Madagascar Energizer is NOT the "Bunny" with the Drum - NOR is OPEC part of OPEX Buyer Caution

Energizer expects synergies between Madagascar graphite and coal projects
TORONTO (miningweekly.com) – Toronto- and Frankfurt-listed Energizer
Resources believes synergies betweenits Molo graphite project and the
neighbouring Sakoa coalfield may be realised sooner than initially
believed, and could potentially positively impact the Molo project's
financial metrics.
Energizer on Wednesday reported the findings of a graphite grade and
operating cost (opex) sensitivity analysis, which would be
incorporated into a preliminary economic analysis (PEA) technical
report update currently being compiled by Johannesburg-based DRA
Mineral Projects.
The company in February published the results of a PEA for the
project, which had found the project to hold an after-tax net present
value (NPV), usinga 10% discount rate, of$341.8-million, and an
after-tax internal rate of return (IRR) of 41%.
The project was expected to cost $162.04-million to construct and
would produce about 84 000 t/y of 98% to 98.6% pure flake graphite,
which was expected to sell at an average market price of about $1
564/t.
Energizer on Wednesday said it believed this numberto be conservative,
as it did not reflect optimisationof graphite flake-size distribution
through pilot-plant testwork.
Correspondingly, the baseline opex cost of$523.45/t of graphite was
believed to be conservativeas it assumed all power for the project
would be supplied by containerised diesel power generation, and that
all road maintenance for the transport corridor to the port would be
Energizer's responsibility.
This opex cost included graphite transport from theplant to the port
and onboard vessels.
However, the company believed opex could decrease with the development
of the neighbouring Sakoa coalfield projects, which the company
expected would provide it with the opportunity to buy 'over the fence'
power from a new coal-fired power station, as well as opex savings as
a result of infrastructure sharing and accelerated port development.
Energizer said there would be coal test shipments to the Port of
Soalara starting later this year, which could bring these benefits to
the company sooner than expected.
"The sensitivity analysis used conservative baselinegraphite pricing
and opex costs, yet still illustrates the robust nature of the
project. If the graphite price falls off by 25% and there is a 20%
opex cost over-run, the project still has very positive IRR and NPV
values," Energizer president and COO Craig Scherba said in a
statement.
According to the sensitivity analysis, in a worst-case scenario, where
the opex had shot upto $628.10/t and the market price for graphite had
fallen to $1 173/t, theproject still had an IRR of 23.7%. Using the
same parameters, the NPV woulddecline to $104.8-million.
In a best-case scenario, if the opex fell to $418.80/t and the market
price of graphite was lifted to $1 799/t, the IRR rose to 62%and the
NPV to $640.1-million.
The Molo deposit had a National Instrument 43-101-compliant indicated
resource estimated at 83.99-million tons, grading 6.36% graphite, with
an additionalinferred resource of 40.32-million tons, grading6.3%
graphite.
The deposit is located in the Green Giant graphite project, and is
part of the joint venture property with Malagasy Minerals, in
Madagascar Energizer.

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