SRG Announces Positive Economic Results of Updated Feasibility Study for Lola Graphite Project
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SRG Mining Inc.
1320 Graham, Suite 132
Ville Mont-Royal, Québec
H3P 3C8
SRG Announces Positive Economic Results of Updated Feasibility Study
for Lola Graphite Project
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Annual Production Doubled to 94,000 tpa Graphite in Concentrate
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Modest Increase in Capital Costs of US$185 Million Compares
Favourably to Industry Average Capital Intensity
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After-Tax NPV8% of US$218 Million and IRR of 25% over 17 years
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Financing, Offtake and Strategic Partnership Discussions Progressing
PRESS RELEASE FOR IMMEDIATE RELEASE
Montreal, Quebec, February 27, 2023 - SRG Mining Inc. (TSXV: SRG) (“SRG” or the “Company”)
today welcomes the positive results of an independent Updated Feasibility Study (“UFS”) for the high-
quality Lola Graphite Project in the Republic of Guinea. T he Lola Graphite Project 2023 UFS
evaluates a doubling in annual production capacity from the previous 2019 Lola Graphite Project
Feasibility Study to an average of 94,000 tonnes of graphite flakes in concentrate per annum (“ktpa”)
over its 17-year life of mine. The UFS was prepared by DRA Global Limited (“DRA”).
Highlights of the Updated Feasibility Study for the Lola Graphite Project include:
• After-tax net present value (“NPV”) at a real 8% discount rate of US$218 million.
• After-tax internal rate of return (IRR) of 25%.
• After-tax project payback period of 3.2 years.
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• Pre-production capital costs, including contingency, estimated at US$185 million compare
favourably to industry standards.
• Life-of-mine average cash operating costs of US$585 per tonne of concentrate.
• Life-of-mine average concentrate production doubled to 94ktpa, with an average concentrate
grade of 95.4% graphite.
The UFS was prepared in compliance with Canadian National Instrument 43 -101 – Standards of
Disclosure for Mineral Projects (NI 43-101).
The UFS is the first phase of the Company’s integrated business model aimed at the creation of a
mine-to-market active anode material producer, hosting a large high-purity graphite production mine
and concentrator in Africa and a value-added, coated spherical purified graphite (“CSPG”) conversion
facility in Europe, North America, Middle East or Africa. The Company anticipates publishing the fully
integrated business model in Q2 202 3 upon completion of the independent preliminary economic
assessment (“PEA”). Dorfner Anzaplan GmbH, a leading consultancy and engineering company for
industrial, specialty mineral and metal projects, based in Hirschau, Germany, is in final phases of
completing the PEA.
The UFS focuses on an open pit mine which targets the oxide and fresh rock reserves of the Lola
Graphite Project, which have an estimated 6.4 Mt of Proven Reserves grading 4.38% Cg and 34.5 Mt
of Probable Reserves grading 4.09% Cg. The processing plant will consist of a conventional crusher,
concentrator, floatation, dewatering and screening circuit . The Company anticipates exporting the
final product by road through the port of Monrovia in the Republic of Liberia.
“The Updated Feasibility Study is the latest validation that Lola Graphite Project has the resources to
become one of the world’s largest graphite producers at attractive capital and operating costs,” said
Mr. Matthieu Bos, President and Chief Executive Officer of SRG . “Discussions are continuing with
potential strategic partners and lenders to support our advance towards the development of the first
graphite mine in the Republic in Guinea.”
“These results are the culmination of many months of studies to de -risk the project and add to its
robustness using reasonable estimates and ass umptions,” Mr Patrick Moryoussef, Chief Operating
Officer of SRG added. “The cost estimates of the project reflect Q4 2022 market prices of equipment
and raw materials which are likely at the peak of the current inflationary cycle. Basic engineering will
focus on improvements in the front-end of the plant, tailings management, connection to the national
electricity grid and reducing the mining footprint.”
Economic Sensitivities
Over the life of the mine, the Lola Graphite Project is expected to produce an average of 94 ktpa of
saleable graphite flakes in concentrate . At an average sale price of US$1,400 per tonne, this
represents US$131M annual revenue incurring average operating costs of US$585/t representing
US$54M operating cash flow annually. Given the volatility of graphite prices in recent years an d the
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bilateral nature of the sales contracts, a sensitivity analysis of the project’s economics is presented
below.
Table 1: Updated Feasibility Study Sensitivity Analysis
LoM Average Sales Price
(US$/t) $1,120 $1,260 $1,400(1) $1,540 $1,681
Post-Tax Results
Avg. Revenue
(US$M p.a.)(2) $105 $118 $131 $144 $157
Avg. Operational Cash Flow
(US$M p.a.)(2) $36 $45 $53 $62 $71
NPV8%
(US$M) $78 $148 $218 $287 $357
IRR
(%) 15% 20% 25% 29% 33%
Payback
(Years) 4.8 3.7 3.2 2.8 2.5
1. Base Case, based on consensus pricing
2. Excluding Year 1 and 17 which don’t represent steady-state production
Mineral Resource and Reserve Update
The resource estimate was established using data from boreholes drilled and sampled up to
December 1, 2018. The total resource estimate of the Lola Project includes Measured and Indicated
Resources of 54.0 Mt grading 3.98% Cg, and Inferred Resources of 12.3 Mt grading 3.6% Cg. The
resource estimate has been prepared using a cut -off grade of 1.0% Cg for oxides and 1.4% Cg for
fresh rock.
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Table 2: Lola Graphite Project Resource Statement
Category Tonnage (Mt) Grade (% Cg) Contained Cg (kt)
Oxide 7.78 4.04 314.6
Fresh Rock 0.47 4.01 19.0
Measured Resources 8.26 4.04 333.6
Oxide 25.40 3.83 972.6
Fresh Rock 20.29 4.14 839.3
Indicated Resources 45.70 3.97 1,812.0
Total M&I Resources 53.96 3.98 2,145.6
Oxide 10.97 3.52 386.4
Fresh Rock 1.33 4.23 56.1
Inferred Resources 12.30 3.60 442.5
Notes:
1. Mineral Resources has been estimated by the Resources QP.
2. The Mineral Resources are reported in accordance with the CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared
by the CIM Standing Committee on Reserve Definitions and adopted by the CIM Council.
3. Resources are constrained by a Pseudoflow optimised pit shell using HxGn MinePlan software.
4. Pit shell was developed using a 34-degree pit slope in oxide and 42-degree pit slope in fresh rock, concentrate sales price of US$1,389/t concentrate,
mining costs of US$2.75/t oxide, US$3.25/t fresh rock, processing costs of US$10.25/t oxide and US$15.18/t fresh rock processed, G&A cost of
US$1.52/t processed and transportation costs of US$50/t concentrate, 84.2% process recovery and 95.4% concentrate grade and an assumed 100,000
tpa concentrate production.
5. Mineral Resources, which are not Mineral Reserves, do not have demonstrated economic viability. The Mineral Resources estimate may be materially
affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues. There is no certainty that Mineral
Resources will be converted to Mineral Reserves.
6. The Inferred Mineral Resource in this estimate has a lower level of confidence than that applied to an Indicated Mineral Resou rce and cannot be
converted to a Mineral Reserve. It is reasonably expected that the majority of the Inferred Mineral Resource could be upgraded to an Indicated Mineral
Resource with continued exploration.
7. Contained graphite without mining loss, dilution, and processing recovery (In -situ).
8. The effective date of the estimate is February 27, 2023.
9. The open pit Mineral Resources are estimated using a cut-off grade of 1.0 % Cg oxide and 1.4% Cg fresh rock.
10. Totals may not add due to rounding.
The Lola Graphite Project is characterised by its oxide surface mineralization, which continues along
strike and at depth into the fresh rock bed. For the UFS, mining operations considered the mineralized
material contained in the oxide weathered lateritic and saprolitic zones, as well as the mineralized
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material contained in the fresh rock formation. The total reserve estimate includes Proven and
Probable Mineral Reserves of approximately 40.9 Mt grading 4.14% Cg . To access these Mineral
Reserves, 35.9 Mt of overburden and waste rock must be mined, resulting in a low life-of-mine strip
ratio of 0.88:1.
Table 3: Lola Graphite Project Reserve Statement
Category Tonnage (Mt) Grade (% Cg) Contained Cg (kt)
Oxide 6.15 4.38 269.5
Fresh Rock 0.28 4.34 12.2
Proven Reserves 6.43 4.38 281.8
Oxide 20.38 4.10 835.5
Fresh Rock 14.12 4.08 576.2
Probable Reserves 34.50 4.09 1,411.1
Total Reserves 40.93 4.14 1,694.7
Notes:
1. Mineral Reserves has been estimated by the Reserves QP.
2. The Mineral Reserves are reported in accordance with the CIM Standards on Mineral Resources and Reserves, Definitions and Gui delines prepared
by the CIM Standing Committee on Reserve Definitions and adopted by the CIM Council.
3. The effective date of the estimate is February 27, 2023.
4. Mineral Reserves are included in Mineral Resources.
5. Pit shell was developed using a 34-degree pit slope in oxide and 42-degree pit slope in fresh rock, concentrate sales price of US$1,289/t concentrate,
average mining costs of US $3.25 /t ore oxide, US $3.75 /t ore fresh rock, US$2.75 /t waste oxide and US $3.25 /t waste fresh rock, processing costs
of US$12.71 /t processe d, G&A cost of US $1.52 /t processed and transportation costs of US $50/t concentrate, 84.2% process recovery and 95.4%
concentrate grade and an assumed 100,000 tpa concentrate production.
6. The Mineral Reserves are inclusive of mining dilution and ore loss.
7. Contained graphite before processing recovery. Mining loss and dilution applied.
8. The open pit Mineral Reserves are estimated using an optimal cut -off grade of 1.9 % Cg.
9. The strip ratio for the open pits is 0.88 to 1.
10. The Mineral Reserves are stated as dry tonnes delivered at the crusher.
11. Totals may not add due to rounding.
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Mining and Processing
The Company anticipates using a contract-mining operation to mine approximately 2.6Mtpa of ore
and 2.3Mtpa of waste in a conventional drill-and-blast mining operation. The resulting average head-
grade to the processing facility is 4.14% Cg.
The mineral processing plant consists of a c rushing area and a concentrator where material
beneficiation and concentrate dewatering, screening, and packaging takes place. The process
flowsheet includes crushing, grinding, rougher flotation, polishing, and cleaner flotation. The back end
of the concentrator includes tailings thickening, concentrate filtration and drying, dry screening and
bagging of graphite products, and material handling. All the tailings from the concentrator will be
thickened and pumped to the lined tailings ponds. Reclaiming water from the tailings ponds has been
considered in the process design to minimize freshwater makeup to the concentrator.
Figure 1: Processing Plant Lay-Out
The graphite concentrate will be recovered by a conventional flotation process at an overall recovery
over the life of mine of 83.6%. Saprolite ore beneficiation process has an overall graphite recovery of
73.1%, producing a graphite concentrate grade of 95.4 % Cg. The addition of up to 45% of fresh rock
in the feed blend improves the average graphite recovery over the life of mine to 83.6%. Over the life
of the mine, the processing plant is expected to produce graphite concentrate divided into four
standard-size fractions: +48 mesh, -48+80 mesh, -80+100 mesh and -100 mesh.
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Table 4: Life-of-Mine Size Fraction Distribution
Size Fraction (Mesh) Life-of-Mine Distribution Concentrate Grade (% Cg)
+48 13.4% 97.0%
-48 to +80 26% 96.0%
-80 to +100 9% 94.5%
-100 51.6% 94.9%
Total 100% 95.4%
Note: Based on oxide Reserves. Numbers may not add due to rounding (Year 17 not included)
The Company expects a 14-month construction period followed by a 3-month commissioning phase
and a 3-month ramp-up phase to reach steady state production.
Table 5: Summary Technical Assumptions
Life-of-Mine Average
Strip Ratio (ratio) 0.88
Total Ore Milled (Mtpa) 2.6
Head Grade (% Cg) 4.14
Metallurgical Recovery (%) 83.6
Concentrate Production (ktpa) 94
Construction Period (months) 14
Commissioning & Ramp-Up (months) 3 + 3
Note: 2. Excluding Year 1 and 17 which don’t represent steady-state production
Capital and Operating Costs
The projected capital and operating costs for the project are presented below in Table 6 and 7 and
have an accuracy of +/-15%. The costs include the Company’s contract mining operations, an owner
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operated processing facility using its own power generators (5 generators for a total installed capacity
of 13 MW) as well as a logistics operation to the port of Monrovia. There is further scope to reduce
these costs as the Company explores the viability of third -party contractors working in close
collaboration with the Company on certain elements of the operating cost . A key focus area for the
Company will be to investigate to possibility to connect the Lola Graphite Project to the national
electricity grid, which would yield significant savings on the pre-production capital costs. The average
annual sustaining capital expenditure over a 17-year period is US$6M.
Table 6: Pre-production Capital Costs
Category US$M
Mining $8M
Process Plant $62M
Tailings & Water Management $4M
Site Infrastructure $11M
Power Plant & Distribution $36M
Preliminary & General $16M
Total Direct Costs $136M
Indirect $25M
Owners $6M
Contingency $17M
Total Costs $185M
Note: Numbers may not add due to rounding