IMX Resources Limited: Chilalo Graphite Project Pre-Feasibility Study Results

West Perth WA (FSCwire) - IMX Resources Limited (ASX: IXR) (‘IMX’ or the ‘Company’) is pleased to announce the results of the Pre-Feasibility Study (the ‘PFS’ or the ‘Study’) for its Chilalo Graphite Project (‘Chilalo’ or the ‘Project’) located in south-east Tanzania. The results of the PFS confirm the emergence of Chilalo as a market-leading graphite project that on all objective measures compares highly favourably with other graphite projects. The PFS results strongly support the Company’s strategy of focusing its efforts on advancing Chilalo as an outstanding near-term development opportunity.


HIGHLIGHTS

- Chilalo is technically sound with high margins, low capital intensity and attractive returns

- Pre-tax internal rate of return (IRR) of 62%

- Pre-tax NPV10 of US$200 million

- Average annual EBITDA of US$47 million over 10 year mine life

- Life of Mine (‘LOM’) average operating cost of US$490 per tonne FOB – lowest compared to similar scale projects and cost-competitive with Chinese graphite supply

- Metallurgical testing confirms high quality product in all respects: grade, flake size distribution, purity – delivering an attractive forecast basket price of US$1,217 per tonne for the Base Case and US$1,456 per tonne for the Alternative Case

- Pre-production capital expenditure of US$74 million (including contingencies), pre-tax payback period of 1 year and 7 months,

- Open pit mining (on an owner operator basis) and conventional flotation processing

- Average annual production of 69,000 tonnes of graphite concentrate

- PFS results to enhance ongoing offtake and financing discussions


Cautionary Statement

The company advises the PFS referred to in this announcement is based on lower-level technical and preliminary economic assessments, and is insufficient to support estimation of Ore Reserves or to provide assurance of an economic development case at this stage, or to provide certainty that the conclusions of the Study will be realised. The Production Target referred to in this announcement is partly based on Inferred Mineral Resources (being 31%). There is a low level of geological confidence associated with the 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 or preliminary economic assessment will be realised.

Mr Phil Hoskins, IMX’s Managing Director commented, “Completion of the PFS is an important milestone for IMX and the Chilalo Graphite Project, with the strong outcomes giving us a great deal of confidence that Chilalo will be a highly competitive, low-cost, high-margin open-pit operation incorporating conventional processing. The results strongly endorse our commitment to continuing to progress the Project towards production and will support due diligence work currently being carried out by several parties interested in Project offtake and financing. Our immediate priority is to conclude these discussions with potential offtake partners to secure binding agreements. We will also look to finalise the environmental certificate and mining licence, which will clear the way for the development of Chilalo.”


KEY STUDY OUTCOMES

The purpose of the Study was to assess the viability of an operation producing a high quality flake graphite product with a particular focus on low capital and operating costs and ease of execution.

The PFS Base Case producing 69,000 tonnes per year can be delivered for a total pre-production capital cost of US$73.8 million, while the FOB operating costs of US$490 per tonne ensure the Project is highly competitive with similar scale projects. These factors combine to generate excellent project economics, including:

- Pre-tax NPV of US$200 million
- Pre-tax IRR of 62%
- Pre-tax payback period of 1 year and 7 months

These results can be attributed to the high grade of the Chilalo Mineral Resource, close proximity to existing infrastructure and Chilalo’s outstanding product specifications, with significant proportions of large and jumbo flake graphite, which have yielded an attractive forecast basket price of US$1,217 per tonne.

Figure 1 and Figure 2 below compare IMX’s Chilalo Project with other developing graphite projects and demonstrate the attractive operating and capital cost outcomes of the PFS. The comparisons have excluded projects in production and those projects targeting annual production of greater than 120,000 tonnes per year as they are not considered to be comparable to the Chilalo PFS base case.

Unit operating costs and capital intensity ratios are largely driven by production volumes. As a result, for the purposes of comparison, only projects with a similar scale to Chilalo have been used and larger scale projects proposed by companies such as Syrah Resources, Triton Minerals and Magnis Resources have been excluded.

IMX is confident that it can generate unit operating costs and a capital intensity ratio that are comparable to such larger scale projects should it seek to increase its scale of production at Chilalo. The Company believes that the proposed size of the Chilalo Project would have a number of advantages over a larger scale development, including a lower capital cost, a more rapid timeline to production, greater ease of selling all the product and increased ability to raise project finance.


Figure 1. Capital Intensity v Operating Cost per tonne (<120kpta Projects, Total Capital in Brackets)

http://www.fscwire.com/sites/default/files/NR/740/8812_IMXFigure1Nov222015.jpg

Amounts are in US$. Exchange rates for TSX listed companies with CAD figures was 1:0.75.


Figure 2. Total Capital Cost Vs Operating Costs per tonne (<120kpta Projects)
http://www.fscwire.com/sites/default/files/NR/740/8812_IMXFigure2Nov222015.jpg

Amounts are in US$. Exchange rates for TSX listed companies with CAD figures was 1:0.75.


NEXT STEPS

The Company sought to move quickly from the high-level study completed in March this year to a PFS that would enable a smooth transition to a Definitive Feasibility Study (‘DFS’). This has allowed for a significant amount of information to be gathered that will allow for a DFS to be more readily finalised.

Study Manager BatteryLimits’ Managing Director Phil Hearse said, “The PFS is supported by a rigorous metallurgical testwork program on the fresh and transition ores in particular. The operating costs have been estimated to a high level of detail for a PFS, and there is high confidence in the PFS outcomes. The joint experience of BatteryLimits on Tanzanian projects, together with IMX’s Project Manager Greg Entwistle’s African experience, has resulted in delivering a PFS with competitive capital and operating cost estimates. The nature of the PFS and the information obtained during the Study means that IMX is well placed to efficiently complete a DFS.”

There is an opportunity to significantly improve project economics with further metallurgical testwork, not only on optimisation of work already completed, but on low-grade and oxide ore which is expected to confirm the amenability of such material to commercial processing and enable improved recoveries and product specifications. Completion of this testwork would then allow for design enhancements and DFS engineering work.

Given the future direction of the Project is dependent on offtake and financing, the Company will continue its efforts to secure binding agreements, the completion of which will significantly de-risk the Project and largely ensure the development of Chilalo. A visit to China is planned in the coming week, the purpose of which is to progress discussions that are already at an advanced stage.

The Company expects to receive the Environmental Certificate for development of the Project before year end and together with the Study, paves the way for submission of a mining licence application. The application is expected to be submitted in the coming weeks and the mining licence granted early in 2016.

Further details on the Study are included in the following pages.

To view the graphic in its original size, please click here
http://www.fscwire.com/sites/default/files/NR/740/8812_imxnov222015007.jpg


Phil Hoskins
Managing Director



For further information, please contact:

IMX Resources Limited
Phil Hoskins – Managing Director
Tel: +61 8 9388 7877

Stuart McKenzie – Commercial Manager and Company Secretary
Tel: +61 8 9388 7877

Media:
Michael Weir/Richard Glass – Citadel-MAGNUS
Telephone: +61 8 6160 4903



CHILALO GRAPHITE PROJECT: DETAILS OF PRE-FEASIBILITY STUDY
http://www.fscwire.com/newsrelease/chilalo-graphite-project-pre-feasibility-study-results