Ann: Epanko Graphite Project Update, page-4

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ASX ANNOUNCEMENT 22 January 2015
Epanko Graphite Project Update
 Epanko growth strategy developed
 2 stage production upgrade from 40,000tpa to 100,000tpa
 Internally funded 5 year expansion plan indicates an NPV of $251m
 Feasibility Study on schedule and within budget
 Environmental Certification in the final stage of the approval process
Kibaran Resources Limited (ASX:KNL), is pleased to provide the following update on its flagship Epanko
Graphite Project within the Mahenge Graphite Province in Tanzania.
EPANKO GROWTH STRATEGY
Kibaran initiated a review of its mining and processing schedule with the view to developing a growth strategy
for the project, which would cater for future increases in demand for premium quality large flake graphite. The
study was undertaken by Intermine Engineering Consultants and confirmed that the Eastern and Western
zones can easily support an annual production rate of 100,000tpa of concentrate.
Whilst production can, from a technical perspective, commence at the rate of 100,000tpa, Kibaran believes
meeting current demand by commencing at 40,000tpa is prudent and coupled with a sound 100,000tpa
growth strategy, places the company in a prime position to respond quickly to future increases in demand.
The study scheduled the ramp up in two (2) stages, with upgrade capital being self-funded as shown in the
table below.
Concentrate (tpa) Timeframe
Initial Start-up 40,000
Stage 1 75,000 2-4 years
Stage 2 100,000 4-5 years
In terms of NPV, the scoping study showed at 40,000tpa, an NPV of $213m over a 27 year mine life (refer
announcement 18 August 2014). The expansion strategy to 100,000tpa has increased the NPV to $251m at the
current resource base; as and when required, the company can in a relatively short timeframe and with
minimal expenditure, increase the resource both along strike and at depth to extend the mine life further.
The production growth strategy has been based on both the Company’s and independent modelling for new
graphite demand for premium quality large flake graphite. Epanko’s current Mineral Resource easily supports
this growth strategy.
Cautionary Statement:
Kibaran cautions investors in relation to using the financial estimations as a basis for investment decisions in
KNL shares. The company utilised Indicated and Inferred JORC Mineral Resource recently estimated report
(Announcement 12 August 2014) and under the JORC (2012) Code, Inferred resources are not adequate to
determine or imply economic viability.
Statements implying economic viability require a reasonable basis; otherwise they can be seen as being
misleading to shareholders. The Scoping Study utilised assumptions in some areas, hence the results do not
definitively confirm the economic viability.
In order to determine the economic viability of the project, the Company needs to establish that the deposit
hosts sufficient Indicated Mineral Resources in addition to confirming all the technical and financial aspects of
mining, processing, metallurgy, infrastructure, economics, marketing, legal, environmental, social and
government. As such, some of the economic assumptions used in the Scoping Study may or may not be
realised.Page 2
There is a low level of geological confidence associated with inferred mineral resources and there is no
certainty that further exploration work will result in the determination of indicated mineral resources or that
the production target itself will be realised.
Table 1 – Key Assumptions and Findings
Note : Stage 2 Capital is an expansion of the plant from the base case.
Mineral Resource Estimate
The Mineral Resource for Epanko is shown in Table 2
Notes for table 3:
 Tonnage figures contained within Table 1 have been rounded to nearest 1000. % TGC grades are rounded to 1 decimal figure.
 The Mineral Resource is quoted from blocks where the TGC (%) grade is greater than 8%.
 Abbreviations used: Mt = 1,000,000 tonnes
The Mineral Resource estimate represents only a very small footprint (20%) of the known Epanko project area,
lending itself to be increased through future exploration.
Metallurgy and Process Design
A process flow sheet was based on the metallurgical testwork carried out. This resulted in a very conventional
flotation plant and the capital cost for the plant is based on a two-stage liberation process to separate the
graphite. The flowsheet comprises rougher flotation, two liberation stages, cleaner flotation, dewatering,
drying and screening prior to bagging for export.
The metallurgical results showed that the flotation concentrate averaged 94% Fixed Carbon and more
importantly, that the testwork yielded large flake graphite. Detailed results are presented in Table 3 below.
Table 3: Flotation results per size fraction
SIZE RETAIN FIXED CARBON
Classification Micron (%) (%)
Jumbo > 500 µm 8.4 97.6
Extra Large > 300 µm 13.2 95.4
Large > 180 µm 28.6 93.8
Medium > 106 µm 23.6 93.6
Small > 75 µm 10.4 91.0
Average 94.0
Micron (µm) and Millimetre (mm). 1mm = 1000µm and fixed carbon content determined by loss of ignition method (LOI)
Items Base Case Stage 2
Plant throughput (tpa) 420,000 1,050,000
Plant Recovery (%) 96% 96%
Feed Grade (%) 9.64% 9.64%
Production Concentrate (tpa) 40,000 100,000
Base Price Assumption ($/t) $1,258 $1,258
Capital Expenditure (at each
stage) ($m) $56 $45
Strip ratio (W:O) 2.2:1 2.2:1
Discount Rate (%) 10 10
Net Present Value (NPV) ($m) 213 251
CLASSIFICATION TONNAGE (Mt) GRADE (%TGC) CONTAINED GRAPHITE (t)
Indicated 12.8 10.0 1,281,200
Inferred 9.9 9.6 942,100
Total 22.7 9.8 2,223,300Page 3
Marketability
The portion of very large size flake has a significant advantage, as at present there is a shortage of this product
in the graphite market. The basket price for graphite product used in the scoping study is $1,258/t of
concentrate which is based on the value of each sizing as detailed in Table 4. The pricing is based the
indicative pricing for 94-97% carbon
Mid-term pricing for premium quality large flake graphite is forecast to substantially increase, according to
recent forecast price modelling by Toronto-based, independent research firm Stormcrow Capital Ltd. In what is
generally considered an opaque market, Stormcrow has forecast pricing for Jumbo flake (+300 micron) to
increase to US$6,170 per tonne in 2020 , a near three-fold jump on 2013 prices (refer table 4). This graphite
price forecast modelling is also consistent with reports published in Industrial Minerals.
Table 4: Graphite Pricing and Basket Price used in Study
CURRENT GRAPHITE PRICING
STORMCROW 2020
PRICES
FLAKE SIZE EPANKO SIZE
FRACTION PRICE (US$/t) VALUE
(US$)
PRICE
(US$/t)
VALUE
(US$)
Jumbo > 300 microns 21.6 $2,300 $497 6175 $1,334
Larger >180 microns 28.6 $1,300 $372 1165 $333
Medium > 106 microns 23.6 $950 $224 517 $122
Small > 75 microns 10.4 $750 $78 493 $51
Fine < 75 microns 15.8 $550 $87 359 $57
Weighted Basket Price (Price x Size Fraction) $1,258 $1,897
If the future prices by Stormcrow are used the basket price would increase to $1,897 which would add further
revenue of $635 million over the life of the mine.
Expanded graphite, from premium natural flake graphite, is used to produce graphite foils, an inert sealing
material that is used in high temperature and high pressure applications such as high temperature gaskets,
bipolar plates in fuel cells and computer heat sinks. Expanded graphite is also considered highly sought after in
the battery market which is considered one of the key drivers for future demand.
The testwork was undertaken at NGS Naturgraphit GmbH (“NGS”), an independent company which specialises
in world-wide graphite sales and carbon based products located in Germany is summarised in table 5
Table 5 - Carbon grades for flotation and chemical purification
FLAKE SIZE FLOTATION
CONCENTRATE
PURIFICATION
GRADE
Name Micron Mesh (%) (%)
Extra Jumbo >500 micron >35 97.7 99.94
Jumbo >300 microns >48 97.2 99.98
Large >180 microns >80 96.2 99.95
Medium >106 microns >150 95.8 99.91
Small >75 microns >200 93.7 99.85
Fine <75 microns <200 87.4 99.72
Notes: Chemical Purification by HF acid. Results calculated by drying at temperatures in the range of 400 °C and from LOI.
Ultra high purity can be reached easily in a single one step process. Importantly, extremely low impurities are
recorded confirming that there is no limitation on the application and uses of Epanko flake graphite.Page 4
Mining
Intermine Engineering carried out preliminary pit optimisation, mine scheduling and mining cost estimation
based on open pit mining constrained by Whittle pit optimisations. The mining costs were developed from
information provided by Intermine. Dilution and ore recovery factors were applied to the mineral inventory,
resulting in a mineral resource used for mine planning, design and cash-flow analysis. This mineral resource
within the pit shell includes dilution of 5% and a 95% mining recovery.
Mining Schedule
Various mining production scenarios were examined. The scenario that was adopted as the base case of the
Study was to extract ore at the rate necessary to completely utilise a process plant with 465,000tpa with a
staged increase to 1,050,000tpa
After some pre-stripping the stripping ratios for the first 10 years of production are less than 1 to 1 (waste to
ore). Mining production would be campaigned during the dry season between March to November. Total
movement to produce of feed would be conducted using a 40t excavator and 2-3 articulated trucks over a 5
months a year basis.
Geotechnical work will be undertaken to assist in the final open pit designs however it is considered no final
slopes will be encountered in the initial years of mining.
Pit Outlines
The main Epanko excavation, occurring in the eastern zone, is a single elongated pit approximately 500m long,
up to 200m wide and up to 50m deep. With an overall pit wall angle of 40o
it is expected that only a single
ramp pass will be required on one of the walls. Excavation on the Western zone occurs over a 750 long strike
length. No final wall is expected in the first 5 years of mining.
Total Indicated and Inferred resource contained within the optimisation shells is 10.8Mt at 9.6% TGC with
waste containing lower grade mineralisation of 5.80Mt at 6.8% of lower grade (5 to 8% TGC) mineralisation.
Processing and Mine Site Infrastructure
Anzaplan in conjunction with EGT have developed preliminary designs for the processing plant, based on the
metallurgical test work carried out by EGT. Operating and capital cost estimates for the various project
options were then prepared to an accuracy based on typical industry practices.
Transport
For the purpose of the study the only transport option considered was direct trucking of graphite concentrate
to the port of Dar es Salaam. The project is located 120km south of the Ifakara rail siding and future studies
may see this as the preferred route. Costs for the transport were developed based on current transport costs
in Tanzania.
FEASIBILITY STUDY
The feasibility study being managed by GR Engineering Services (GRES) is progressing well and is on schedule
and within budget. Work to date has focussed on finalising the plant site, ROM pad, tailings storage facility and
access road alignment, the key criteria being minimising earthworks and environmental impact.
Representatives of GRES and Knight Piesold completed their initial site visit in November and subsequent to
that, diamond drilling and test pits have been completed on the proposed plant and TSF sites and samples sent
to the laboratory for geotechnical analysis.
The metallurgical testwork program for the study has been finalised in conjunction with GRES, Independent
Metallurgical Operations Pty Ltd (IMO), Australia’s largest metallurgical services group and Kibaran’s off-take
and sales partners. Samples have arrived in Australia from Tanzania and work has commenced, being
undertaken by IMO in Perth. Comminution testwork is mostly complete and sample characterisation has
begun.Page 5
ENVIRONMENTAL AND SOCIAL IMPACT ASSESSMENT
The Company received the formal feedback on 9th January 2015, from NEMC’s Technical Audit Committee
related to their site visit undertaken last quarter. The ESIA has subsequently been updated to address points
raised with appropriate mitigations and was resubmitted to NEMC on 16
th January 2015. Kibaran expects that
NEMC will now be in a position to recommend to the Ministry of Environment that the Environmental
Certificate for the Epanko Project be issued.
Kibaran’s Chairman Mr John Park commented, “The development of a 100,000tpa expansion strategy is an
extremely exciting advance for Kibaran and allows for manageable step changes in production to meet
anticipated growth in the market.
Whilst the company has always believed and has demonstrated its graphite is amongst the best quality in
the world, the Epanko project can now be considered competitive in terms of scale, to some of the large
deposits currently being explored in other countries. We are poised and ready to react to future demand
increases and have the ability to act quickly, given our lean structure and in house expertise.
The progress we are making in terms of statutory permitting and the feasibility study is equally as pleasing;
we remain diligently on track to deliver on our commitments in this regard.”
For further information, please contact:
Company Secretary
Robert Hodby
Kibaran Resources
P: + 61 8 6380 1003
About Kibaran Resources Limited:
Kibaran Resources Limited (ASX: KNL or “Kibaran”) is an exploration
company with highly prospective graphite and nickel projects located
in Tanzania.
The Company’s primary focus is on its 100%-owned Epanko deposit,
located within the Mahenge Graphite Project. Epanko currently has a
total Indicated and Inferred Mineral Resource Estimate of 22.7Mt,
grading 9.8% TGC, for 2.2Mt of contained graphite, defined in
accordance with the JORC Code. This initial estimate only covers 20%
of the project area. Metallurgy has found Epanko graphite to be large
flake and expandable in nature.
Kibaran also has rights to the Merelani-Arusha Graphite Project,
located in the north-east of Tanzania. Merelani-Arusha is also
considered to be highly prospective for commercial graphite.
Graphite is regarded as a critical material for future global industrial
growth, destined for industrial and technology applications including
nuclear reactors, lithium-ion battery manufacturing and a source of
graphene.
In addition, the Kagera Nickel Project remains underexplored and is located along strike of the Kabanga nickel deposit,
owned be Xstrata, which is considered to be the largest undeveloped, high grade nickel sulphide deposit in the world
The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Andrew Spinks, who is a
Member of The Australasian Institute of Mining and Metallurgy included in a list promulgates by the ASX from time to time. Andrew Spinks is a director of Kibaran
Resources Limited and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is
undertaking to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves”. Andrew Spinks consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
The information in this report that relates to Exploration Results and Mineral Resources is based on information compiled by Mr David Williams, who is a Member of The
Australasian Institute of Mining and Metallurgy included in a list promulgated by the ASX from time to time. David Williams is employed by CSA Global Pty Ltd and has
sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a
Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. David Williams
consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
Media Relations
Rebecca Lawson
M&C Partners
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