REG - GreenRoc Mining PLC - Amitsoq - Results of Anode Plant Feasibility Study

GreenRoc Strategic MaterialsAnnouncement

07/05/2024 07:15

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RNS Number : 3375N  GreenRoc Mining PLC  07 May 2024

GreenRoc Mining Plc / EPIC: GROC / Market: AIM / Sector: Mining

07 May 2024

GreenRoc Mining plc

("GreenRoc" or the "Company")

 

Amitsoq Update

Feasibility Study Confirms Compelling Case for GreenRoc Anode Plant

Notice of Final Results

 

GreenRoc Mining plc (AIM: GROC), a company focused on the development of
critical mineral projects in Greenland, is pleased to announce the results of
a preliminary feasibility study ("Feasibility Study") in respect of the
establishment of a downstream processing plant to produce graphite active
anode material from graphite concentrate produced from the Company's planned
graphite mine at Amitsoq, South Greenland.

 

The Feasibility Study, completed with a cost accuracy to AACE Class 4, was
conducted by SLR Consulting Ltd ("SLR"), an independent UK consulting firm
with considerable global expertise in the field of mining and mineral
processing, and was supported by a ca. £250k grant from Innovate UK's
Automotive Transformation Fund.

 

GreenRoc also provides an update on its expected financial results for the
financial year ended 30 November 2023 at the end of this RNS.

 

Highlights

 

·    Pre-Tax Net Present Value at 8% discount rate (NPV(8)) of US$837M
with Internal Rate of Return (IRR) of 33.8%.

·    After-tax NPV(8) of US$545M with IRR of 25.3%.

·    Total gross revenue of US$6.5Bn over the 22-year period, with total
gross profit totalling US$2.7Bn.

·    Years of operation set at 22 to match that planned for the Amitsoq
graphite mine.

·    4-year payback period on capital from start of production.

·    Initial capital cost (Capex) of US$321M inclusive of a 25%
contingency.

·    Average operating cost (Opex) of US$2,211 per tonne of CSPG.

·    Average annual processing of 80,000t of graphite concentrate at 95%
graphitic carbon (C(g)) with production of 39,700t of active anode material in
the form of coated spherical purified graphite (CSPG).

 

GreenRoc's CEO, Stefan Bernstein, commented:

"The Feasibility Study in respect of GreenRoc's planned downstream processing
plant has delivered excellent results, with an after-tax NPV8 of more than
half a billion US dollars. Having employed the industry's standard techniques
and premium instrumentation where possible, we are confident of the robustness
of the Feasibility Study. This view is corroborated by the inclusion of a 25%
contingency which forms part of the modelled capital cost of US$321M.

"This Feasibility Study firmly places GreenRoc as one of the few contenders to
supply the European EV Battery industry with domestically produced active
anode material. On behalf of GreenRoc, I would like to extend our gratitude
towards Innovate UK for the generous support of a £250k grant towards this
Feasibility Study though its Automotive Transformation Fund.

"There are further possible improvements to the process design which we will
be looking into in a second stage, commencing shortly, and we will provide
updates on that in due course.

"With the already positive Preliminary Economic Assessment of the Amitsoq
graphite mine and now this compelling assessment of the economics of
establishing a downstream anode processing plant for our graphite, our
confidence in our plans for a vertically integrated production model for
Amitsoq, from mine to battery anode material production, has been greatly
reinforced."

Details

The Feasibility Study was project managed by the Company and conducted by SLR
Consulting Ltd with contributions from three expert consultants, namely
Benchmark Mineral Intelligence, ProGraphite and Decision Risk Analytics.

A key component of Li-based batteries is the active anode material ("AAM")
which is composed of graphite in the form of coated spherical purified
graphite ("CSPG"). Presently, China has a near monopoly, delivering more than
90% of the world's production of CSPG. With the energy transition seeing a
gradual replacement of the world's internal combustion engine vehicles with
electric vehicles and a growing demand from Stationary Battery Storage Systems
for solar energy farms and other uses, a 400% growth in demand for battery
grade graphite is forecast by leading market analysts. There is therefore a
political desire to urgently initiate production of domestically sourced and
processed graphite for the European and North American battery industries.

The raw material for production of CSPG is natural flake graphite concentrate.
The production of CSPG consists of a series of intermediate steps: first, the
graphite concentrate is micronised to a standard particle size using a rotary
impact mill. Then the graphite flake particles are introduced to a rounding
impact mill or shaping mill, which turns the angular graphite flakes into
rounded particles (speronized graphite). Purification then takes place via
chemical leaching. In the Feasibility Study, this involved initially assessing
a two-stage leaching process using a mix of hydrofluoric, hydrochloric and
nitric acids to arrive at the required >99.95% purity. Finally, the
spherical purified graphite (SPG) is coated with pitch and heated in kilns for
about 24 hours before using high-intensity magnet separation for the removal
of any impurities introduced during machining. The end-product CSPG is then
sold to the battery industry to serve as AAM in lithium-ion batteries.

For the Feasibility Study, SLR has used proven state-of-the-art technology
based on the use of equipment produced by Chinese manufacturers, including
microniser impact mills, impact rounding mills, cyclones and air classifiers
and filters, fitted with German electronic steering systems.

The processing plant will consist of 16 parallel micronisation/spheronisation
lines each equipped with five microniser mills and 13 spheroniser mills. The
micronisation and spheronisation circuit is designed to provide a graphite
product with high tap density (close to 1.0 g/cm(3)) and the ability to
produce a range of characteristic particle sizes of d(50) of 10 µm to 20 µm
depending on specific settings and requirements from the battery industry.

Purification will take place in four parallel leaching lines with a final
stage of coating taking place in eight parallel lines with subsequent baking
in kilns and final magnetic removal of any metal particles introduced during
the processing.

The Discounted Cash Flow ("DCF") model provided as part of the Feasibility
Study shows a Pre-Tax Net Present Value at 8% discount rate (NPV(8)) of
US$837M with an Internal Rate of Return ("IRR") of 33.8%, while the After-Tax
NPV(8) is US$545M with an IRR of 25.3%. The corporate tax is set at 22%, which
is an average number for northern European Countries.

These NPV calculations are based on a 22-year production of 39,700t of CSPG
per annum (from 80,000t of graphite concentrate at 95% graphitic carbon
(C(g)), similar to the life of mine provisionally planned for the Amitsoq
mine.  However, as previously stated, the resource at Amitsoq could sustain a
longer mine life (see the RNS of 23 January 2023). Based on 22 years of
production, the total gross revenue for the anode plant has been calculated at
US$6.5Bn over that period, with total gross profit totalling US$2.7Bn.

The initial capital cost is US$321M which includes a 25% contingency, while
the operating cost is US$2,211 per tonne of produced CSPG.  This results in a
4-year payback period on capital from the start of production.

The DCF model is based on a forecast price for CSPG of US$7,500 per tonne and
with two types of bi-product (undersize graphite material) attracting a
forecast price of US$300 per tonne.

The Feasibility Study has assumed that the anode plant operation will purchase
the key input raw material, graphite concentrate, at a forecast market price
of US$ 1,100 per tonne.  This is in keeping with the approach of carrying out
the Feasibility Study for the downstream anode plant as an entirely
stand-alone economic assessment, separate to the economic assessment of the
Amitsoq graphite mine and primary processing plant (in relation to which,
refer to the results of the Preliminary Economic Assessment released by RNS on
31 October 2023).  In practice, however, the cost to the anode plant
operation of the graphite concentrate feedstock is expected to be determined
by the cost of production of graphite concentrate from the Amitsoq mine rather
than by market prices.

One of the largest cost elements in the economic model relates to power
consumption (ca. 250 GWh per annum) for all of the various stages of
processing and amounts to ca. US$318 per tonne of produced CSPG which is ca.
14% of the total operating cost of US$ 2,211 per tonne of CSPG. This makes the
choice of a site very important in keeping operating costs down and reducing
CO(2) emissions. Accordingly, GreenRoc is reviewing several options for the
location of the processing plant. The cost of labour is set at that for an
average Northern European country.

In the near future, SLR will also look at an alternative purification
technique using a combination of sodium hydroxide and acid mixtures other than
hydrofluoric acid. Such sodium hydroxide-based purification is likely to be
less expensive and have lower environmental impact and regulatory requirements
than the standard hydrofluoric acid based technology. Early qualitative
testwork conducted by ProGraphite on Amitsoq graphite suggests that the high
purity requirement of 99.95% can be met using sodium hydroxide leaching (see
the RNS of 20 January 2023).  ProGraphite is currently undertaking a series
of tests to constrain the use of chemicals for this purification technique,
the results of which will be incorporated in an update to the Feasibility
Study.

Another point of potential refinement is the costing for an onsite nitrogen
gas production plant at the processing plant location. Nitrogen gas is used in
the kilns where the final CSPG material is baked, hindering the oxidation
(burning) of CSPG particles. In the current Feasibility Study, nitrogen gas is
purchased in tanks and makes up a considerable portion of the consumables.
Accordingly, a potential cost saving may be achieved by establishing local
production of nitrogen gas.

With the completion of this Feasibility Study for the Anode Processing Plant,
GreenRoc can now demonstrate that running a vertically integrated production
of graphite anode material, based on graphite concentrate mined at the
Company's planned Amitsoq mine, is a viable and potentially profitable
undertaking. The next milestone with regard to the processing plant is
identifying the site for the plant, and setting up a pilot scale processing
plant to start the qualification process, which should lead to the signing of
off-take agreements with the battery industry.

Expected Final Results

The Company expects to report a consolidated loss of £1,693,000 for the year
to 30 November 2023 (2022: £1,230,000), including an exceptional £787,000
impairment charge for the surrender of the Melville Bay project, which was
announced by GreenRoc on 7 February 2024. The Company expects to report
year-end consolidated net assets of approximately £9,027,000 (2022:
£8,965,000), comprising non-current assets of £9,741,000 and net current
assets of £290,000 offset by a deferred tax liability of £1,004,000. All of
the aforementioned figures for the year to 30 November 2023 are unaudited.

Greenroc expects to announce its final audited full year results for the year
ended 30 November 2023 later this month.

 

This announcement contains inside information for the purposes of the UK
Market Abuse Regulation and the Directors of the Company are responsible for
the release of this announcement.

 

Forward Looking Statements

This announcement contains forward-looking statements relating to expected or
anticipated future events and anticipated results that are forward-looking in
nature and, as a result, are subject to certain risks and uncertainties, such
as general economic, market and business conditions, competition for qualified
staff, the regulatory process and actions, technical issues, new legislation,
uncertainties resulting from potential delays or changes in plans,
uncertainties resulting from working in a new political jurisdiction,
uncertainties regarding the results of exploration, uncertainties regarding
the timing and granting of prospecting rights, uncertainties regarding the
timing and granting of regulatory and other third party consents and
approvals, uncertainties regarding the Company's or any third party's ability
to execute and implement future plans, and the occurrence of unexpected
events.

Actual results achieved may vary from the information provided herein as a
result of numerous known and unknown risks and uncertainties and other
factors.

 

 

**ENDS** 

For further information, please contact: 

 GreenRoc Mining Plc                                        +44 20 3950 0724

 Stefan Bernstein, CEO 

  
 Cairn Financial Advisers LLP (Nomad)                       +44 20 7213 0880

James Caithie / Sandy Jamieson / Louise O'Driscoll 

 
 Oberon Capital (Broker)                                    +44 20 3179 5300

 Nick Lovering / Adam Pollock

   
 St Brides Partners Ltd (Financial PR & IR)                 +44 20 7236 1177

 Paul Dulieu / Isabel De Salis / Isabelle Morris           greenroc@stbridespartners.co.uk

  

 

About GreenRoc

GreenRoc Mining plc is an AIM-quoted company which is developing mining
projects in Greenland in critical, high-demand and high-value minerals. Led by
a group of highly experienced mining industry professionals, GreenRoc has 100%
ownership of the following high-grade critical mineral projects both of which
benefit from defined Resources:

 

·     The Amitsoq Graphite Project, the Company's flagship project and
one of the highest-grade graphite deposits in the world with a combined
Measured, Indicated and Inferred JORC Resource of 23.05 million tonnes (Mt) at
an average grade of 20.41% graphite, giving a total graphite content of 4.71
Mt; and

 

·     The Thule Black Sands Ilmenite Project ('TBS'), which has an
initial Mineral Resource of 19Mt at 43.6% Total Heavy Minerals with an in-situ
ilmenite grade of 8.9%.

 

Key Points about Amitsoq, GreenRoc's Flagship Asset

1.    Amitsoq is located in the Nanortalik region of southern Greenland, in
year-round ice-free waters and on the same latitude as far northern
Scotland.

2.    GreenRoc is focused on fast-tracking the development of Amitsoq into
a producing mine in the shortest possible timeframe to meet critical demand
from Electric Vehicle ('EV') manufacturers in Europe and North America for
new, high grade and conflict-free sources of graphite.

3.   The Amitsoq Island Deposit has a total inferred, indicated and measured
JORC Resource of 23.05 million tonnes (Mt) at an average grade of 20.41%
Graphitic Carbon ("C(g)"), giving a total graphite content of 4.71 Mt. This
makes Amitsoq one of the highest-grade graphite projects in the world.

4.   Significant further resource upside exists at Amitsoq as the Amitsoq
Island Deposit is open in at least two directions, with potential for
considerable further expansion via the similarly high-grade Kalaaq Mainland
Deposit as well as a series of other high-grade targets within GreenRoc's
licence package.

5.   The Amitsoq Island Deposit was in small-scale production about 100
years ago, and there remains considerable underground mine development in
place from that time, which will be of considerable benefit to GreenRoc in the
mine construction phase.

6.   In GreenRoc's test work programmes:

a.   Micronisation and spheronisation test work has proven that Amitsoq
graphite can be readily upgraded to high-grade, anode-quality graphite, known
as high purity spherical graphite or cSPG, a critical component in the Li-ion
battery of an EV.

b.   Amitsoq spheronised graphite has achieved higher than 99.95% purity
with relatively little energy input and processing and using a milder alkaline
purification method compared to the industry standard hydrofluoric acid,
boding well for future production costs and sustainability commitments.

c.   Electrochemical testing of Amitsoq graphite anode material within a
test Li-ion battery cell has shown that it performs very well, in part due to
its good crystallinity.

7.   The results of a Preliminary Economic Assessment (or PEA) for Amitsoq
released on 31 October 2023 give a post-tax NPV8 for the Project of US$179M,
an IRR of 26.7% and capex estimated at US$131M (including a 25%
contingency).  These figures solely relate to the economics of a mining and
primary processing operation in South Greenland and do not take into account
any potential upside from a downstream processing operation which GreenRoc
intends to establish in Europe or the USA.

8.   In relation to that downstream business, GreenRoc is currently
undertaking a Feasibility Study into the establishment of a graphite
spheronisation processing plant to produce cSPG from graphite concentrate
delivered from Amitsoq. This Feasibility Study, which is expected to be
completed in H1, 2024, has been part-financed by a grant of approximately
£250,000 from the UK's Automotive Transformation Fund.

9.   Following a detailed evaluation process, the European Raw Materials
Alliance has expressed its support of GreenRoc and its Amitsoq graphite
project, stating that: "GreenRoc's graphite resource is of global importance
and, together with the Company's strategy, will enable the European Union to
achieve a certain level of independence for the electrical vehicle supply
chain. ERMA has approved the Amitsoq Graphite project and will engage to
support its development and financing to produce these critical raw materials
for the benefit of the European Union goals." (see RNS dated 8 February 2023).

 

 

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