Construction of the Lindi Jumbo graphite mine in Tanzania has been ongoing since first mobilisation in late 2021. Lindi Jumbo had been funding the construction through May 2022 from the companion equity contributed by Walkabout Resources.

Since June 2022, the continuation of site construction has been facilitated by the incredible support of the contractors and suppliers to the project awaiting project loan drawdown. The Company advises that due to the delay in debt drawdown from CRDB Bank Plc (CRDB) in Tanzania it will raise up to A$33.17 million to ensure the continuation and completion of the construction at the Lindi Jumbo graphite mine in Tanzania.

While Lindi Jumbo is actively seeking to finalise the debt drawdown, it is necessary to raise equity capital to be utilized as either further loan collateral or to directly fund the mine.

Most of the development capital for the construction of the Lindi Jumbo mine is based on fixed price or fixed rate contracts. To date, more than US$15.0 million has been spent on project development with approximately US$19.1 million of capital expenditure remaining to be spent to complete project construction.

RELATED: Walkabout signs amended binding sales agreement Walkabout commences graphite mining at Lindi Jumbo Lindi Jumbo marches on towards commissioning

Most of the mechanical equipment fabrication work in China is now complete, with the larger and more complex civils work in in Tanzania also nearing completion. Thus, the critical pathways to project completion have been significantly de-risked with no net cost overruns on works performed to date.

The estimated 4.4% increase in Capex from the original budget, amongst other considerations, is due to the delay of the project completion timeline arising from the delay in debt drawdown, additional power equipment to enable grid power, recent increases in operational costs (shipping, fuel, equipment etc) and minor additional expenditure for escalations, QA/QC and the Independent Project Manager as per the CRDB requirements.

In addition to the amount paid to date, a further US$8.1 million of equipment and construction costs have been incurred resulting in US$11.0 million of future cost to construction completion including commissioning of the plant.

Walkabout is seeking to raise a minimum of A$16.5 million and up to circa A$33.17 million through a Rights Issue to enable it to fully fund construction and commissioning of the Lindi Jumbo Graphite Mine in Q1,2023 ahead of ramp up of graphite production.

Walkabout currently also has several active parallel funding initiatives including the continuation of the negotiations towards drawdown of the US$ 20 million CRDB debt facility. Lindi Jumbo received a commitment from CRDB to allow for a 1 for 1 drawdown on the posting of cash as collateral.

Other parallel funding options currently under negotiation are:

Depending on the success of the abovementioned parallel funding initiatives, Walkabout may not require the full amount to be raised through this Rights Issue and the Board reserves its right to scale back applications under the Rights Issue.

The proceeds from the Rights Issue will be used to provide the following as needed and/or necessary:

Walkabout has also secured commitments from shareholders for A$1,000,000 in the form of limited recourse loans to fund short-term working capital. The repayment date of these loans is 31 December, 2023 but the lender may offset the repayment of the loans against any money due to them against any future capital raising by Walkabout. The lenders receive options at A$0.25 cents for the value of the loans and the 6.67 million options expire on 30 April 2023.

Approximately 65% of the mechanical equipment is on site in Tanzania and in the process of being installed. Most of the remaining mechanical equipment has been manufactured by the Company’s EPC Contractor, Jinpeng, and is in storage in China (approximately US$2.0 million worth of equipment). Approximately 77% of the costs of the EPC contract has already been incurred.

An EPC mechanical construction team has been on site from April 2022 working on the assembly and erection of equipment where most of the plate and steelwork was needed i.e., fine-ore bin, thickener, front-end (ROM Bin) and conveyor areas of the processing plant. The civils completed to date were prioritised to these areas.

Post construction responsibilities of the EPC contractor

A core team of the EPC contractor will remain on site until commissioning has been completed, the plant performance guarantee has been fulfilled and the local operators have been suitably trained to operate and maintain the plant. The functional completion of the processing plant will include operational handover of the plant to the Lindi Jumbo operations team. This includes:

Concrete works have been prioritised to accommodate the equipment and structures already delivered to site. The focus remains on the critical areas but due to the delay in the shipping schedule the civil works are no longer on the critical pathway and are currently more than 70% complete against the planned schedule.

The first production blast was successfully completed at the end of June. Within the blast area, all topsoil was removed and stockpiled for later use/rehabilitation prior to blast activity, as stipulated in the Environmental Impact Assessment. The clay rich overburden was used in the construction of the TSF, with the principal purpose of current mining activities to source waste rock for the ongoing construction of the TSF. A second blast was conducted at the end of July.

The starter pit area is in the hanging wall of the initial-term production area and although care was taken to avoid the core super-high-grade zones, there is still an instance of a known and modelled high-grade zone within the starter pit and to date more than 9,000t of graphite ore (estimated 1,620t of contained graphite) has been stockpiled for use during the commissioning phases of the processing plant.

This high-grade material is visually very distinct from the waste and/or lower grade graphitic units and is being stockpiled for use during the commissioning of the processing plant. Ore zones are demarcated, and a “spotter” is used to direct the separation of ore from waste.

Mining in the starter pit is currently approximately 50% complete for the sourcing of TSF materials.

Lindi Jumbo will be connected to grid power through an agreement with the Tanzanian Electrical Supply Company (“TANESCO”) and installation of the 33kV powerline is now complete and has reached the project site. Once the transformer has been installed, grid power will be readily available to support completion of the construction activities. Initially, this line will supply power to the mining camp and ancillary facilities.

Installation of the 4.5MW powerline is progressing well and has reached the village of Matambarale, approximately 3 km to the west of the mining licence. On completion, this line will supply continuous power for the entire operation once commissioning starts. With diesel generated power making up approximately 26% of the total operating costs the supply of grid power at a fraction of the cost will potentially have a significant positive effect on the operating costs of which is already earmarked to be one of the world’s lowest cost graphite producers.

Lindi Jumbo has embarked on recruiting essential senior staff for the operational control of the project once construction is complete and functional handover achieved. These personnel will be onboarded as soon as practically possible and will be working together with the construction team, EPC contractor, logistics and mining contractor to ensure that the operational readiness plan is in place and that there is a seamless transition between construction, commissioning, and operations.

The major requirement for working capital funding will occur from the start of operational readiness through production ramp up to positive cashflow which is expected to be a period of 3-6 months. As the company has previously disclosed, it has access to US$3.2 million in a working capital facility from Wogen Pacific with the opportunity to expand this to a US$8 million facility.

This will be available once product is loaded onto a ship. Prior to that working capital will be required to be funded via a bank overdraft. Lindi Jumbo has been approached by several banks interested in providing such a facility. The bank overdraft facility will be finalised after the final project development capital structure is known.

The Company has recently signed a binding sales, purchase, and marketing agreement with Wogen for the supply of all exported graphite production from its Lindi Jumbo Graphite Project in southeast Tanzania for an initial period of five years. This Agreement will allow Lindi Jumbo to harness the skills and resources of an established international commodities marketing organisation across its full production capacity. Lindi Jumbo will draw on the considerable market knowledge and relationships Wogen has established in the graphite market since partnering with Walkabout Resources and Lindi Jumbo in 2019. It is anticipated that Lindi Jumbo’s sales book will be more diversified and have greater exposure to shorter term pricing than previously because of the new arrangement. The Agreement also provides Lindi Jumbo enhanced access to supply chain financing, supporting the objective of operating a capital-efficient balance sheet.

Growth opportunities for Lindi Jumbo

The Company has scaled the planned production from Lindi Jumbo to 40,000t pa of natural flake graphite concentrate to predominantly supply the higher value large flake graphite market with 28,000t of high-grade flake concentrate per annum. This represents just over the forecasted annual market growth and thereby is unlikely to disrupt the market balance especially as demand for diversification of non-Chinese natural flake graphite supply increases.

This market continues to grow at an estimated compound annual rate of 6% and Lindi Jumbo is well placed to grow with that market and potentially expanding production to meet that growth.

The Lindi Jumbo mine is not resource bound and currently has a lengthy forecasted lifespan of more than 24 years. The ore reserve of 5.1 Mt @ 17.9% TGC for a total of 987,000 t of contained graphite is based on only 37% of the Measured and Indicated Resources. This is also the highest-grade undeveloped graphite deposit in Africa.

None of the Inferred Resource material is included in the current mine design and remains available for further consideration and potential expansion opportunities. Depending on future market conditions, Lindi Jumbo could convert more of its remaining 36Mt of JORC Resources into Reserves.

Third party technical studies completed have indicated that the current Processing Plant under construction will potentially have 23% excess capacity once in steady state operations.

While this excess capacity is available for no further capital expenditure, the plant capacity can be further increased beyond this for relatively minor levels of expansionary capital expenditure. Any increases in future production should be well absorbed by the market seeking ethically produced natural flake graphite.

The Company has also been approached by other graphite companies considering the use of the excess capacity in the Lindi Jumbo as an alternative to the construction of their own pilot plants. Any arrangements for toll treatment would share the commercial benefits of production and not be at the expense of Lindi Jumbo mine production.

Fine flake graphite concentrate (-180 micron), making up approximately 25% of total production, is in high demand by operators and developers of Battery Anode facilities. While seen as a by-product, fine flake concentrate is viewed by the company as a strategic asset and Lindi Jumbo has been approached by several parties seeking medium term offtake of fines material. This may result in product pre-payments as the project gets closer to production.

To date the largest flake markets (e.g., Super Jumbo or +500 micron) are immature as relatively little product of consistent quality has been produced by mines currently operating and available to customers. Customers have thus been reluctant to invest in the capital required to take advantage of the largest flake graphite unless they could be assured consistent quality supply. Lindi Jumbo will provide those customers with that source of supply, and it is expected that demand will grow for the larger flake sizes as consistent supply is proven.

With a cut-off grade of 10%, nearly 8.0 Mt of low-grade graphite ore averaging ~ 6% TGC will be stockpiled over the life of the current mine. At the constructed nameplate capacity of the Lindi Jumbo plant that material could extend the mine life for a further 26 years. It is notable that the average grade of Lindi Jumbo low-grade material exceeds the average grade of several current producing graphite mines and many of the peer group currently in their planning or study stages.

While Lindi Jumbo currently has no plans to process the low-grade stockpiles it does provide option value to the mine (with minimal rehandling costs), depending on future pricing. While lower grade, the ore has a very similar large flake distribution as the high-grade ore.

Lindi Jumbo has control over three adjoining Prospecting Licences for more than 160 km2 adjacent to the current Mining Licence. Based on surface mapping, sampling, drilling and the interpretation of geophysical datasets, the Company has a near-mine Exploration Target of between 15Mt to 29Mt and an additional 35 Mt to 71 Mt within a 20 km radius of the current mine.

These potential additional sources of graphite have similar characteristics to the current JORC compliant Mineral Resource. Any additional tonnage would require relatively low capex to delineate and or develop.

The combination of Lindi Jumbo’s outstanding high-grade Ore Reserve, the unique flake distribution in high-grade final concentrate, the scale of the operation and the small environmental footprint drives the competitive advantage of expanding mine production to take advantage of emerging large flake graphite market opportunities. It is in the interests of Lindi Jumbo to work with key market participants to expand demand growth, especially for the largest flake varieties.

While downstream processing of graphite flake is viewed as an attractive value-add for graphite producers, it is more prone to commoditisation and provides lower rates of return than the production of graphite concentrate at the Lindi Jumbo mine. However, strategically it provides opportunities for the company to get closer to its end customers, to be fully vertically integrated and to grow the market.

The Company has previously undertaken a scoping study of a 6,000t pa Expandable Graphite Plant using Lindi Jumbo concentrate and has been in negotiations with a Middle Eastern group about a Joint Venture on the construction of the proposed plant where the Company would be free carried. Finalisation of the joint venture is pending completion of the Lindi Jumbo mine. Expandable graphite can be sold as a raw material into the flame retardant or fire protection industry or as a feedstock for expanded graphite fabrication for use in the manufacturing of amongst others, graphite foils, paper, shapes, and pipes.

The same Middle Eastern group is considering a 50/50 joint venture to produce graphite foils. Such a venture would require Walkabout Resources to fully contribute to its share of the capital costs.

Exploration potential – other WKT graphite properties

The Company holds 100% of the Kimoingan Graphite Project in Northern Tanzania. It has an Exploration Target of 22 Mt to 72 Mt of medium-grade large flake graphite. Given the experience of Lindi Jumbo it would likely be a low to medium capex standalone operation. It could potentially be at a larger scale with more of a focus on supplying graphite to the battery anode supply chain.

Having the operating Lindi Jumbo mine in country will provide several synergies around exploration, administration, procurement, gaining government approvals, marketing and ESG performance.

As the owner of the most advanced large flake graphite project in Tanzania, Walkabout Resources is regularly presented with corporate opportunities to potentially work with other graphite projects in country and in the region.

© All content copyright 1997 - 2021 Vuka Group, unless specified otherwise.