An admitted late-comer to the energy mineral space, Adelaide-based Renascor has seen a lot of the failings of its peers, but managing director David Christensen believes it has a good shot of making a go of Australia's first modern graphite mine because it has a few critical factors in its favour that mean its Siviour project can go head-to-head with existing Chinese mines or the emerging mega-developments in eastern Africa.
Siviour is in a tier one jurisdiction with low sovereign risk, highly developed infrastructure such as roads to port and grid power, and a shallow, flat-lying orebody that is "superb" in terms of grade and depth, all adding up to some of the lowest cost mining in the graphite world.
"There will always be a lot of graphite, so whoever can get into production and sustain that at a low cost will be the winners of the race," Christensen told MNN.
Renascor's hopes are based on the booming battery storage market, and while growth are not quite where earlier projections suggested, the demand trajectory is clear and Christensen believes the company can be in production within two years, feeding a hungry market.
Renascor's prefeasibility study suggests the company could have mining costs of just $330/t, one of the lowest costs anywhere in the world.
"You are looking at selling for three times that, so even in a poor market this stacks up," Christensen said.
Graphite prices are currently between $900-2000/t, depending on the quality of the final product, according to Brenchmark Mineral Intelligence.
Given processing costs are similar the world over, the combination of low extraction costs and high grades is the magic ingredient for what Christensen says is a "pretty special" project that has all the attributes to excite a market that had its time in the sun 4-5 years ago.
Having developed its project on the South Australia's Eyre Peninsula rom an early concept to what could be the largest graphite resource in Australia, and one of the five largest graphite reserves in the world in a little over two years, Renascor is now working frantically to get ahead of the market with the aim of completing a definitive feasibility study and making a final investment decision next year.
"We're pretty quickly ticking off the boxes as we are de-risking this thing and climbing the ladder. We did a capital raising earlier this year that should see us through to the completion of the DFS," Christensen said.
A lot of Renascor's peers and rivals stumbled at the financing stage, but Christensen says Siviour has a high "certainty to market" as it won't face some of the regulatory upheavals that have set back the Tanzanian mining sector several years.
"In any place in Australia there is a very clear regulatory framework: you follow the rules and you get your mining licence, and I think from a risk perspective I think that is very important, particularly if you are going to be looking to come degree of debt financing," he said.
Financing concerns occupy a lot of Christensen's time, and is one of the aims of a recent as "unique" deal with European conglomerate Royal IHC, which has given not only the early engagement of a potential EPC contractor to help accelerate the development, but access to the large Dutch consortium's balance sheet.
"We wanted to be able to complete the DFS and have the EPC proposal ready, and IHC is offering that, because they have that experience, and that the parent company has the balance sheet that has the ability to deliver the EPC when we get there," he said.
Royal IHC could also help make introductions to the financing networks.
The DFS is focused on infill drilling that has confirmed an "absolutely fantastic resource" and has been "finding more of the good stuff" at the shallower depths, which could lead to an improved mining schedule.
The work has shown an "incredibly consistent" orebody with thick intersections of graphite at mineable depths, including at the margins of initial pit designs.
A revised resource estimate will be calculated from the results, and is expected to increase the estimate of 80.6 million tonnes at 7.9% total graphitic carbon for 6.4Mt of contained graphite and probable reserves of 45.2Mt at 7.9% for 3.6Mt of graphite.
Recent metallurgical testing has showed Siviour can create a high-grade, clean concentrate, but any graphite producer worth its salt has its eyes on value-adding, and Christensen says Renascor is looking to develop a downstream plant to produce spherical graphite for battery developers.
While demand for spherical graphite accounts for about 15-20% of demand today, but could account for 30-50%, depending on the growth of lithium-ion batteries, and should fetch a premium.
A scoping study suggests Siviour's low-costs mean it should be able to compete with China on price terms and meet demand for a diversity of supply.
The PFS is now being finalised, while the DFS for the mine is due for completion early next year, and will help the company secure additional off-take agreements ahead of first production in 2020.