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Energizer Resources continues to make progress at Molo with feasibility study work

Published: 09:39 06 May 2014 EDT

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Energizer Resources (TSE:EGZ) (OTCQX:ENZR) is making progress on the work required as part of its feasibility study which is underway at its flagship Molo graphite project in Madagascar, as the company works towards securing both mine financing and off-take agreements. 

In a progress update released for investors on Tuesday, the company compiled a list of the work it has completed so far as part of the feasibility study, which was launched earlier this year and is being led by African engineering and construction company DRA. 

Of the highlights, Energizer said it has completed 29 infill diamond drill holes and 16 trenches to elevate a portion of the project's NI 43-101 compliant indicated resource to measured status.  It has also completed hydrogeological test work over the deposit, including a resistivity survey and water sample analysis. Discussions are also underway with Madagascar-based contractors regarding fuel, logistics, equipment, civil engineering and earthworks, the company said.

"We look forward to building on the substantial progress we have achieved over the past months in advancing our Molo Graphite Project, which included the completion of an operational pilot plant run as part of our Molo Feasibility Study," said CEO Richard Schler in the release. 

"I believe this will be an exciting year for Energizer as we work towards achieving the important milestones of securing both mine financing and off-take agreements. Although we have been very active over the past few months pursuing these initiatives, they are tasks that do not easily lend themselves to providing regular news flow.

"With the recent positive developments in the global flake graphite market centering around lithium-ion batteries for electrical vehicles and large scale energy storage, I believe that conditions are ideal to support the rapid advancement of the Molo Graphite Project." 

Indeed, the bankable feasibility study is a big step in satisfying the due diligence requirements of financial institutions that are interested in providing mine and equipment financing during development.

The company last year signed a preliminary deal with Cat Financial for potential project financing for the future Molo mine, which based on Energizer's preliminary economic assessment and pilot plant updates, ranks as one of the top flake graphite projects in terms of quality and size in the world. The deposit hosts 84 million tonnes of indicated resource at 6.36% carbon, and 40.3 million tonnes of inferred resource at a grade of 6.29% carbon.

The preliminary economic report on the asset estimated a pre-tax net present value of $421 million at a discount rate of 10%, with a 48% internal rate of return. Capital costs were pegged at $162 million, with a three-year payback period. 

In February, Energizer closed a financing to fund its feasibility study, raising a total of C$7.49 million. This came just a month after it announced the results from a large scale pilot operation, where over 13 tonnes of Molo graphite concentrate was produced, confirming that over 78% of the Molo flake graphite meets the minimum required size to produce battery-grade graphite.

The company is aiming to complete the full feasibility study by the fourth quarter of this year, following the planned upgrade of its Molo resource from indicated to measured status in the third quarter. Project commissioning is currently targeted for the second or third quarter of 2016, subject to mine permitting and financing agreements.

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