Black Rock Mining
Financials:
Primary ticker: ASX:BKT
Stage of development: Development, Production
Primary minerals: Graphite
Project to promote: Mahenge Graphite Project
Project location: Tanzania
Website: www.blackrockmining.com.au
Black Rock Mining Ltd (ASX:BKT) is developing its 100% owned Tier 1 scale Mahenge Graphite Mine located in Tanzania, which hosts a multi-generational graphite resource, and is 4th largest JORC-compliant graphite resources globally, with 212m tonnes @ 7.8% TGC, and a reserve of 70m tonnes @ 8.5% TGC.
Black Rock has a Strategic Alliance with POSCO as cornerstone offtake partner and major shareholder. POSCO Term Sheet agreed for US$10m prepay and LOM fines offtake for Module 1 agreed in Dec 2021. Black Rock has a qualified path to market through established strategic partnerships
All the key Tanzania Govt agreements in place for Mahenge with FCI Agreement signed with Govt in Dec 2021 and Special Mining Licence (SML) issued in Sept 2022.
The Mahenge Graphite Mine offers a strongly differentiated position driven by leading High Purity and Large Flake Distribution (Geology), as well as logistical advantages being close to Rail, Port, and Grid Power (Geography).
Under the Company’s Updated enhanced Definitive Feasibility Study, released in October 2022, the operation outlines exceptional financial metrics including:
• Tier 1 Scale: Mahenge has a resource of over 200mt and the 2nd largest graphite reserve globally
• Modular development approach: Module 1 Capex of US$182m;
• 1st quartile on the global cost curve: Adjusted C1 Cash cost of US$359/t
• Attractive projected returns: Unlevered IRR post-tax, post free carry of 36%
• Substantial upside potential: NPV10 nominal post-tax, post free carry of A$2.1bn or US$1.4bn
The Company is currently progressing its debt financing process with a view to commencing construction of the mine in Q3 CY23.
Cash: AUD$7.6M
Debt: NIL
Major shareholders:
POSCO – 13%
Copulos Group – 12%
Daniel Turner Capital – 3.5%
Anthony Hall – 3.0%
Chin Yong Chong – 2.2%
Management Ownership – 3%
Management Profile
John de Vries – Managing Director
Mr. de Vries in a Mining Engineer with over 35 years’ experience in the resources sector. He started his career in 1984 working for WMC Resources and held operational roles such as Underground Manager, Senior Mining Engineer and Manager Mining. In 1998, he moved to AMC Consultants to become a Principal Mining Engineer responsible for Mine Optimisation. In 2003, he joined Orica Mining Services as Global Business Manager, Advanced Mining Solutions before moving to BHP Billiton in 2007 as Manager Strategic Mine Planning.
What is your rationale for taking part in 121 Mining Investment?
Black Rock is strongly differentiated through orebody quality and execution strategy. High quality concentrate coupled with class leading logistics and environmental controls positions Mahenge to supply clean green graphite into the burgeoning renewables and energy conservations markets.
Black Rock has completed extensive product development work and as a consequence has qualified our products in a number of important Western and Chinese markets, including securing direct investment and offtake from one of the world’s largest Anode producers, POSCO.
Black Rock intended to commence finance process for project development and our intention is to finalise the project debt in mid CY23 and then to commence construction shortly thereafter.
What recent news would you like to highlight to investors attending?
Black Rock has made significant recent progress in developing the Mahenge Project. Key recent announcements are:
– POSCO of Korea to invest US $7.5m in Black Rock, take a LoM Offtake for all -195 (fines) from module and provide a US$10m prepayment
– POSCO Term Sheet agreed for US$10m prepay and LOM fines offtake for Module 1 (Dec 2021)
– All key Tanzania Govt agreements in place with Free Carried Interest Agreement signed with Govt (Dec 2021)
– Special Mining Licence issued for Mahenge (Sept 2022)
– Completion of Front End Engineering Design (FEED) and Updated eDFS (Oct 2022)
What are your key goals for the next 3, 6 and 12 months?
3 Months:
Finalise Project debt by mid CY23
6 Months:
Finalise Project debt by mid CY23, commence construction shortly thereafter.
12 Months:
Finalise Project debt by early CY23, commence construction shortly thereafter. 20 month construction period, first production due in early CY25.
What do you see as the key risks and challenges facing your company at the moment and how are you overcoming these?
Finalising project debt by mid CY23, to enable commencement of construction shortly thereafter.
What do you think makes your company such a compelling investment?
• Black Rock’s owns the Tier 1 scale Mahenge graphite project (2nd largest reserve globally)
• Innovative modular development approach via x 1mtpa modules reduces project risk, market risk and enhances value-per-share
• Only graphite developer globally with an alliance with a large scale Anode producer (POSCO) providing crucial customer validation of the quality of Mahenge’s products
• POSCO is a major shareholder holding 13% of BKT, has an agreement to take life of mine fines production from module 1 and is also providing US$10m prepayment to assist with project development
• Mcap of A$138m compared to NPV (10 nominal) of A$2.1bn – very substantial upside if the company can execute, supported by a very strong macro tail wind in graphite (Benchmark Mineral Intelligence is forecasting some very large supply deficits in the next few years)
• The first graphite development company to arrange publicly index linked product pricing
• Mahenge has advantageous geology – 60-70% of the deposit comprises high value large flake, it is very low strip and has low deleterious and intersticial gangue material.
• Mahenge is blessed with excellent infrastructure – close proximity to rail, low cost hyrdo grid power and export through the 16mtpa container port in Dar es Salaam
• Mahenge has all key Tanzania Govt agreements in place with Free Carried Interest Agreement signed with Govt in Dec 2021, Special Mining Licence granted Sept 2022.
• Offtake agreements in place for ~80% of production for Module 1
What are the top 3 key investor takeaways?
• Only graphite developer globally with an alliance with a large scale Anode producer (POSCO) providing crucial customer validation of the quality of Mahenge’s products
• POSCO is a major shareholder holding 13% of BKT, has an agreement to take life of mine fines production from Module 1 and is also providing US$10m prepayment to assist with project development
• Mcap of A$138m compared to NPV (10 nominal) of A$2.1bn – very substantial upside if the company can execute, supported by a very strong macro tail wind in graphite (Benchmark Mineral Intelligence is forecasting some very large supply deficits in the next few years)