Nachu production expected Q1 2025 on signing an offtake deal with the world’s leading

electric vehicle and energy storage manufacturer

Australia’s Magnis is advancing its Nachu graphite project in Ruangwa, which will produce
236,000 t/yr of graphite concentrate. Financing is expected to be in place by mid-2023 and
first production in early 2025. Bolstered by a recent offtake agreement with the world’s
leading electric vehicle and energy storage manufacturer, Magnis will also tender for a gas-
to-power plant this year, writes Marc Howard in Dar-es-Salaam

Australian Securities Exchange (ASX)-listed Magnis Energy Technologies said on February

21 that it has signed a binding offtake agreement with a US electric vehicle manufacturer.
Magnis will supply a minimum of 17,500 t/yr and a maximum of 35,000 t/yr of Anode Active
Material over three years, starting in February 2025.

The deal is a major vote of confidence in Sydney-headquartered Magnis and its Nachu
project in Tanzania, where it will source natural flake graphite, the dominant anode input for
batteries. Western investors have increasingly turned to East Africa to reduce reliance on
China, which dominates production and processing (AE 472/30).

The agreement with Magnis further bolsters Tanzania’s swift ascent as one of Africa’s
transition mineral leaders, with at least seven graphite mines under development (AE
472/33). The country will ship its first graphite cargo once Magnis’ fellow ASX-listed firm
Walkabout Resources’ 40,000 t/yr Lindi Jumbo starts production by year's end (AE 478/28).

The open-pit Nachu development is notable for its scale, with Magnis expecting to produce
2,000 tonnes of concentrate in the first year of operation from its pilot plant before the large-
scale plant is commissioned. Full production will be 236,000 t/yr, from 5 million t/yr of
ore. African Energy spoke with Alley Mwakibolwa, chief executive of Magnis subsidiary
Uranex Tanzania, to gain insight into the development.

Much of Nachu’s resource production (around 140,000 t/yr) will consist of flake concentrate
less than 300 microns in size with a notably high total graphitic carbon (TGC) purity level of
99%, which makes it particularly suitable for battery anodes. The remainder of production
comprises jumbo flake of 70,000 t/yr (300 microns and above in size), suitable for products
such as flame retardants, gaskets, and graphite foil, and super jumbo flake of 20,000 t/yr (500
microns and above), which is sought after by the aerospace industry and other niche
manufacturers.

Estimated mine life is 16 years at present based on approximately 76 million tonnes of JORC
compliant ore reserves. Mwakibolwa commented that the project has significantly more
upside with approximately 174 million tonnes in the "resources" classification.

Projects in other jurisdictions, such as Syrah’s Balama graphite mine across the border in
Mozambique (AE 472/32, 472/31) – have already started commercial operations. President
Samia Suluhu Hassan’s government, in office since 2021, enacted pro-investment reforms
that have rapidly accelerated developments in the mining and energy sectors (AE 458/1).

Graphite production expected Q1 2025

Nachu has recently made quick progress, Mwakibolwa said, with full financing expected to
be in place by mid-2023. Some construction work has started, including the resettlement
programme (see below), all of which has been funded by equity to date. A new
environmental and social impact assessment (ESIA) for both the mine and processing site is
being prepared and is also expected by mid-year. Graphite production is expected to start in
early 2025.

Strictly speaking, Nachu comprises two distinct developments by wholly-owned Magnis

subsidiaries. This is because in Tanzania, mining operations fall under the jurisdiction of the
minerals ministry, whereas processing falls under the ministry of industry.

Ore extraction will be undertaken by Uranex, which holds a special mining licence
(SML550/2015) that lasts for 25 years.

Uranex’s distinctive Tanzanian entity name reflects its previous focus on uranium
exploration, which started in 2006. This enterprise was effectively curtailed by the sharp fall
in uranium prices following 2011’s accident at the Fukushima nuclear power plant in Japan,
and Uranex shifted its focus to other minerals. The 30 km2 SML for Nachu was granted in
2015, and a bankable feasibility study was completed the following year.

Adjacent to the Uranex SML is Magnis Technologies Tanzania’s (MTT) special export zone
(SEZ) licence, renewed for 10 years in 2021. This will be the site of the processing facility,
which will eventually treat the flake concentrate into a spherical graphite product. The
process Magnis will use to produce spherical graphite is purely mechanical and does not use
the chemical or thermal purification methods used by other producers of SPG. The SEZ
offers tax advantages for Magnis (although all products must be exported), and Tanzania has
the advantage of locating value-added manufacturing processes in-country.

Mwakibolwa said that MTT’s process, which offers considerable environmental benefits, has
made the project particularly attractive to offtakers in the United States and in Europe. In
addition to the recent offtake deal for Anode Active Material , in December 2021, Magnis
signed a six-year agreement with Luxembourg-headquartered minerals marketer Traxys
Europe for 110,000 t/yr of Nachu graphite.

Gas-to-power plant to be tendered

Power demand at Nachu in the early years will be around 24 MW, with mining and
processing operations expected to require some 135,000 MWh/yr. This will be provided by a
gas-to-power (GTP) plant, which Magnis expects to tender for later this year. The GTP plant,
which will start operations in early 2025 in tandem with graphite production, is one of the
most important aspects of the project, Mwakibolwa said. It will also supply local
communities, adding significantly to the 15MW of available on-grid capacity available in
Nachu’s two neighbouring regions.

Gas for the GTP plant will be supplied by a 90 km pipeline that is currently the subject of a
full feasibility study. Although exact details await the completion of the final feasibility
study, it is likely that it will be 200 mm in diameter.
Magnis will also use the gas in its processing plant, particularly for the drying of the graphite
concentrate. Initial consumption is expected to be approx. 5mcf/d during the first years of
production, rising to 10mcf/d following expansion.

New infrastructure and eco-village

Ruangwa is a remote rural region, and its economy has historically relied upon cashew nut
and sesame seed cultivation. The rainy season has long made road transportation difficult, but
the government is upgrading regional transport infrastructure to boost economic activity. The
project is some 220 km from the port at Mtwara and by year's end, it is expected that 200 km
of this will be fully sealed roads. Magnis plans to lease land 200 metres from the port
facilities in Mtwara.

Another key aspect of infrastructure will be water development: Nachu’s flotation process is
water-intensive, and Magnis does not want to take water from the local river system. To
achieve this, the tailings dam and water management system have been designed in
conjunction with one of the world’s leading consultancies using a fully dynamic simulation
model.

Construction has been completed at the nearby eco-village, where 59 houses have been
completed to resettle households formerly situated on the Nachu site. These households now
have access to electricity and clean running water year-round for the first time, which has a
significant impact in an area under high levels of water stress that is off-grid.

Alexandra Beuthin, MTT's head of corporate social responsibility, said that Magnis has long
prioritised environmental, social and governance (ESG) initiatives and that this investment in
its "social licence" had resulted a particularly good relationship with local communities and
the government, which have been highly important to the development’s recent swift
progress.