Santa Cruz Graphite Project
The Santa Cruz Graphite Project is located in the second-largest flake graphite producing district in the world and is located in the Bahia State of Brazil. The project consists of 13 approved exploration licenses covering approximately 13,000 hectares. The project benefits from at-surface mineralization containing large and extra-large graphite flakes. Significant work has been completed to date including over 7,000m of drilling and a pilot plant test on over 30 tonnes of mineralized material, which was finalized in late 2015 and produced high quality concentrates.
The Project has excellent infrastructure and logistics. High-tension power is within 3 km of the plant site along with a major natural gas line within 5km. City water and wastewater are within 3-5 km and access to the Project is provided by well-maintained 1.3km long road connecting to a main highway. The major port of Ilheus is 270km away via paved federal highways.
Ore exposed at surface with visible large graphite flakes
Contained Graphite Resource
A Preliminary Economic Assessment technical report (the “PEA”) completed in mid-2017 for the Santa Cruz Graphite Project outlines Indicated resources of 14,990,400 t @ 2.70% with 404,741 t Cg and Inferred resources of 3,572,100 t @ 2.90% with 103,591 t Cg. Graphite deposition at Santa Cruz is found at surface within oxidized material providing a very favourable strip ratio, and requiring no crushing nor blasting.
The Santa Cruz project has a Net Present Value of US$117 million, a post-tax Internal Rate of Return of 78%, and a payback period of 2 years as projected in the PEA. Mine planning for the existing graphite deposit outlines a 12.0 million tonne mineable resource with a diluted grade of 2.63% Cg providing support for a 19-year open pit mine. LOM average yearly production of 15,800 tonnes at Santa Cruz is expected to have operating costs of US$413 per tonne.
Significant testwork using a modern pilot plant was finalized in late 2015. Advanced study work was performed on over 30 tonnes of mineralized material tested. Large-flake and battery-grade concentrates were produced. Pilot plant tests indicated premium graphite granulometry including 35-40% of extracted graphite at +50 mesh (jumbo flakes) and 65-75% graphite at +80 mesh (large flakes). Testing also proved the ability to produce ultra-pure +99.97% graphite.
The current PEA estimates free cash flow of US$15,800,000 per annum in years one through five from potential future production at Santa Cruz. Estimated overall free cash flow is expected to average US$10,400,000 per annum over a projected 19 year mine life.
Growth through Exploration
Graphite mineralization at Santa Cruz remains open at depth and along strike with excellent potential for expansion of resources. South Star Mining Corp. has extensive exploration drilling planned that should extend known areas of graphitic mineralzation and significantly increase the graphite resources at Santa Cruz.