Resource Companies with Positive Bankable Feasibil
SOURCE: [Commodity Dispatch] - A Bankable Feasibility Study (BFS) is an independently audited document that analyses all technical and financial risks before the construction of mine including: capital costs, grades, permits, taxation, cash flow, strip ratio, politics, water, power, labour, revenues, royalties, metallurgy, milling and transport.
A positive BFS is a green light to move the project to funding. The level of accuracy is +/- 15%.
Image: https://www.commoditydispatch.com/wp-content/uploads/2012/11/CD1-e1352094665574
A Bankable Feasibility Study transforms a company from a story to a rigorously tested model. Because BFSs are complex technical documents, investors tend gloss over them. For institutional funds with in-house analytical teams, the BFS is a bible and a crystal ball. It is the ultimate de-risker. Typically the volumes of institutional buying will increase during this phase.
Northern Graphite (NGC-TSX.V) is developing the Bissett Creek property located in Southern Ontario Canada, 15 kilometers from the Trans-Canada highway. The Bankable Feasibility Study was completed in July, 2012. Mine permitting is expected to be completed in the 4Q/2012.
The BFS estimated a probable reserve of 19 million tonnes grading 1.89% Cg based on indicated resources only. Contemplated Life Of Mine is 23 years, producing 20,000 tonnes of graphite concentrate per year. NGC has another 50+ years of inferred resources and has just completed a 3,000m drill program to upgrade the inferred to indicated. This will enable higher grade inferred resources to replace lower grade indicated in the BFS and further enhance the economics of the project.
The waste to ore ratio is 0.50 and operating costs over the first five years of operation are $851/tonne of concentrate. Based on a weighted average price of $2,600 per tonne for the sizes and grades of graphite that will be produced, the pre-tax IRR is 23.1% and the NPV is $151 million (@8%). The capital cost of the mine is $102.9 million including a $9.4 million contingency. Bissett Creek will have the largest flake size and highest purity concentrates in the graphite industry, resulting in premium pricing.
Image: https://www.commoditydispatch.com/wp-content/uploads/2012/11/CD3.jpg
Long term shareholder value is amplified by demand growth from China, India and other emerging economies, and from many new applications such as Li ion batteries, fuel cells, vanadium redox batteries and nuclear energy.
Currently 80% of world production comes from China and its production/exports are expected to decline. Northern Graphite is trading close to its 52-week low at .79 with a market capitalisation of $39 million.