Reviewing Various Options To Unlock Tanzanian Project’s Value
Marvel Gold Limited (ASX: MVL) has received numerous investor enquiries about its 100%-owned Chilalo Graphite Project in Tanzania and is giving consideration to the best pathway to maximise value for Marvel shareholders, including a possible demerger and IPO.
Managing Director, Phil Hoskins, said the interest in Chilalo comes at a time when the graphite market outlook is very strong with electric vehicles forecast to drive +700% growth in natural graphite demand by 2025 according to Roskill.
Global demand for ex-China graphite supply has increased since the onset of the COVID-19 pandemic and a strict focus on ethically sourced supply chains. Given China historically accounts for ~70% of global graphite supply, this is a compelling opportunity for projects with product quality such as Chilalo.
“Chilalo is the forgotten sleeper within Marvel’s asset portfolio,” Mr Hoskins said.
“Since re-positioning the company in March last year, our focus has quite rightly been on advancing our exciting gold projects in Mali, where the Tabakorole Project has grown to a near one million ounce resource with resource expansion drill results expected imminently. Notwithstanding that focus, Chilalo remains a quality asset, and the company has continued to entertain interest from strategic investors, industry partners and project financiers.
“The graphite market is now primed for new entrants as the electrification of the world grows from concept stage to mainstream acceptance. Chilalo, as a world-class graphite project permitted for construction, is strongly positioned to secure development finance.
“Investor enquiry has recently intensified, and we are pro-actively assessing transaction options for Chilalo that optimise value to Marvel shareholders. The Company intends to finalise the preferred path as soon as possible and we look forward to providing updates as this develops.”
A definitive feasibility study (DFS) completed in January 2020 demonstrated that the Chilalo Project is a robust project based on a Probable Ore Reserve of 9.2 million tonnes, underpinning an estimated 18-year mine life producing approximately 50,000tpa. Key outcomes of the DFS included:
- Post-tax NPV8 of US$331 million
- Post-tax internal rate of return of 36%
- Post-tax payback period of 3.5 years
- Pre-production capital cost of US$87.4 million
- Average annual EBITDA of US$74 million
The DFS, which was prepared to a bankable standard to support a decision to mine and finance, positions the Chilalo Project as the centrepiece of a company that is a vertically integrated manufacturer of high-value graphite products.
Chilalo is permitted for development with environmental approvals, a granted mining licence, community relocation arrangements and compensation agreed and approved. The highest environmental, social and governance (ESG) standards have been adopted in the DFS with documentation associated with environmental and community factors aligning with IFC Performance Standards and the Equator Principles.
Progression to construction could proceed as soon as financing is secured, and the Company has continued discussions with many potential financiers and strategic investors who continue to view Chilalo as a quality graphite project having significant economic potential.
