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Black Rock’s African graphite play exceeds $1.65b NPV

Africa focussed graphite developer, Black Rock Mining, has significantly improved the metrics of its existing definitive feasibility study, or “DFS”, for the Mahenge graphite project in Tanzania, by including a fourth production module at the proposed mine.

The company’s offtake customers effectively requested a more aggressive ramp-up of the operation, which produces a highly sought-after, world-class premium graphite flake product.

Targeted steady-state annual production of the graphite concentrate will now rise from a maximum of 250,000 tonnes annually set out in last October’s DFS, to 340,000 tonnes per annum in the enhanced DFS plan.

The company said that its post-tax net present value, or "NPV", for the Mahenge project would rise by 30% to USD$1.16b - AUD$1.65b - and the internal rate of return will increase to 44.8%.

There are no material changes to the capital costs for building the first three modules of plant for the proposed mining operation and in fact, the USD$265m uplift in the NPV results from a miniscule $2.1m addition to the capital costs for those modules.

The additional fourth module is forecast to add USD$67.1m to the project’s capital costs.

As a result of the expansion, the life of mine will be reduced by six years to 26 years and an impressive stable state EBITDA of USD$306m per annum would be established after the first five years of production.

According to Black Rock, the compressed development schedule remains subject to financing arrangements and confirmation of the Tanzanian government’s free-carried interest of 16% in the Mahenge project.

There is a slight increase in the all-in sustaining cost of production to USD$494 per tonne, but this still provides an exceptional margin of 62% to the forecast graphite concentrate basket price of USD$1,301 per tonne for the company’s product.

Management said that additional mill feed would be sourced from a third open-cut operation proposed at the Epanko deposit, with mine production from that area not scheduled until year 7 in the compressed schedule.

The current ore reserve for Mahenge stands at 70 million tonnes grading 8.5% total graphitic carbon and contains 6 million tonnes of contained graphite.

Test work has achieved very high recoveries of the graphite into ore concentrates that exceed 95%, with purities close to 99%.

And hence, the push by the company’s offtake partners to rapidly increase the production of the high-quality graphite ore concentrates.  

Commenting on the enhanced DFS schedule, Black Rock Chief Executive Officer John de Vries said: “The enhanced definitive feasibility study (eDFS) brings together a number of competitive advantages associated with Mahenge. Product placement from both the Canadian pilot plant and our recent Chinese pilot plant has demonstrated that Mahenge graphite concentrate has significant “value is use” advantages, now recognised by our customers.”

“A key strength of our business model is scalability. Being able to add capacity incrementally ensures we do not over capitalise the asset with excessive redundant capacity but can respond to changes in market demand.”

“… the addition of the fourth module brings our total planned annual capacity to 340 – 350kt of concentrate (and) will make Mahenge one of the world’s largest potential graphite producers. Critically, given our concentrate purity and flake size, we have multiple market segments where demand for higher specification product exceeds available supply.”

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1 year TSR5 year TSR
106thBlack Rock Mining71%-2%
381stBlina Minerals0%-13%
387thBlaze International0%-35%
465thBannerman Resources-11%-5%
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377th↓Bannerman Resources$0
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380th↑Blaze International$0
381st↓Blina Minerals$0
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