Mineral Commodities (MRC), an ASX-listed mineral sands and graphite producer, has encountered a significant setback at its Skaland graphite mine in Norway. The company has reported a mechanical failure of the primary ore production drill rig, leading to a projected six-week interruption in operations.
Efforts to repair the drill rig have been unsuccessful, and temporary solutions have been deemed inadequate. To mitigate the impact on revenues, MRC has decided to source and temporarily rent a drill rig until a permanent solution can be implemented. Options being considered for the permanent rig include a complete rebuild of the existing one or the purchase of a new or second-hand drill rig.
Unfortunately, Skaland’s inventory of finished product and feed stock for the plant has been depleted, resulting in a loss of revenue until the rental rig can be delivered and commissioned. MRC is currently in discussions with a vendor, and it is estimated that the rental drill will be delivered around mid-October 2023. The company anticipates a negative impact on cash flows, ranging from approximately $0.6 million to $0.9 million, depending on the timing of the rental rig’s delivery.
CEO Scott Lowe acknowledged the temporary disruption at Skaland and emphasized the significance of the mine as a critical asset in their battery minerals division strategy. Lowe also expressed his dedication to delivering improvements at the Tormin mineral sands operation in South Africa and advancing the ore-to-battery anode piloting project to maximize the value generation potential from downstream processes for both Skaland and Munglinup.
This development poses a challenge for Mineral Commodities as it works to address the mechanical failure and secure a suitable replacement rig. The company’s ability to manage this interruption effectively will be essential in maintaining its competitive position in the mineral sands and graphite market.
