Lac Carheil Graphite Project PFS Confirms Robust Economics and Strategic Canadian Graphite Supply

Prefeasibility Study Highlights Strong Upstream Economics

Metals Australia Ltd (ASX:MLS) has delivered a robust prefeasibility study (PFS) for its flagship Lac Carheil Graphite Project in Quebec, confirming the upstream open cut mine and flake graphite concentrate plant as economically compelling. The study forecasts annual production of 101,241 tonnes of high-purity flake graphite concentrate grading 95.4% graphitic carbon over an initial 24-year mine life.

The project’s maiden ore reserve stands at 21.51 million tonnes at 11.14% graphitic carbon, representing an 86% conversion of indicated resources, a mark of geological confidence. Financially, the PFS lays out a pre-tax net present value (NPV) of AUD 790.8 million (USD 553 million) at an 8% discount rate, with a healthy internal rate of return (IRR) of 22% and a payback period of just 4.2 years. After tax, the NPV remains significant at AUD 572 million (USD 400 million).

Capital and Operating Costs Underpinned by Tax Incentives

Capital expenditure (CAPEX) is estimated at USD 346.3 million, including a USD 40 million contingency. This figure covers the concentrate plant, mining infrastructure, tailings co-disposal facility, water management, and site power infrastructure. Notably, the project is eligible for Canadian Clean Technology Manufacturing Investment Tax Credits (CTM ITC), which could return up to 30% of eligible capital as cash rebates, potentially reducing effective CAPEX to USD 249.6 million.

Operating expenses are forecast at USD 473.90 per tonne of concentrate produced, with an all-in sustaining cost (AISC) of USD 533 per tonne inclusive of shipping and sustaining capital. These cost metrics position the project competitively within the graphite sector.

Strategic Location and Workforce Integration

The Lac Carheil project benefits from a prime location 20km south of Fermont, Quebec, with excellent access to infrastructure including a high-voltage Hydro Quebec power line and the under-construction Highway 389 re-route, scheduled for completion in 2028. The nearby communities of Fermont, Wabush, and Labrador City offer a ready local workforce, with the project planning an initial operational team of 143 personnel, peaking at 183. All employees are expected to reside locally, supporting regional economic development.

Environmental Design and Social Engagement

Environmental considerations are central to the project’s design, with a dry stacked tailings co-disposal facility engineered to minimise waterway impacts, a notable departure from conventional tailings dams in the region. Extensive baseline environmental and social studies have been conducted, with ongoing field surveys planned. Metals Australia has engaged proactively with local stakeholders and Indigenous communities, aligning project development with regional priorities and cultural sensitivities.

Competitive Benchmarking Against Canadian Peers

When benchmarked against the Nouveau Monde Graphite project, recently classified by the Canadian government as a project of national importance, Lac Carheil compares very favourably. It boasts a graphite reserve grade 2.6 times higher and a concentrate plant CAPEX approximately 16% lower, reflecting the advantage of higher-grade ore. Combined with the company’s separately reported downstream battery anode material refinery PEA, which delivered a pre-tax NPV of over AUD 2.9 billion, the integrated project approaches a combined value of nearly AUD 3.7 billion pre-tax.

This strong comparative position supports Metals Australia’s ambition to establish Lac Carheil as Canada’s next fully integrated high-purity graphite project, strategically positioned to supply North American battery markets.

Path to Final Feasibility and Production

The company has already commenced critical path metallurgical test work and environmental surveys required for the final feasibility study (FS), targeting production commencement in late 2030. Planned FS work includes targeted drilling to convert inferred resources into reserves, engineering design updates, and expanded metallurgical programs to optimise production and downstream processing.

While the PFS results are promising, realisation of the project remains contingent on securing funding, regulatory approvals, and market conditions. The company’s proactive approach to environmental and social impact assessments, alongside engagement with First Nations communities, positions it well for advancing through the permitting process.