NextSource’s longer Molo graphite mine life: capex, NPV and IRR lens for engineers
Reviewed by Tom Sullivan
First reported on MINING.com
30 Second Briefing
An updated feasibility study for NextSource Materials’ Molo graphite mine in southern Madagascar extends mine life from 25 to 37 years but cuts the stage-two post-tax NPV (8% discount) to $348.4 million and IRR to 20%, while capital costs jump 79% to $290.8 million. The plan adds three 50,000 t/y processing modules to lift capacity from 17,000 t/y to 150,000 t/y of graphite concentrate, underpinned by an offtake with Mitsubishi Chemical Group. Molo hosts 82.5 Mt at 6.27% Cg for 5.1 Mt contained graphite, positioning it as a major non-Chinese flake source.
Technical Brief
- Updated graphite concentrate price assumption cut to US$1,138/t from US$1,191/t in 2023.
- Capital cost escalation of 79% drives new capex to US$290.8 million for stage two.
- Stage-two economics now benchmarked at post-tax NPV8 of US$348.4 million and 20% IRR.
- Expansion concept adds three 50,000 t/y processing modules in two stages to existing plant.
- Current installed capacity is 17,000 t/y graphite concentrate, with first production achieved in 2023.
- Product marketed as patented SuperFlake graphite, targeting EV battery and anode supply chains.
- Offtake with Mitsubishi Chemical Group underpins feed to a planned UAE Battery Anode Facility.
- Molo’s proven and probable reserves total 82.5 Mt at 6.27% Cg, containing 5.1 Mt graphite.
Our Take
With a post-tax NPV of US$348.4 million for the stage-two expansion against a market capitalisation of C$73.3 million, NextSource Materials is trading at a steep discount to project value, which often signals either perceived execution risk in southern Madagascar or investor scepticism on long-term graphite pricing.
The 79% capital cost increase for Molo’s expansion, despite a still-robust 20% IRR, suggests cost inflation and logistics at a site 900 km from Antananarivo are materially eroding returns, which could make financing more contingent on locking in offtake security with groups such as Mitsubishi Chemical Group.
Within our 25 keyword-matched graphite pieces, most African projects present shorter mine lives than Molo’s updated 37-year schedule, implying that if delivered, this asset could become one of the longer-duration flake graphite supply options outside China and the UAE for battery anode chains.
Prepared by collating external sources, AI-assisted tools, and Geomechanics.io’s proprietary mining database, then reviewed for technical accuracy & edited by our geotechnical team.
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