viewBlack Rock Mining Ltd

Black Rock Mining enhances Mahenge Graphite Project DFS; fourth production module added

The project’s post-tax unlevered net present value has increased by 30% from US$895 million to US$1.16 billion.

tanzania flag painted on two hands
Targeted steady-state annual production to increase from 250,000 to 340,000 tonnes

Black Rock Mining Ltd (BKT:ASX) has enhanced the definite feasibility study (DFS) for its Mahenge Graphite Project in Tanzania.

The enhanced DFS includes a fourth production module and a compressed development schedule, which is now subject to financing and confirmation of the 16% Tanzanian government free carried interest.

Summary of the enhanced DFS financial metrics compared to the initial DFS

The enhanced DFS was completed in response to product demand and feedback from customers and financial markets for a more aggressive production schedule and de-risked commissioning plan.

Black Rock CEO John de Vries said: “The enhanced Definitive Feasibility Study (eDFS) brings together a number of competitive advantages associated with Mahenge.

“Ultimately this is a customer and financial markets driven outcome. 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.

“This is evident in Black Rock having established pricing and volume frameworks based on the October DFS, three module business plan, and our customers being prepared to be named against a pricing framework. Something no other developer or producer has achieved.”

Offtake pricing framework

The addition of a fourth production module has no material change to the forecast capex for the first three phases, however will lift the overall revenues with a revised project net present value of US$1.16 billion (A$1.65 billion).

The next steps include continued progression of financing discussions and commencing detailed engineering for the commencement of construction and confirmation of the 16% Tanzanian government free carried interest.

de Vries added: “Ultimately, this is an outcome that supports our financing strategy. 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. This approach ensures the asset is not developed unless market demand is present.

“While not an intended outcome of the exercise, the addition of the fourth module brings our total planned annual capacity to 340 – 350kt of concentrate. This will make Mahenge one of the world’s largest potential graphite producers.

READ: Black Rock Mining has the second largest graphite reserve globally: Patersons Securities

“Critically, given our concentrate purity and flake size, we have multiple market segments where demand for higher specification product exceeds available supply.

“Fundamentally, we are not directly competing with existing producers and trying to place product in highly contested lower specification markets.

“What started off as an enhancement study in response to market demand from our customers, ultimately ended up as a conversation with our financiers about a de-risked start-up and commissioning plan.

Committed offtake volumes by customer

“Ongoing engagement with financial markets indicated a strong desire to decouple the project development schedule from the schedule for development of the 220 KV High Voltage lateral from Ifakara to Mahenge.

“The High Voltage Line development is scheduled to be available for Module Two, which occurs in year 2 of the compressed schedule. Our base case is that access to hydro power from the national grid gives us the greenest produced graphite possible, and at the lowest cost possible. A decoupled power supply schedule via short term on site generation ensures Black Rock controls and manages all elements of the project start-up.

“Finally, we have nominated Module Four as “sprint”. Our development strategy is now “crawl, walk, run, sprint”

Quick facts: Black Rock Mining Ltd

Price: 0.053 AUD

Market: ASX
Market Cap: $33.86 m

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