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Black Rock’s Tanzanian graphite prices set in stone

ASX listed graphite developer Black Rock Mining has now agreed to pricing with four of its five Chinese offtake partners, for the high quality, premium flake product to be delivered from the outstanding Mahenge project in Tanzania.

Importantly, the pricing framework is consistent with the concentrate basket prices used in the company’s robust DFS for the project, outlined in October last year.

The two new commitments were agreed to by Qingdao Yujinxi and Yantai Jinyuan for three years of supply for up to a combined 50,000 tonnes of graphite by year 3, taking the total committed volume to 255,000 tonnes per annum by year 3, in line with steady state production from the proposed mine.

The new offtake agreements follow on from previously agreed volumes to Heilongjiang Bohao and Taihe Soar.

Only the pricing for Qingdao Fujin’s commitment of 40,000 tonnes over the first three years of graphite production is yet to be finalised.

According to Black Rock, the new contracts underpin the fourth module of the optimised DFS, which is currently in progress.

The agreed pricing for high-grade Regular, Premium and Ultra concentrated graphite flake products range from USD$1,117 per tonne to USD$2,161 per tonne, which straddles the USD$1,301 per tonne used in the Mahenge graphite DFS, using the same metrics.

Commenting on the price framework, Black Rock CEO John de Vries said: “One of the challenges in developing any new graphite project is securing price transparency so investment markets can form a view on the value of the project. Delivering a binding price framework is a fundamental step in our financing process as this gives financiers confidence in our financial metrics.”

“The basket price achieved is reflective of the absence of substitute Chinese domestic concentrates with similar properties to Mahenge Premium and Ultra products. We are delighted that our basket pricing clearly differentiates.”

“The opportunity to validate Mahenge’s unique concentrate with our customers, who are now prepared to be named against a pricing framework, as an outcome of the pilot plant run in China, further supports our dialogue with financiers.”

“We are now focussed on delivering our optimised Definitive Feasibility Study and securing financing based on the exceptional financial metrics of the Mahenge graphite mine.”

The company is starting to get serious about the development of its impressive graphite resources in Tanzania, last week appointing two experienced executives to bolster the company’s Board.

Well respected mining veteran Ian Murray has joined Black Rock as a Non-Executive Director and will utilise his global networks and industry expertise to assist the company in structuring and financing the project for the potential start-up of construction activities at Mahenge later this year.

Black Rock has also taken on Jeffrey Dawkins as the company’s CFO and Joint Company Secretary, as it commences building out its business platforms in support of the development of mining operations in Africa.

Mr Dawkins has over 20 years of industry experience in senior financial positions with companies including Lynas Corporation, Archipelago Resources, Peak Resources Ltd, Blackham Resources and most recently, Chief Financial Officer at Battery Minerals.

The Mahenge project has an ore reserve of 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 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.

Mahenge’s DFS showed a 32-year project life that could generate a post-tax NPV of USD$895m and an IRR of 42.8%, with a CAPEX estimate of USD$115m.

This capital spend is required to build the initial processing plant for phase one at the project, which is targeted to produce graphite at an enviable margin of over USD$800 per tonne for its high-quality flake concentrate products.

With this week’s signing of two more offtake agreements for these premium products, it is likely that company executives will now be sleeping a bit easier, whilst bolstering its case for securing the required finance to push the start button at the exciting project. 

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Total Shareholder Return as at 31/10/19

1 year TSR5 year TSR
106thBlack Rock Mining71%-2%
381stBlina Minerals0%-13%
387thBlaze International0%-35%
465thBannerman Resources-11%-5%
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$128k Bought
30/11/18
$0 Other
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377th↓Bannerman Resources$0
378th↓Black Rock Mining$0
380th↑Blaze International$0
381st↓Blina Minerals$0
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