Giyani Metals’ K-Hill promises to be a multi-billion pula spinner after the company preliminary economic assessment (PEA), the company said on Thursday when announcing the results.
The K-Hill manganese project has shown to show strong economic potential, with findings based on 1.1 million tonnes – which the company says will produce 245,000 tonnes over the 9-year life span. The mined high purity electrolytic manganese metal is expected to push the company’s pre-tax net present value (NPV) of $369 million, and an after tax of $285 million, based on a 10 percent discount rate.
The Canadian junior explorer, Giyani, expects pre-production capital injection of $108.5 million, and then further inject about $9.9 million to sustain production, while $17.8 million has been eyed for contingency. The closure costs for total project capital has been pegged at $188 million. The company is hinging its project economics on a projected average price of $4,700 per tonne when selling the high purity electrolytic manganese metal.
The project promoters estimates that the project should be able to operate comfortably at a general and administrative operating cost of $3 million per year, and the royalty paid to the Botswana government from the sale of manganese is 3 percent. Furthermore, the company said the success of the project will be dependent on established logistics chain and infrastructure in a well-developed and mining friendly jurisdiction.
The company further announced that economic viability of the project rests on a growing demand for battery grade manganese products, which would attract multiple offers of project financing from mining-focused investors. It was also revealed that opportunities exist to improve returns through further enhancement of of K-Hill mineral reserves, and the addition of of other deposits within the greater Giyani licence area which includes Otse and Lobatse deposits.
“We are extremely pleased with the completion of the PEA for K-Hill, our first deposit in Botswana, and we are even more delighted with the findings of this report which demonstrates the strong economic potential of the K-Hill manganese project. Our immediate next steps are to continue hydrometallurgical testing with electro-refining to produce high purity EMM samples for testing by battery makers. We will move forward with a definitive feasibility study in order to upgrade K-Hill into a mineral reserve through a targeted reserve drilling campaign, and ultimately develop a mine plan for the K-Hill project,” said Robin Birchall, CEO of Giyani Metals Corp.
However, Giyani warned that the PEA is considered preliminary in nature and includes inferred mineral resources that are considered “too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and accordingly there is no certainty that the preliminary economic assessment will be realized”. The expected accuracy of costs in the PEA are within a -35% to +45% level of confidence, the company said.
Manganese has become a hot commodity as companies position themselves for the emerging electric vehicle value chain, with the element poised to replace nickel, cobalt and aluminium to be the preferred commodity for manufacturing of batteries for electrical batteries.
After dabbling in several project opportunities in recent years, including an oil and coal infrastructure opportunity in Turkey, and gold exploration in north-eastern South Africa, Giyani is now focusing on manganese prospects in Botswana. The company in October 2017 agreed to acquire an 88 to 95 percent interest in various prospecting licences in Botswana that are under explored and highly prospective of manganese development. The significant 13, 283.1 km2 land package included the K. Hill manganese mine.