Volt nears approval for USD$40m note issue

ASX listed flake graphite company, Volt Resources, is edging closer towards listing its USD$40m note issue on the Dar es Salaam Stock Exchange, or “DSE”, that will underpin the stage 1 development of its Bunyu graphite project in Tanzania.

The company has now received final formal approval from the stock exchange and is awaiting final approval from the Tanzanian Capital Markets and Securities Authority before proceeding with the note issue.

Volt’s planned issue is the first resources-based note to be listed on the DSE and will help fund the stage 1 development of Bunyu, which will churn out an average of 23,700 tonnes of graphite product per annum over an initial seven year mine life commencing in the later half of 2019.

In July, Volt released a feasibility study for stage 1 of Bunyu that showed the operation would churn out an EBITDA of USD$93.6m over seven years.

Payback on the stage 1 development is estimated by Volt to be a little over 4 years and CAPEX costs were on the lowish side, in the order of about USD$32m.

The stage 1 development carries much of the cost for stage 2, which would see an eventual ramp up to 170,000 tonnes of graphite product annually over a 22 year mine life.

The Bunyu graphite project has a JORC compliant mineral resource of 461 million tonnes grading 4.9% total graphitic carbon, from which it has generated an ore reserve of 127 million tonnes grading 4.4% TGC.

Notably, up to 81.3% of the graphite is in the highly sought-after Super Jumbo, Jumbo and Large flake categories.

There is also substantial exploration upside as the JORC resource covers only 6% of Volt’s tenement holdings.

In October, the company was granted two mining licences by Tanzania’s Ministry of Minerals.

This follows on from Volt securing a second binding offtake agreement in August, to sell 9,000 tonnes of graphite per annum from Bunyu to major Chinese graphite processor and distributor, Qingdao Tiangshengda Graphite, for at least five years.

It also signed a cooperation agreement with HAIDA Graphite, one of China’s largest graphite companies with extensive mining, processing and sales experience, that could lead to an offtake agreement.