive economics even at or below current depressed graphite price levels. The pre-tax internal rate of return ("IRR") is 31.7% (26.7% after tax) and the pre-tax net present value ("NPV") is $264.7 million ($178.9 million after tax) in the base case which is based on an 8% discount rate and a weighted average price of US$1,800/tonne of concentrate which reflects current market conditions.

Development capital costs in the updated PEA have been estimated at $134.1 million (including a 10% contingency) for an operation that will produce an average of approximately 44,200 tonnes of graphite concentrate annually over the first 10 full years of operation. Almost 90% of production will consist of large and extra large flake and battery grade graphite which is by far the highest ratio in the industry. There are also 27.3 million tonnes of Measured and Indicated resources and 24 million tonnes of Inferred resources that are not part of the PEA mine plan and the deposit has not yet been closed off by drilling, all of which indicates that further production expansions are possible.

Gregory Bowes, CEO, commented that: "It has been reported that multiple new graphite mines will be required to supply proposed lithium ion battery manufacturing plants because graphite deposits typically produce a high percentage of non battery grade material, and two thirds of the material that is battery grade is lost in the manufacturing process. However, Bissett Creek may be the only mine that is required to meet market demand due to its very high percentage of battery grade material, lower manufacturing losses and future expansion potential."


Summary of updated PEA Results                                             
                                                                           
Potential Economically Extractable Resources (million                      
 tonnes)(i)                                                       40.5Mt(i)
Feed Grade (% graphitic carbon)                                    1.83%(i)
Waste to ore ratio                                                   0.25:1
Annual processing rate (tonnes per year)                          2,000,000
Processing rate (tonnes per day - 92% availability)                   5,480
Project life (based on 2.0 Mtpa)                                   21 years
Mill recovery                                                         94.7%
Average annual concentrate production (tonnes - first 10                   
 years)                                                              44,200
Capital cost ($ millions - including 10% contingency)                $134.1
Sustaining capital ($ millions)                                       $55.1
Cash operating costs ($/tonne of concentrate)                          $736
Mining costs ($/tonne of process feed material)                       $3.74
Processing costs ($/tonne of process feed material)                   $7.78
General and administrative costs ($/tonne of process feed                  
 material)                                                            $1.45
Concentrate transportation to Montreal ($/tonne of process                 
 feed material)                                                       $0.55
CDN/US dollar exchange rate                                $0.95US = $1 CDN

(i) The PEA production plan is based on 24 million tonnes ("Mt") grading 2.20% Cg (as estimated in the FS) being processed first followed by the processing of 16.1 million tonnes of Measured and Indicated resources grading 1.26 % Cg from a low grade stockpile. All grades are diluted. Mineral resources that are not mineral reserves do not have demonstrated economic viability.


                                                    PEA Update            
                                      ------------------------------------
                                                   (base case)            
Average graphite price (US$ per tonne)      $2,100      $1,800      $1,500
Pre tax Net Present Value @8% (CDN$                                       
 millions)                                  $380.9      $264.7      $148.4
Pre tax IRR (%)                              40.7%       31.7%       22.2%
After tax Net Present Value @8% (CDN$                                     
 millions)                                  $257.9      $178.9       $99.0
After tax IRR (%)                            33.9%       26.7%       18.9%

The PEA was originally undertaken to demonstrate the ability to meet expected future growth in graphite demand by substantially increasing production from the Bissett Creek deposit after three years of operation based on Measured and Indicated resources only. The PEA built on the Feasibility Study completed by G Mining in August, 2012 and the expanded resource model, mine plan and updated FS economics completed by AGP Mining Consultants ("AGP") in September, 2013. P&E Mining Consultants Inc. ("P&E") reviewed the AGP mine plan and modified it to commence production at the expanded 2.0 Mtpa production rate in Year 1 rather than ramping up in Year 3 and to more aggressively backfill the open pit with waste. WorleyParsons Canada updated the capital and operating costs for the process plant which represents a portion of the total capital and operating costs for the project. Consistent with industry practice, the estimates have been prepared with an engineering accuracy of +15/- 20%.

Graphite Markets and Pricing

Graphite prices have fallen 50% or more from their 2012 peak due to the economic slowdown in China and a lack of growth in the US, Europe and Japan. Recently, it has been reported that Chinese flake production has fallen 30% as uneconomic and polluting mines are being closed. Current prices are at the marginal cost of production for many producers which should limit further price declines. The weighted average price that would be realized by Bissett Creek concentrates in the current market is estimated at US$1,800/t which is the highest in the industry because approximately 50% of production will be +50 mesh extra large flake and another 40% is +80 mesh large flake. Current graphite pricing is approximately $2,100/t for +50 mesh XL flake concentrates, $1,300/t for +80 mesh large flake, $1,100/t and $900/t for +100 mesh and +150 mesh medium and small flake respectively, and less than $500/t for -150 mesh fines. Typical graphite deposits only have about 15% XL flake and over one third -150 mesh fines, and would realize average prices in the range of $1,000-1,200 per tonne of concentrate under current conditions, assuming a market for the fines.

Qualified Persons

Ken Kuchling, P.Eng., Senior Mining Associate of P&E Mining Consultants Inc. prepared the revised mine plan for the PEA update. Dan Peldiak, P.Eng., Principal Process Engineer WorleyParsons Canada prepared the revised capital and operating costs for the process plant. Andrew Bradfield, P.Eng., of P&E, who is independent of the Company, approved and authorized the disclosure of the technical information contained in this press release. Readers should refer to the NI 43-101 technical reports relating to the FS and the PEA for further details with respect to the Bissett Creek Project.

Northern Graphite Corporation

Northern Graphite Corporation is a Canadian company that has a 100% interest in the Bissett Creek graphite deposit located in eastern Ontario. The Company expects graphite prices to outperform those of other commodities in an economic recovery because of Chinese supply problems and the continued rapid growth in new uses such as lithium ion batteries. Bissett Creek is the only true large flake deposit and the only one with a bankable Feasibility Study and its major environmental permit. It also has the best infrastructure of any new graphite project, the lowest capital costs and the highest operating margin. A copy of this press release which includes detailed cash flows for the updated PEA economics, as well as additional information on Northern, can be found at www.sedar.com and www.northerngraphite.com.

This press release contains forward-looking statements, which can be identified by the use of statements that include words such as "could", "potential", "believe", "expect", "anticipate", "intend", "plan", "likely", "will" or other similar words or phrases. These statements are only current predictions and are subject to known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements. The Company does not intend, and does not assume any obligation, to update forward-looking statements, whether as a result of new information, future events or otherwise, unless otherwise required by applicable securities laws. Readers should not place undue reliance on forward-looking statements.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contacts:
Northern Graphite Corporation
Gregory Bowes
CEO
(613) 241-9959

Northern Graphite Corporation
Stephen Thompson
CFO
(613) 241-9959

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
In the midst of the widespread popularity and adoption of cloud computing, it seems like everything is being offered “as a Service” these days: Infrastructure? Check. Platform? You bet. Software? Absolutely. Toaster? It’s only a matter of time. With service providers positioning vastly differing offerings under a generic “cloud” umbrella, it’s all too easy to get confused about what’s actually being offered. In his session at 16th Cloud Expo, Kevin Hazard, Director of Digital Content for SoftL...
Agile, which started in the development organization, has gradually expanded into other areas downstream - namely IT and Operations. Teams – then teams of teams – have streamlined processes, improved feedback loops and driven a much faster pace into IT departments which have had profound effects on the entire organization. In his session at DevOps Summit, Anders Wallgren, Chief Technology Officer of Electric Cloud, will discuss how DevOps and Continuous Delivery have emerged to help connect dev...
Today air travel is a minefield of delays, hassles and customer disappointment. Airlines struggle to revitalize the experience. GE and M2Mi will demonstrate practical examples of how IoT solutions are helping airlines bring back personalization, reduce trip time and improve reliability. In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect with GE, and Dr. Sarah Cooper, M2Mi’s VP Business Development and Engineering, will explore the IoT cloud-based platform technologies drivi...
Containers are changing the security landscape for software development and deployment. As with any security solutions, security approaches that work for developers, operations personnel and security professionals is a requirement. In his session at DevOps Summit, Kevin Gilpin, CTO and Co-Founder of Conjur, will discuss various security considerations for container-based infrastructure and related DevOps workflows.
It is one thing to build single industrial IoT applications, but what will it take to build the Smart Cities and truly society-changing applications of the future? The technology won’t be the problem, it will be the number of parties that need to work together and be aligned in their motivation to succeed. In his session at @ThingsExpo, Jason Mondanaro, Director, Product Management at Metanga, discussed how you can plan to cooperate, partner, and form lasting all-star teams to change the world...
Overgrown applications have given way to modular applications, driven by the need to break larger problems into smaller problems. Similarly large monolithic development processes have been forced to be broken into smaller agile development cycles. Looking at trends in software development, microservices architectures meet the same demands. Additional benefits of microservices architectures are compartmentalization and a limited impact of service failure versus a complete software malfunction. ...
Internet of Things is moving from being a hype to a reality. Experts estimate that internet connected cars will grow to 152 million, while over 100 million internet connected wireless light bulbs and lamps will be operational by 2020. These and many other intriguing statistics highlight the importance of Internet powered devices and how market penetration is going to multiply many times over in the next few years.
Internet of Things (IoT) will be a hybrid ecosystem of diverse devices and sensors collaborating with operational and enterprise systems to create the next big application. In their session at @ThingsExpo, Bramh Gupta, founder and CEO of robomq.io, and Fred Yatzeck, principal architect leading product development at robomq.io, discussed how choosing the right middleware and integration strategy from the get-go will enable IoT solution developers to adapt and grow with the industry, while at th...
Containers have changed the mind of IT in DevOps. They enable developers to work with dev, test, stage and production environments identically. Containers provide the right abstraction for microservices and many cloud platforms have integrated them into deployment pipelines. DevOps and Containers together help companies to achieve their business goals faster and more effectively. In his session at DevOps Summit, Ruslan Synytsky, CEO and Co-founder of Jelastic, reviewed the current landscape of...
Malicious agents are moving faster than the speed of business. Even more worrisome, most companies are relying on legacy approaches to security that are no longer capable of meeting current threats. In the modern cloud, threat diversity is rapidly expanding, necessitating more sophisticated security protocols than those used in the past or in desktop environments. Yet companies are falling for cloud security myths that were truths at one time but have evolved out of existence.
The cloud has transformed how we think about software quality. Instead of preventing failures, we must focus on automatic recovery from failure. In other words, resilience trumps traditional quality measures. Continuous delivery models further squeeze traditional notions of quality. Remember the venerable project management Iron Triangle? Among time, scope, and cost, you can only fix two or quality will suffer. Only in today's DevOps world, continuous testing, integration, and deployment upend...
The time is ripe for high speed resilient software defined storage solutions with unlimited scalability. ISS has been working with the leading open source projects and developed a commercial high performance solution that is able to grow forever without performance limitations. In his session at Cloud Expo, Alex Gorbachev, President of Intelligent Systems Services Inc., shared foundation principles of Ceph architecture, as well as the design to deliver this storage to traditional SAN storage co...
To many people, IoT is a buzzword whose value is not understood. Many people think IoT is all about wearables and home automation. In his session at @ThingsExpo, Mike Kavis, Vice President & Principal Cloud Architect at Cloud Technology Partners, discussed some incredible game-changing use cases and how they are transforming industries like agriculture, manufacturing, health care, and smart cities. He will discuss cool technologies like smart dust, robotics, smart labels, and much more. Prepare...
"We provide a web application framework for building really sophisticated web applications that run on a browser without any installation need so we get used for biotech, defense, and banking applications," noted Charles Kendrick, CTO and Chief Architect at Isomorphic Software, in this SYS-CON.tv interview at @DevOpsSummit (http://DevOpsSummit.SYS-CON.com), held June 9-11, 2015, at the Javits Center in New York
The Internet of Things is not only adding billions of sensors and billions of terabytes to the Internet. It is also forcing a fundamental change in the way we envision Information Technology. For the first time, more data is being created by devices at the edge of the Internet rather than from centralized systems. What does this mean for today's IT professional? In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists addressed this very serious issue of pro...