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
Cloud Expo, Inc. has announced today that Andi Mann and Aruna Ravichandran have been named Co-Chairs of @DevOpsSummit at Cloud Expo Silicon Valley which will take place Oct. 31-Nov. 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. "DevOps is at the intersection of technology and business-optimizing tools, organizations and processes to bring measurable improvements in productivity and profitability," said Aruna Ravichandran, vice president, DevOps product and solutions marketing...
@DevOpsSummit at Cloud Expo taking place Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center, Santa Clara, CA, is co-located with the 21st International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is ...
SYS-CON Events announced today that CA Technologies has been named "Platinum Sponsor" of SYS-CON's 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. CA Technologies helps customers succeed in a future where every business - from apparel to energy - is being rewritten by software. From planning to development to management to security, CA creates software that fuels transformation for companies in the applic...
What's the role of an IT self-service portal when you get to continuous delivery and Infrastructure as Code? This general session showed how to create the continuous delivery culture and eight accelerators for leading the change. Don Demcsak is a DevOps and Cloud Native Modernization Principal for Dell EMC based out of New Jersey. He is a former, long time, Microsoft Most Valuable Professional, specializing in building and architecting Application Delivery Pipelines for hybrid legacy, and cloud ...
SYS-CON Events announced today that IBM has been named “Diamond Sponsor” of SYS-CON's 21st Cloud Expo, which will take place on October 31 through November 2nd 2017 at the Santa Clara Convention Center in Santa Clara, California.
In his session at Cloud Expo, Alan Winters, an entertainment executive/TV producer turned serial entrepreneur, presented a success story of an entrepreneur who has both suffered through and benefited from offshore development across multiple businesses: The smart choice, or how to select the right offshore development partner Warning signs, or how to minimize chances of making the wrong choice Collaboration, or how to establish the most effective work processes Budget control, or how to ma...
SYS-CON Events announced today that Cloud Academy named "Bronze Sponsor" of 21st International Cloud Expo which will take place October 31 - November 2, 2017 at the Santa Clara Convention Center in Santa Clara, CA. Cloud Academy is the industry’s most innovative, vendor-neutral cloud technology training platform. Cloud Academy provides continuous learning solutions for individuals and enterprise teams for Amazon Web Services, Microsoft Azure, Google Cloud Platform, and the most popular cloud com...
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend 21st Cloud Expo October 31 - November 2, 2017, at the Santa Clara Convention Center, CA, and June 12-14, 2018, at the Javits Center in New York City, NY, and learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
We build IoT infrastructure products - when you have to integrate different devices, different systems and cloud you have to build an application to do that but we eliminate the need to build an application. Our products can integrate any device, any system, any cloud regardless of protocol," explained Peter Jung, Chief Product Officer at Pulzze Systems, in this SYS-CON.tv interview at @ThingsExpo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend 21st Cloud Expo October 31 - November 2, 2017, at the Santa Clara Convention Center, CA, and June 12-14, 2018, at the Javits Center in New York City, NY, and learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
21st International Cloud Expo, taking place October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Me...
DevOps at Cloud Expo, taking place October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 21st Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to w...
In 2014, Amazon announced a new form of compute called Lambda. We didn't know it at the time, but this represented a fundamental shift in what we expect from cloud computing. Now, all of the major cloud computing vendors want to take part in this disruptive technology. In his session at 20th Cloud Expo, Doug Vanderweide, an instructor at Linux Academy, discussed why major players like AWS, Microsoft Azure, IBM Bluemix, and Google Cloud Platform are all trying to sidestep VMs and containers wit...
"When we talk about cloud without compromise what we're talking about is that when people think about 'I need the flexibility of the cloud' - it's the ability to create applications and run them in a cloud environment that's far more flexible,” explained Matthew Finnie, CTO of Interoute, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
In his session at @ThingsExpo, Eric Lachapelle, CEO of the Professional Evaluation and Certification Board (PECB), provided an overview of various initiatives to certify the security of connected devices and future trends in ensuring public trust of IoT. Eric Lachapelle is the Chief Executive Officer of the Professional Evaluation and Certification Board (PECB), an international certification body. His role is to help companies and individuals to achieve professional, accredited and worldwide re...