Zentek Ltd. (TSXV: ZEN) announced the results of a new preliminary economic assessment for its Albany Graphite Project near Hearst, Ontario on August 10, 2026, and filed a material change report on Form 51-102F3 covering the disclosure. The study, prepared by Micon International Limited in accordance with National Instrument 43-101, models an integrated operation running from extraction through flotation processing and fluidized bed reactor purification to finished ultra-high-purity graphite. Zentek is also quoted on the Nasdaq under ZTEK.
At a 5.0% discount rate the PEA reports a pre-tax net present value of US$4,179.3M and an after-tax net present value of US$3,854.5M, with a pre-tax internal rate of return of 27.7%, an after-tax rate of 27.4% and an after-tax discounted payback period of 4.4 years. At an 8.0% discount rate the pre-tax and after-tax figures fall to US$2.47 billion and US$2.29 billion. Initial capital is estimated at US$817.0M and sustaining capital over the project life at US$1,161.6M.
The physical plan behind the numbers
The study assumes a three-year pre-production period, a 30-year operating life and a two-year closure period, for an overall project life of 35 years. The mine plan processes approximately 25.9 Mt of mill feed grading 3.9% graphitic carbon against 169.8 Mt of waste, an average strip ratio of 6.6 to 1, at an open pit extraction rate of approximately 2,400 tonnes per day and a nominal annual processing rate of 894,454 tonnes. Flotation recovery averages 86%, producing approximately 34,483 tonnes of concentrate a year and 30,000 tonnes of finished product.
Grade is scheduled rather than constant. Higher grade material is taken early to meet concentrate targets while stripping advances at the West Pit; from Years 4 to 25 material from both pipes is blended to hold feed grade at an average 4.2% graphitic carbon, and in the final years blended grade falls to an average 2.5%.
The deposit sits in two vertical breccia pipes about 250 m apart. The modelled East Pipe is roughly 300 m long and 50 m wide to a depth of about 600 m, with a lower grade halo bringing total mineralised width to about 150 m. The West Pipe is about 300 m long, 175 m wide and extends to about 500 m. Barren sills 10 m to 60 m thick, sitting roughly 200 m to 300 m below surface, cut both pipes and set the mining method: material above the sills is contemplated for open pit extraction and material below for underground. The PEA evaluates open pit extraction only, and underground material, while included in the mineral resource estimate, is excluded from both the production schedule and the economics. Both pipes remain open at depth.
Zentek highlighted a purification route that uses no hydrofluoric acid at any stage and flotation requiring no lime or acid pH modifiers. Independent bench-scale testing disclosed on September 22, 2025 measured 99.9992% carbon with an equivalent boron content of 2.60 ppm, meeting published benchmarks associated with certain nuclear-grade applications. The project lies within 30 km of the Trans-Canada Highway with road, rail, power transmission and natural gas infrastructure nearby, and on the design contemplated in the study is not expected to trigger a federal impact assessment, which would allow permitting through a single provincial process.
Where the cost and the price come from
Total capital expenditure across the life of mine is estimated at US$1,978.7M, of which offsite infrastructure, which includes the FBR site, accounts for 881.7 and indirect, contingency and owner’s costs for 711.9, with contingency applied at 25%. The concentrator is 157.7 and mining 106.9. Sustaining capital excludes US$84.8 million spent during the closure period.
The operating cost structure is dominated by purification rather than mining. Life-of-mine operating cost is US$6,645.2M, or US$7,989.4 per tonne of finished product, of which FBR purification is 5,353.1, or US$6,435.8 per tonne. Mining is 732.0, processing 303.5 and general and administrative 256.6. Average annual operating cost is US$221.5M.
Revenue rests on a weighted average realized price of US$23,485 per tonne, giving average annual gross revenue of approximately US$651.3M, or US$639.3M net of royalties and concentrate transport. The pricing was developed from independent market research prepared by AppEco Inc. and by a United States-based advanced graphite materials company, assessing nuclear, defence and aerospace segments, benchmarked against nuclear-grade graphite and extended to 2035 under multiple price scenarios, with an adjustment reflecting allied buyers’ preference for supply from allied jurisdictions. The model uses a C$1.33 per US$1.00 exchange rate. The mineral resource estimate was updated using drill hole data available as of June 30, 2026 and is reported for a combined open pit and underground scenario.
Separately, on August 20, 2026 Zentek said it had been awarded a Government of Canada standing offer for HVAC filtration products including ZenGUARD Enhanced Air Filters for federal facilities in the National Capital Region, running from August 19, 2026 to August 18, 2027 with a maximum published value of CAD $348,666.84.
Analysis: the study prices a product, not a commodity
The number that governs everything else in this PEA is US$23,485 per tonne. For scale, the U.S. Geological Survey reports the average unit value of U.S. flake graphite imports at foreign ports at $1,070 per metric ton in 2024, with lump and chip from Sri Lanka at $2,900 and amorphous at $640. Albany is not being modelled as a graphite mine in that market. Zentek is explicit that the pricing reflects a position supplying ultra-high-purity material into specialised markets rather than commodity or battery-grade markets, and the cost structure confirms it: purification accounts for US$6,435.8 of the US$7,989.4 per tonne operating cost, so most of the value added happens after the concentrate leaves the flotation circuit.
That framing makes the pricing basis, rather than the geology, the central assumption to test. The price was set by two commissioned studies, benchmarked to nuclear-grade graphite and extended to 2035, with an explicit allied-jurisdiction premium. No offtake agreement, contract price or customer is disclosed in the material change report. Neither is the addressable volume of the nuclear, defence and aerospace segments the study targets, which matters because the plan contemplates 30,000 tonnes a year of finished product for 30 years into markets defined by specification rather than by tonnage.
The USGS data explains why an allied-supply premium is being modelled at all. China produced an estimated 78% of world graphite output in 2024, and the United States mined none, importing an estimated 60,000 tons while relying on imports for 100% of apparent consumption. Canada supplied 13% of U.S. imports between 2020 and 2023. A North American source of nuclear-specification graphite is a scarce thing, which is the strategic case Zentek is making.
Three qualifications sit in the document itself. The study is preliminary, includes inferred resources considered too speculative geologically to have economic considerations applied, and carries the standard warning that there is no certainty the PEA will be realised. Purification, the largest cost line and the entire basis of the price assumption, is modelled on bench-scale testwork rather than pilot or demonstration scale. And the underground material sits in the resource but outside the economics, so the 30-year schedule is an open pit schedule.
For a reader tracking this toward a feasibility study, the checkpoints are specific: purification testwork moving beyond bench scale, any disclosed offtake or contract pricing that tests the US$23,485 assumption, and confirmation that the design keeps the project outside federal impact assessment. Initial capital of US$817.0M before production is a separate question again; the material change report does not identify a funding source for it.
