Kibaran Annual Report 2018
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20 ANNUAL 18 REPORT Contents Chairman’s report 02 Review of operations 04 Poised to exploit accelerating battery Directors’ report 14 graphite demand via a combined Auditor’s independence declaration 28 graphite mining and manufacturing Financial statements 29 business with a global supply network Directors’ declaration 56 Independent auditor’s report 57 Shareholder information 61 Corporate directory 65 Fully charged for the The Epanko Graphite Project development and spherical graphite business, once established, will form a diversified graphite portfolio, supplying high quality East African natural flake graphite battery supercycle products to established markets in Asia and Europe, together with eco-friendly purified spherical graphite products from manufacturing facilities in each of those regions. 2018 ANNUAL REPORT 20 ANNUAL 18 REPORT 01 CHAIRMAN’S REPORT The latest estimate from the European It starts with the favourable mineralogy A new clean, green process for purifying While there have been delays in Tanzania Union Commission is that the of the Epanko deposit which ensures a the graphite has been developed and as structures were put in place to lithium-ion battery market will be worth quality flake graphite product. This quality patented by Kibaran which avoids the manage the new mining regulations, 250 billion Euro by 2025. This emanates is not only the key to securing off-take use of the very dangerous and toxic there are now strong signs that Tanzania from a paradigm shift in transport agreements but is also a strong driver hydrofluoric acid currently used by is back in business with the new Mining technology to electric vehicles and battery of project economics allowing us to existing manufacturers, all of whom are Commission appointed and operating. storage for the renewable energy sector. produce a pure product from simple, low in China. cost processing. Your Company recently received a This is the very understandable rationale Samples of your Company’s product letter from the new Mining Commission for strong market focus on battery This is reflected in the economics of the have been tested and meet the guaranteeing renewal of the Epanko minerals over the last year. We hear bankable feasibility study completed stringent specifications of major anode Mining Licence for an additional 10 a lot about lithium, cobalt, nickel and last year and which has been subjected manufacturers and the new clean years upon its expiry, subject to normal manganese which together make up the to stringent due-diligence by bank processing technology, trademarked requirements. The guarantee letter is composition of the cathode in a lithium- appointed independent engineers SRK under the name EcoGraf, fully endorsed a major requirement of lenders and its ion battery, but not so much about Consulting Pty Ltd (“SRK”). The result and as having a very strong competitive renewal is an important demonstration of graphite of which 100% of the anode is is a very robust mining project with advantage to existing supply. Government support for the Project. composed. In fact, graphite accounts very strong economics substantially for 47% of the total battery minerals in a de-risked by the conservative design, Another major breakthrough has been The combined mining and manufacturing lithium-ion battery. operating parameters, pricing and costing the successful application of this new business being developed by Kibaran incorporated to ensure unconditional sign EcoGraf processing technology to third provides an opportunity for Tanzania to But it is not just any graphite but a very off by SRK and meet the high standard party flake graphite sourced from graphite become a major player and a key supplier pure graphite product of plus 99.95% required to secure bank financing. It also mines around the world including Europe, for a massive new global industry and graphite carbon capable of handling the included full compliance with IFC and Africa, Asia and the Americas, which has help transform the Tanzanian regional intense operating demands of a battery World Bank social, environmental and constantly delivered carbon purity of economy with jobs, training, technology, anode in an electric vehicle. safety requirements. 99.95% or above from all samples. transport, economic growth, taxes and royalties. There are existing traditional uses for Off-take agreements are in place for The opportunity to manufacture spherical graphite; refractories, foundries, lubricants all production and the project is ready graphite for the growing battery market We are confident that this opportunity etc which are growing modestly and for immediate development waiting is now a reality with pilot test work to will be grasped to the benefit of both some new innovations, but this is being only for clearance from the Tanzanian produce commercial quantities now the Tanzanian people and Kibaran swamped by new demand for graphite Government to allow project financing underway in Germany with financial stakeholders. suitable for use in electric vehicles. to proceed. support from the German Government. Moreover, the timing of this project is no My thanks go out to the Kibaran With 55 kilograms of mined natural In parallel, Kibaran has now completed longer constrained by graphite production management team and directors for flake graphite earmarked for every a feasibility study on the manufacture of from Epanko and given the successful their hard work during the year and to electric vehicle, up to 1 million tonnes spherical battery graphite, conducted by results from third-party graphite, can you, our shareholders, for your patience of additional new mined graphite demand GR Engineering. This involves taking flake proceed independently of Tanzanian and continuing support. It is our goal to is expected in just the next 7 years, graphite product from mine production, production. ensure that this is fully rewarded. producing 500,000 tonnes of battery then processing and purifying it to grade spherical graphite for anode 99.95% pure graphite suitable for anode Your Company has secured off-take manufacturing. manufacture. agreements with blue ribbon partners in Germany and Japan and has secured This new demand for quality graphite financing support from German State is why Kibaran is in business and why Kibaran has now Bank KfW and Australian Government we have spent so much time, effort and lender EFIC. money on the Epanko Graphite Mining completed a Robert Pett Project (“Epanko”) and on production of feasibility study on Epanko is now ready for development. Chairman spherical battery grade graphite for sale It will comply with the new mining directly to anode manufacturers. the manufacture regulations and is only awaiting the completion of negotiations with the This effort is being rewarded with your of spherical battery Tanzanian Government to facilitate bank Company now poised to exploit the financing. opportunity via a combined graphite graphite mining and manufacturing business with a global supply network. KIBARAN RESOURCES ANNUAL REPORT 2018 02 03 REVIEW OF OPERATIONS Epanko Graphite Mining Project (KNL:100%) The Epanko Graphite Project (“Epanko”) SRK have also identified several potential 60,000tpa US$44.5m is well located to infrastructure in value adding opportunities that are south-east Tanzania, approximately expected to enhance the BFS outcomes Natural Flake Annual EBITDA 370km from Tanzania’s key city and and which will be pursued as part of the principal port, Dar es Salaam. Epanko is engineering and design program. easily accessed via multiple road, rail and air transport routes which connect to The BFS is based on the production of Dar es Salaam. 60,000tpa of premium natural flake graphite over an initial operational period Kibaran has a 100% interest in Epanko of 18 years, generating annual EBITDA of through its equity in TanzGraphite (TZ) US$44.5m, a pre-tax NPV10 of US$211m Limited. and a 38.9% internal rate of return. 38.9% US$211m Following the completion of the Pretax NPV Epanko Bankable Feasibility Study Internal Rate of Return 10 (“BFS”) in June 2017, bank appointed Independent Technical Engineer SRK Consulting Pty Ltd (“SRK”) completed their comprehensive review and report, concluding that all technical areas of the BFS satisfy project finance standards and the environmental and social management planning aspects are in accordance with Tanzanian legal Epanko is well requirements, International Finance 100% 18+ Corporation Performance Standards and located to World Bank Group Environmental, Health Interest in Epanko Years of Mine Life and Safety Guidelines. infrastructure in As a result of the conservative approach south-east Tanzania adopted for the BFS design principles, Key Outcomes - BFS June 2017 Table 1 Key Operating Metrics - BFS June 2017 Development period (months) 19 Mine life (years) 18 Average annual throughput (t) 695,000 Strip ratio (waste to ore) 0.4:1 Average feed grade (% TGC) 8.3 Graphite recovery (%) 94.7 Average product carbon grade (%) 96 Graphite production (tpa) 60,000 Mining cost (US$/t processed) 7.93 Processing cost (US$/t processed) 19.61 General & administration cost (US$/t processed) 4.75 Transport and port charges (US$/t sold) 107 C1 FOB cost (US$/t sold) 500 AII In Sustaining Cost (US$/t sold) 572 Pre-production capital cost (US$m) 88.9 KIBARAN RESOURCES ANNUAL REPORT 2018 04 05 REVIEW OF OPERATIONS NEW MINING LEGISLATION strategy for Epanko and confirm aspects DEVELOPMENT PROGRAM GR Engineering is an engineering of the new mineral