The Renascor Resources Ltd (ASX: RNU) share price took a tumble today after the mining company released an update on its proposed Siviour Graphite Project in South Australia.
Renascor Resources says it is in the "advanced stages" of revising its Battery Anode Material Study (BAM Study) for the site in Bolivar.
The company expects to complete the study in July.
Let's look at the details of the update shortly.
First, some quick background on this ASX small-cap share.
Renascor Resources share price finishes in the red
The ASX graphite share finished down 8.7% to 21 cents at the market close on Wednesday.
Renascor Resources is looking to capitalise on the clean energy movement by developing a vertically integrated graphite mine and manufacturing project.
The aim is to produce sustainable and ethically sourced battery anode material for the lithium battery market.
One of Renascor's points of difference is an eco-friendly purification process to produce purified spherical graphite (PSG).
This is the type of graphite used in the anode component of lithium batteries.
The Siviour Project has three divisions:
- The Siviour Graphite Deposit — the world's second-largest proven graphite reserve and the largest outside of Africa
- The Siviour Graphite Mine and Concentrator — a conventional open-pit mine and a crush, grind, and
float processing plant - A Battery Anode Material Production Facility — for the manufacturing of PSG.
What's in the BAM Study?
As part of the study, Renascor is considering whether it can lift production capacity and also develop a plan for staged operational expansion "to meet projected demand".
The company has previously estimated production at 28,000 tonnes of graphite per annum.
Renascor says it can speed up the start of construction of its upstream processing plant. It intends to begin buying long-lead time infrastructure items this quarter.
It will also commence the tendering for front-end engineering and design (FEED) this quarter.
The company says all engineering work on the upstream mine and concentrator is complete.
It is nearing completion of the engineering and design work on the downstream operation.
Inflation likely to push costs higher
The revised BAM Study will include revised cost estimates for building the project.
In its statement, Renascor said:
While it is anticipated that the estimated capital costs will be subject to inflationary pressures, Renascor expects the improvements in productivity and the strong graphite market outlook will ensure the BAM project will continue to demonstrate robust returns and support a favourable final investment decision later this year.
Renascor Managing Director David Christensen said:
Our technical team is making excellent progress on our updated, optimised Battery Anode Material Study which seeks to increase our projected PSG production capacity to meet the growing demand for graphite in lithium-ion batteries.
We look forward to the completion of the BAM Study and our transition into the construction phase of a long-life operation that will produce globally competitive, 100% Australian-made battery anode material.
Renascor says its graphite deposit is unique due to its scale and near-surface, flat orientation.
The company says this will allow it to produce low-cost graphite concentrate over a 40-year mine life.
What's the future for graphite?
Benchmark Mineral Intelligence predicts graphite demand will grow at an annual compound rate of 10.5% over the next 10 years, but supply will only expand by 5.7% per annum.
Benchmark's Natural Flake Graphite Forecast tips the battery industry will consume two-thirds of the world's flake graphite by 2025, increasing to 79% in 2030.
Renascor Resources share price snapshot
The ASX mining share has risen in value by 606% over the past five years.
Over the past 12 months, the Renascor Resources share price has dipped 29%.
The S&P/ASX All Ordinaries Index (ASX: XAO) fell by 0.6% over the same period.
