Sarytogan promises good returns on Kazakhstan project, but the market is uncertain

Sarytogan Graphite Ltd (ASX:SGA) has seen its share price plunge on the release of a prefeasibility study (PFS) for its flagship project in Kazakhstan – despite claims of exceptional returns for three different product types – with investors instead eyeing downstream operational costs of more than US$1000 per tonne.

At 13:33 AEST, the company’s shares were trading at 12 cents, a fall of 22.6% since the market opened.

The PFS outlined three potential products for the Sarytogan Graphite Project: microcrystalline graphite (with recoveries of more than 80%) at up to US$791 per tonne, ultra-high purity fines (UHPF) at up to fine nines purity, earning as much as US$5,577 per tonne, and spherical purified graphite at up to US$8,000 per tonne.

The metrics were calculated according to 10-year weighted averages, and the study also posited an initial mine life of 60 years at the maiden ore reserve of 8.6 million tonnes at 30% TGC (total graphite content), with only 4% of the mineral resource to be consumed in that time.

This, Sarytogan said, would enable multi-generational expandability for the project, whose financials also looked positive, with net present value (NPV) estimated at US$518 million, or A$797 million, and payback time estimated between 3.4 and 5.3 years, according to the mining stage.

Given the size and grades evident at the project, it was initially uncertain why the market as it did, although some investors appeared to pick up on the downstream operating costs for the life of mine (LOM) positioned at US$1,150.47 for production of UHPF.

Nevertheless, Managing Director, Sean Gregory said the PFS showed strong potential for the future operation.

“The Sarytogan Graphite Project now takes its place as a very serious contender to play an
important role in meeting the world’s energy storage needs,” he said.

“The physical attributes of the giant and exceptionally high grade Sarytogan Graphite Deposit have shone through in the PFS which envisages low costs and high margins, even at the conservative project sizing selected to minimise risk.

“Coupled with the recent planned investment by the European Bank for Reconstruction and Development strengthening of our balance sheet, Sarytogan is in a strong position to drive the project forward with early works on the DFS already underway.”