Lincoln Minerals says it could bring its graphite mine into production for just $29m

Lincoln Minerals’ Kookaburra graphite project on the Eyre Peninsula would cost just $29m to bring into production and generate average earnings of $23m per year, the company says.

Lincoln Minerals’ Kookaburra graphite project on the Eyre Peninsula would cost just $29m to bring into production and generate average earnings of $23m per year, the company says.

The Adelaide-based company on Monday released a prefeasibility study into the proposed graphite mining project near Tumby Bay, saying the mine would run for 16 years and could be developed in a two stage process.

Lincoln Minerals said it would aim to initially sell product into the industrial graphite market using production from stage one, while progressing qualification for suppling into the lithium ion battery supply chain as demand and prices improve.

“Currently the industrial graphite market is paying significantly higher prices, due to robust immediate demand and high value in use,’’ the company said.

“By commencing at lower production scale, Lincoln can establish sale contracts in the industrial graphite markets.

“Once battery market certification and qualifications are obtained, Lincoln will be well placed to take advantage of future increases in graphite prices in the lithium-ion battery market segment.’’

Capital expedniture for stage one would be $29m while stage two would cost another $24m.

Stage one would produce 11,000 tonnes of graphite per year while stage two would produce 62,000 tonnes over years three to seven.

Lincoln chief executive Jonathon Trewartha said the company aimed to be the first Australian graphite producer to market.

“This gives Lincoln a first-mover opportunity which will enhance our ability to secure long-term graphite customers who are increasingly seeking ex-China graphite supply sources,’’ he said.

“Our staged approach to development will also provide the necessary cashflow to assist with funding the subsequent larger scale and longer life stage two production.”

The propsoed mining porject is 35km north of Port Lincoln.

“The project involves mining and processing known graphite deposits in and around the Kookaburra Gully mining lease,’’ ht e company said.

“The mineralisation is processed via simple crushing, flotation, and thickening of the

graphite material to produce a graphite concentrate that is filtered, dried, and bagged for sale to downstream graphite processors.

“Mining will be conducted using conventional truck and shovel open-pit methods with a mining contractor.’’

Lincoln said there was exploration upside, with a number of prospects identified in an airborne survey conducted in 2012.

Lincoln also recently revealed it owns a 1.2bn tonne magnetite resource on the Eyre Peninsula, and had made a submission to the South Australian State Government’s green steel expressions of interest process.

Lincoln holds rights to what was previously Centrex Metals’ iron ore project also near Tumby Bay, which was previously co-owned by Chinese company Wuhan Iron and Steel (WISCO).

The joint venture, which WISCO was a majority owner of, announced plans in 2010 to develop two, five million tonne per year iron ore export operations, however the projects never eventuated, stymied by low commodity prices.

The projects - dubbed the Fusion iron ore project - were costed at $2.5bn at the time, but were rescoped and rescheduled in 2013 due to low iron prices, before being abandoned.

Lincoln shares were steady on 0.6c.

Originally published as Lincoln Minerals says it could bring its graphite mine into production for just $29m