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SRG Mining awards Lola graphite EPCM contract

Canadian graphite developer SRG Mining has awarded an engineering, procurement and construction management services contract for its Lola graphite project in Guinea.
SRG Mining awards Lola graphite EPCM contract SRG Mining awards Lola graphite EPCM contract SRG Mining awards Lola graphite EPCM contract SRG Mining awards Lola graphite EPCM contract SRG Mining awards Lola graphite EPCM contract

SRG Mining has awarded the EPCM contract for the Lola graphite project in Guinea to DRA Global

DRA has been closely involved with the project from the preliminary economic assessment stage through to the most recent feasibility study, placing it at the top of the list of several international engineering firms that competed for the EPCM contract via a competitive tender process.

The engineering phase of the project will be done through the DRA's offices in Montreal and Toronto and the site-based execution will be led by DRA's subsidiary SENET.

SRG said DRA had a strong track record of execution in Africa, most recently being involved in construction of Alufer's Bel Air bauxite project and Managem's Tri-K gold project, both in Guinea.

"Our tender process cemented our belief that DRA is the best partner for SRG to successfully complete the design and construct our Lola graphite project," said SRG president and COO Ugo Landry-Tolszczuk.

"They have gained valuable knowledge throughout this time and are very well positioned to successfully execute the construction of the Lola project."

SRG in November received a 15-year, renewable mining permit, paving the way for mine design and construction to proceed.

SRG had released a feasibility study for Lola earlier in July, saying it presented a highly profitable business using what it described as reasonable estimates for graphite prices.

The study had put Lola's capex at US$123 million, with a post-tax NPV (8% discount) of $159 million and IRR at 21%, for a 29-year mine producing an average 54,600t of graphite flakes at average operational costs of $447 per tonne for the first 16 years.

SRG has signed a three-year binding offtake agreement for about 20% of its expected output. It has also started finance discussions with institutions.

The company is betting on the rise of electric vehicles to boost demand for its graphite product, expecting global demand to rise from 2.4-4Mtpa in the next 5-10 years. It expects the market would require about 700,000tpa of new production by 2023, rising to 1.9Mtpa of new capacity required by 2028.

Shares in SRG (SRG:TSXV) have fallen by 46% in the past 12 months and 47% in the year to date. This despite a 40% gain since late last month, including adding 10% on Wednesday to close at C40.5c, which capitalises it at $33 million (US$23 million).