Black Rock Mining has inched another step closer to developing its mammoth Mahenge graphite mine in Tanzania, inking a non-binding framework agreement with Chinese state owned enterprise, China Railway Seventh Group, or “CRSG”, to act as its head engineering, procurement and construction contractor for the project.
Importantly, Black Rock and CRSG’s final EPC contract will include a deferred payment structure based on plant performance milestones. This delayed payment schedule should result in over 30%, or USD$24 million worth of the final contract value being paid only after the processing plant has passed requisite tests and performance hurdles, considerably easing the upfront financing pressure on the ASX-listed company.
Black Rock is sitting on one of the largest premium graphite flake deposits in the world. It contains a resource of 212 million tonnes grading 7.8% total graphite content and a reserve of 70m tonnes grading 8.5% TGC.
The project’s definitive feasibility study showed an extraordinary 32-year initial mine life, making it a “multi-generational” operation that will produce a 98.5% premium graphite flake concentrate with the ability to go even further and reach ultra-pure levels of around 99%.
Graphite, or carbon as it is sometimes known, is the only natural, non-metal element that can conduct electricity. It is also used in a lot of refractory applications and as a dry lubricant. Refractory applications involve incredibly high heat and therefore are required to use materials that will not melt, such as brake linings or foundry moulds.
Black Rock Managing Director, John de Vries, said: “This framework agreement is a big step forward for Black Rock and our Mahenge Graphite Project. To have Black Rock aligned with a project execution partner as large, established, Africa-proven and financially robust as China Railway Seventh is materially significant…”
“In short, the agreement delivers us greater certainty on our project execution. It has been deliberately structured to deliver a final EPC contract that maximises both partner alignment and appeal to potential project financiers.“
“This includes with respect to the deferred, performance-based payment terms that would significantly reduce our upfront capital requirement and overall build execution risk.”
Blackrock already has an existing partnership with another Chinese firm, Yantai Jinyuan, to design and supply the plant and machinery and some non-process infrastructure at Mahenge.
CRSG will act as the lead engineering and procurement contractor for the module one processing plant and some non-process items.
Black Rock said the first phase of development at the project will aim to produce 85,000 tonnes of graphite concentrate per year.
CSRG will also oversee all of the non-processing related site infrastructure, which includes things like accommodation, earthworks, power and the like.
The project’s definitive feasibility study shows a three-stage construction ramp-up process that will eventually churn out 250,000 tonnes per year of TGC.
Management said it is aiming for a binding EPC term sheet to be executed by the end of March this year, which will then place it on a pathway to production.
With offtake agreements already in place, a product that has been stacking up well metallurgically and now a $24 million shot in the arm for the upfront project financing, all eyes will be on Black Rock as it hurtles headlong onto the pathway to production.
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By Matt Birney
