The company says its Maniry graphite project in southern Madagascar could cost US$79 million for the first 500,000 tonne per annum stage, plus a further $25 million to double production for stage two.
Stage one is expected to produce an average 39,000tpa of graphite concentrate suitable for processing into lithium battery components, with stage two anticipated to increase capacity to 54,600tpa from year four of what could be a 21-year life of mine.
Average C1 operating costs are tipped to be $658/t, compared with a life of mine sales price that's expected to be $1448/t, which BlackEarth believes is conservative.
Pre-tax net present value and internal rate of return are estimated at $263 million and 33%.
Payback is 3.8 years.
BlackEarth managing director Tom Revy said Maniry has all the hallmarks of becoming a world-class graphite project in "what is rapidly shaping up to be a boom time for graphite producers" with demand expected to double by 2025.
"The graphite supply shortfall is widely forecast to grow rapidly from next year onwards, increasing prices and profit margins for producers in the process," he said.
"Demand for non-Chinese graphite is expected to be even stronger as battery manufacturers and EV makers look to diversify their sources of supply."
Consultants CPC Engineering have reworked earlier studies to optimise selective mining of high-grade product in order to maximise near-term economic outcomes.
While the stage one capex is substantially higher than 2019's scoping study estimate of $41 million it is a function of need to increase the flotation circuit due to the higher grade of the resource, and a decision to increase the size of the primary crusher to support stage two.
Production is expected to be higher as a result.
Bringing forward some items from stage two should also allow for a quicker and less disruptive construction and commissioning for the expansion.
Inflationary pressures of the past two years have also played a role.
Despite that, Revy said the DFS showed a project that is longer lived, with better returns than the scoping study.
And that is before it adds to resources with exploration around the high-grade Razafy North West area, which he expects will improve the economics further.
The company is now working to complete its environmental and social impact studies. In tandem work continues into the viability of building a battery anode material plant in Europe to upgrade the Maniry fines, which will account for 40% of total production.
Maniry has total resources of 40Mt at 6.5% total graphitic carbon.
BlackEarth started the quarter with A$4 million cash.
Timing for final investment decisions remain unknown.
Shares in the junior have traded at 6.5-18c over the past year, and closed at 10.5c yesterday, valuing it at $30 million.
