UK-based iron ore mining company GreenRoc Mining has unveiled positive Preliminary Economic Assessment (PEA) results for its Amitsoq graphite project in southern Greenland.

The PEA was conducted by SLR Consulting, an independent UK consulting firm with global expertise in the field of mining and mineral processing.

The PEA results show a pre-tax net present value (NPV), at an 8% discount rate (NPV8), of $235m, an Internal Rate of Return (IRR) of 31.1%, and an after-tax NPV8 of $179m with IRR of 26.7%.

Amitsoq project is estimated to have a life of mine (LOM) of 22 years with, a payback period of four years from the start of production.

It is expected to generate an average net revenue of $89.8m per annum, and total gross revenues of $2.1bn throughout the LOM, with total pre-tax cash flow totalling $794.7m.

The project may require an initial capital cost (Capex) of $131m including 25% contingency, average operating cost (Opex) of $121 per tonne of milled ore.

Amitsoq is expected to produce 77,000t of concentrate annually, at a minimum 94% grade.

GreenRoc CEO Stefan Bernstein said: “We are extremely pleased with the outcome of the PEA, which confirms robust economic figures for mining activities at Amitsoq. The mine plan set out in the PEA is relatively straightforward thanks to Amitsoq’s simple ore body geometry.

“All of the on-site processing equipment is based on the use of standard and proven techniques, but with potential upside through the use of some new, and more efficient, processing technologies that we are currently exploring.

“The entire mining operation is planned to take place in the Lower Graphite Layer, thus reserving the Upper Graphite Layer for production expansion, or to extend the mine life.”

The PEA report shows a detailed description of the ore bodies at Amitsoq and incorporates the Competent Person Report (CPR) on the resource estimate.

It also includes an analysis of processing work and a basic design of an on-site processing plant, along with a mine plan, workforce needs, Capex and Opex and a discounted cash flow (DCF) model.

The mine plan suggests mining only from the Lower Graphite Layer (LGL), leaving considerable resources from the Upper Graphite Layer (UGL) for future production expansion to the LOM.

GreenRoc said that the positive PEA results validate the Amitsoq project’s potential to become a globally significant producer of graphite concentrate.

The company will continue to develop its processing capabilities to enhance its future graphite concentrate production into anode material for electric vehicle (EV) batteries.

Amitsoq is positioned to become an important source of high-purity spherical graphite, which is used in the production of anode material for the European car industry, said GreenRoc.

Bernstein added: “The proposed use of a Drift and Fill mining method, coupled with the exceptionally high grades of the Amitsoq ore, will mean that as much as 86% of the tailings will be used as backfill, with a mere 14% required to go to a tailing storage facility.

“This is excellent news as it will minimise the environmental impact of the mine, whilst also saving the cost of transporting tailings.

“While the PEA is based on the use of conventional diesel-generated power, we are looking into a variety of emission-free energy solutions to replace the diesel-generated power plants as soon as that is feasible.”