234180f0-70ce-44f9-9364-97d5ccf1fc94.pdf


FOR RELEASE

15 December 2015

NACHU GRAPHITE PROJECT UPDATE


  • Sedgman to lead delivery of BFS


  • Project financing and offtake discussions progress


  • Community resettlement program on track


  • Ample water identified for construction


  • Resource and geotechnical drilling completed


    Magnis Resources Limited (ASX:MNS) is pleased to provide the following update on development activities for its Nachu Graphite Project (Nachu).


    Bankable Feasibility Study (BFS)

    Sedgman was recently selected to lead the delivery of the Nachu BFS. With the majority of process engineering and detail design already completed by Logiman, Sedgman in partnership with Logiman will now incorporate this work into the BFS for the project financiers.

    Sedgman is a well respected provider of mineral processing and associated infrastructure solutions to the global resources industry. Sedgman has a strong presence in Africa and its resume of recent projects includes the Benga Coal Project in Mozambique and the Boseto Copper Project in Botswana. Sedgman's capacity to successfully deliver projects throughout the world is recognised by leading financial institutions and its participation in the Nachu Project BFS adds to our list of highly credentialed contributors.


    Project Financing

    Over recent weeks, meetings continued with potential financing partners, including financial institutions and EPC contractors as follows:

  • Senior representatives of SINOMA and Chinese Government authorities;

  • POSCO in relation to the provision of a lump sum fixed price for project construction;


  • Potential project financiers, including investment banks, government agencies and other institutions; and

  • Current and potential project stakeholders including offtake parties, EPC contractors, trading houses and logistics providers in regards to funding.

Securing project finance remains the primary focus of management and current activities are aimed at ensuring that the requirements of the wide range of potential funding sources can be satisfied.


Offtake

In light of the recent promising metallurgical results with concentrates of 99.6%TGC being achieved via a basic flotation process, there has been increased levels of interest shown from potential end users of graphite. Magnis has successfully demonstrated that an environmentally friendly product can be produced without chemical treatment, which simultaneously delivers a high specification product suitable for the lithium-ion battery and expandable graphite markets. Talks continue with our current offtake partners along with significant new interest coming from North America, Europe, Japan and Korea.


Community Resettlement

As part of the community resettlement process for the project development, a valuation of assets for all Project Affected Peoples (PAP) has commenced. The valuation is being conducted by an independent valuation company in accordance with Tanzanian legislation.

While there are some 575 PAP, most comprise small acreage farmers with only an estimated 58 residences requiring relocation. The estimated cost for the resettlement will be based on a strong understanding of the assets in the affected area and the fair value for land access compensation.


Figure 1 - Local community meeting


Water Supply

Three water bores have been drilled approximately 4.5 kms from the proposed plant site area and will be sufficient for construction and potable water uses. Water supply for the process plant post commissioning will be sourced from surface water harvested in the project area. The area receives on average over 1 metre of rainfall per year, mostly during the wet season from December through to late April. A raw water storage dam and the tailings storage facility will maintain supply through the dry season.


Figure 2 - Ample bore water identified for future construction


Resource & Geotechnical Engineering Drilling

The drilling programs completed in late November included 3,691m of reverse circulation (RC) and 1,761m diamond core drilling for a total of 5,452m. The RC drill holes infilled gaps within the existing "F block" Mineral Resource to a nominal 100m by 100m spacing. The holes successfully intersected the mineralised intervals in the positions and at the grades expected and will increase confidence in the geological and resource model, allowing for much of the current Indicated Resource to be reported in the Measured category.

The diamond core holes were completed to assist in the design of the open pits through a geotechnical engineering assessment. Initial observations are highly encouraging, indicating that there are no serious detrimental features that will limit stability, allowing the pit wall angles to be toward the higher end of standard engineering recommendations.

Figure 3 shows the spatial distribution of the drill holes within the existing F Block Mineral Resource area. Further details of the drill holes are provided in Table 1.

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