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Chinese testing endorses Black Rock’s graphite quality

Sometimes in the commodity sector, it is more about a market looking for a product, rather than a product looking for a market.

Such is the case in the exponentially growing expandable graphite sector, particularly in thermal foils and fire retardancy applications, which has a growing hunger for large flake graphite.

Fire retardancy in the building industry gained prominence in the wake of London’s Grenfell Tower tragedy in 2017 that killed 72 people and in the more recent Spencer Street tower fire in Melbourne that fortunately did not cause casualties.

Both incidents were caused by the use of flammable cladding, sending the building industry scrambling for fire retardant alternatives.

Black Rock’s Mahenge project in Tanzania might just be the answer for the expandable graphite sector’s hunger with more than half of its processed premium graphite concentrate product reporting to the high-value, large flake category.

And it is all there in the numbers if you look closely.

Whilst many operators are struggling with skinny margins rarely exceeding USD$200 per tonne for their graphite products, Black Rock’s DFS for Mahenge shows exceptional margins that exceed USD$800 per tonne for its high-quality flake graphite concentrates.

The former operators are lucky to have 10% or 20% of their product reporting to large graphite flake sizes, which exemplifies the uniqueness of Black Rock’s ores.

The company further de-risked the Mahenge project this week by replicating the exceptional results generated from processing its high-quality ores in Canada last year at engineering, procurement and construction, or “EPC”, partner Yantai Jinyuan’s processing facility in China.

Last month, Yantai’s metallurgical studies delivered a graphite concentrate exceeding 99% purity at 93% overall recovery from the processing of the Mahenge ore composites.

This pilot plant test work effectively validated the Black Rock’s Mahenge graphite mine processing flow sheet design and the premium nature of the concentrated ore products.

The work will also enable Yantai to fully optimise the DFS flow sheet design, based off the preliminary pilot test work program conducted in Canada.

The latest pilot plant test work operations were attended by Chinese, Korean and Japanese offtake partners and potential investors, who observed the plant’s performance and conducted their own due diligence.

For Black Rock, it’s all about locking in an appropriate basket price for its quality graphite products, now that the volumes have been agreed with its offtake customers.

According to the company, the plant recoveries, product grades and graphite flake sizes in China are fully consistent with its recent laboratory and previous DFS results, which is a very encouraging outcome.

A total of 18.5 tonnes of ore was treated during the pilot plant run in China.

Black Rock said that large graphite flake concentrate would be made available to its offtake partners as part of the validation process.

Graphite concentrate below this size will be processed for battery anode precursor in dedicated facilities to provide materials for independent battery performance testing, with results of this work expected in late May.

Black Rock CEO John de Vries said: “Our second round of substantial pilot plant testworks is the best way to attract finance by further derisking the project. This pilot plant has also given us an opportunity to differentiate and demonstrate the uniqueness of Mahenge brand graphite in front of key offtakers and potential investors.”

“The demonstration of our capacity to produce our premium branded product through a simple and repeatable process without the need for chemical intervention establishes Mahenge as one of the world’s leading premium flake graphite concentrates.”

“The pilot plant will deliver improvements on our DFS flowsheet by incorporating the experience and IP of Yantai Jinyuan. Once all the plant data is fully processed, we will be able to proceed with contract establishment … for supply of plant and engineering services as well begin the process of documenting the pledge of US$20m in vendor finance and a further US$20m of supported finance through third parties.”

The recent test work results continue to endorse the high-value nature of the company’s ore stream from its exciting Mahenge graphite project.

Black Rock released its impressive DFS for the project in October last year, estimating a 32-year project life with a post-tax NPV of USD$895m and IRR of 42.8%.

The CAPEX also looks manageable with only USD$115m required to build the initial processing plant for phase one.

Current ore reserves stand at 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.

Mr de Vries uses an “iron ore analogy” when it comes to the quality of his company’s Tanzanian graphite products, comparing the multitude of iron ore mines producing low-value “fines” products, to those rarer beasts that consistently produce the high quality “lump” that everyone really wants.

In that sense, Mahenge seems to have plenty of “lump” to go around.

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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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30/11/18
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381st↓Blina Minerals$0
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