In the spotlight: Mineral Commodities chief executive Mark Caruso

Q. Can you please tell me the reasons behind the decision to acquire 51pc of the high-grad Munglinup Graphite Project?

The acquisition of Munglinup is part of a strategic commodity and jurisdictional diversification.

The mine is one of the highest graphite deposits in the world and had enormous latent potential.

Moreover, it offered a unique entry point into a Tier 1 jurisdiction, on a fully granted mining lease, 105 km from Esperance and close to excellent local and regional infrastructure.

The decision to acquire 51pc was the initial Farm-In and part of a larger staged transaction to acquire a further 39pc on completion of a feasibility study and the option to move to 100pc at the vendor’s election.

The company has largely satisfied the conditions to proceed to 90pc ownership, which is anticipated to occur soon after the release of the feasibility study in May 2019. The company is also confident it will ultimately move to 100pc ownership of the project.

Q. How does the Munglinup project fit in to MRC’s renewable energy storage and electric vehicle strategy?

When assessing the exciting future of raw material demand for energy storage (battery) production, the company was mindful of fundamental lessons learned from decades of mining experience. That is – where possible – mine small, open pit, high-grade ore bodies.

That ethos led us to South Africa, where we mine the highest grade heavy mineral sands in the world.

Another lesson learnt from our experience in South Africa is the challenges of funding and operating projects in emerging jurisdictions.

The company sought to position itself in Tier 1 jurisdictions and to operate high-grade mines.

Munglinup fits exactly these criteria; coupled with geographical offtake advantages to Asia and combined with Skaland which services the European market, a significant part of the battery material supply is covered.

Munglinup, due to its mine life, and which we plan to extended beyond the initial nine years, also offers an excellent opportunity to integrate downstream upgrading through purification, micronisation and spheroidization.

The asset will provide a long-term supply of quality feedstock to any downstream processing initiatives either in Australia or in other jurisdictions.

Q. What is the development timeline of the project and when do you expect it to be operational?

The project environmental permitting is expected to be granted in late Q3, early Q4 2019.

The company has awarded a FEED contract to Mondium. This is designed to be suitably advanced in the engineering design process whilst the permitting submissions are being assessed by the relevant authorities.

Based on this program, it is anticipated that the mine will be operating in Q3 2020.

Q. How will MRC value-add to the Munglinup Project over the expected nine years of mine life?

The intention is to develop the project and increase the reserve base to extend the mine life beyond the current nine years. This will be done through a structured exploration program.

Recent drilling programs have been highly successful and it is expected that the DFS will deliver a significantly increase life of mine.

Also, it is clear that the Munglinup Project will offer the ability to cornerstone a downstream processing initiative.

The company has already invested considerable resources in developing these downstream options.

In late 2017, the company announced an MOU with Doral, a subsidiary of Japanese energy giant Iwatani Corporation to assess the Doral Fused Alumina plant in Kwinana, Western Australia as a possible site for downstream processing of Munglinup graphite.

The MOU was extended last December and the company has made significant progress in studies to determine the suitability of the site for thermal purification, spheroidisation and coating of natural flake graphite to produce premium downstream carbon products.

The company has also conducted comprehensive testwork on Munglinup graphite to assess its amenability to beneficiation for downstream applications, such as the production of expandable graphite and graphene.

To date, all of this test work has been very encouraging and we see lots of opportunities to differentiate ourselves as not being just a ‘concentrate producer’.

The ultimate prize is being able to offer downstream offtake partners the opportunity to secure beneficiated carbon products outside of China.

Q. What exploration activities does MRC have planned in the region for 2019/2020?

The company will continue to infill the Whites deposit which has recently reported high-grade intercepts.

The results have confirmed the continuity of the mineralisation along strike of Halberts South and Whites/McCarthy West.

We will continue to drill out these extensions of high-grade zones along strike at Halberts South and Whites.

This drilling will likely occur later in this calendar year and in line with the project development schedule.

However, given the size of the proposed process plant and expected updated Mineral Resource, it is planned in the short term to only target areas of high potential value uplift (ie. grade and/or large flake size).

Exploration and infill drilling to add ore tonnes and hence mine life to the project will be undertaken using a staged approach as required.

In the future, should the market/economics suggest a plant expansion is warranted, acceleration of the longer term exploration program will certainly be assessed.

Q. Where do you see MRC in the next 5 years?

MRC through its current mineral sands operations at Tormin, and near-term expansion initiatives which involve current permitting, will see the company’s mineral sands operations extended for at least 10 years and integrate a magnetic separation plant for downstream processing into final ilmenite, zircon, rutile and garnet products.

Tormin minerals sands is one of the highest grade mineral sands operations in the world. The recent acquisition of Skaland as well as the proposed development at Munglinup positions MRC as the only multiple Tier 1 jurisdiction suppliers of high-grade graphite.

The quality of the resource at Munglinup and Skaland, combined with the life of mine profile, provides an excellent opportunity to move into downstream processing investment with a unique geographic coverage of the respective European and Asian markets.

Q. Is there anything else you would like to add?

MRC is an established mining entity with a proven track record of development and financial performance.

The management of its capital to acquire and develop world class high grade mineral deposits and projects as well as maintaining shareholder returns is testament to the quality of its assets and managements capability and sets it aside amongst its peers in the space.