26/02/2019 - 20:08

Black Rock hits key milestone at massive graphite play

26/02/2019 - 20:08


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The Tanzanian Government has granted Black Rock Mining two mining licences over its massive Mahenge graphite project and the company now looks to be a real chance at making the quantum leap from explorer to miner. The impressive DFS for Mahenge shows a 32-year project life that could generate a post-tax NPV of USD$895m and an IRR of 42.8% with CAPEX numbers that don’t look to be too frightening.

Black Rock hits key milestone at massive graphite play

ASX listed and Tanzania focussed graphite developer, Black Rock Mining, is a step closer to turning the key at its massive Mahenge graphite project that the company’s DFS says could spit out annual post-tax cash flows averaging USD$146m for 26 years when fully developed.

The Perth based company achieved a major milestone this week when the Tanzanian Government granted it two key contiguous mining licences over Mahenge.

The licences compliment the Environmental Permit for the project awarded to the company in early September last year.

The tenements cover the entire proposed Mahenge graphite mine area and its proposed infrastructure.

Importantly, they also include the prospective Epanko area, which contains extensions of mineralisation not yet contained in last year’s impressive looking DFS.

And what a DFS it was.

The estimated 32-year project life looks like generating a post-tax NPV of USD$895m with an IRR of 42.8% according to the company.

The CAPEX doesn’t look to frightening either with only USD$115m required to build the initial processing plant for phase one that could produce graphite at an enviable margin of over USD$800 per tonne for its high-quality flake graphite concentrate products.

The current ore reserve is 70 million tonnes grading 8.5% total graphitic carbon or “TGC”, that Black Rock’s DFS says should result in 250,000 tonnes of graphite product being processed per annum for nearly 25 years.

The ore reserve is contained within one of the largest JORC-compliant graphite resources globally, with 212 million tonnes grading 7.8% TGC.

According to company management, subject to the completion of detailed engineering and financing, Black Rock is now in a position to commence construction of the Mahenge graphite mine.

Black Rock has already de-risked the project to a degree too courtesy of its pilot plant that has processed 90 tonnes of the high-grade ore stream from Mahenge that generated 8 tonnes of graphite product for delivery to potential off-take customers.

The company says this was the largest plant ever run in the graphite sector at the DFS stage of development and it no doubt provided invaluable physical data and operating performance stats for the company’s processing plant design and flow sheet optimisation, potentially placing Black Rock well ahead pf the pack.

The mine is well-positioned, close to road and rail infrastructure and grid power and the graphite product will be shipped from the major Port of Dar es Salaam, located about 300km northeast of the Mahenge deposit.

Commenting on the significance of the granting of the mining licences, Black Rock Mining CEO John de Vries said: “Licensing gives all stakeholders comfort that Tanzania wants this project to be developed.”

“… this is the most compelling graphite development project globally.  We have best in class financial metrics supported by (a) 90 tonne pilot plant delivering eight tonnes of product to over 20 global customers, the only project capable of delivering a concentrate grade of over 99% without the use of acid, the second largest graphite reserve supporting a 32 year mine life at 250k tonnes per annum with a study underway to increase this, best in class logistics supported by rail to the largest port in the region, and binding offtakes for up to 205k tonnes per annum in our third year of operation.”

“Our next steps are to close out ongoing financing discussions and to complete the detailed engineering to enable the commencement of construction.

The ore deposits are hosted by a highly metamorphosed granite rock that contains large mineral crystals, including the sought-after coarse graphite products, which makes Mahenge so lucrative and compelling for the company to mine and process.

Black Rock appears to have gone overboard on its DFS that is heavy on technical data rather than repeating the mistakes of some other existing and aspiring graphite producers.

The Mahenge graphite product stream is free of secondary penalty minerals and generates concentrates of just under 99% purity.

More than half of the concentrate reports to the premium large flake fraction, which has an exponentially growing market in the thermal insulation sector, effectively replacing asbestos-based products.

The finer sized graphite materials look set to be soaked up by the lithium-ion battery sector, where the material acts as the cathode. 

You need to look no further than the US Senate to get a taste of where the world’s biggest economy thinks the battery minerals sector is heading in the EV and energy storage sector, where high-quality graphite is such a critical component.

Speaking recently to the US Senate, the revered think-tank, Benchmark Mineral Intelligence, decried the US’ “bystander” status in the current battery arms race, where it was being “outflanked” by China across the board.

Benchmark’s Managing Director Simon Moores addressed the elephant in the room saying that: “… in the next decade the demand for lithium - used in the battery industry - is set to go up nine times, cobalt is set to go up six times, nickel is set to go up five times, and graphite anode is set to go up nine times.”

Armed with this information, Mr Moores then added: “… (and) how much of that mined supply does the US control? For nickel it’s zero, for cobalt it’s zero, for graphite it’s zero and for lithium, it’s one per cent.”, which highlights how serious the US is about demand and supply of these key commodities heading into the future.

The company appears well-placed to take up the slack in the graphite market, particularly given the plethora of potential customers for premium graphite products in Asia, Europe and North America.

Black Rock’s Mahenge graphite deposit looks to be a work of art, having an extraordinarily low stripping ratio of just 0.5 to 1 - the deposit actually sticks out of the ground.

Add to this that the company has only defined mineral resources over a short strike length within its extensive landholdings in Tanzania and you can see why Black Rock describes the project as a “multi-generational graphite resource”.

On the basis of the company’s achievements to date, few would disagree.


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