Black Rock Releases Mahenge DFS on Heels of Graphite Offtake

Black Rock Mining (ASX:BKT) has revealed the results of a definitive feasibility study (DFS) for its Mahenge graphite project in Tanzania.

CAPEX for phase one comes in at US$115 million, with CAPEX for phases two and three being US$69.5 million and US$84.2 million, respectively.

According to the company, the DFS builds on a mid-2017 prefeasibility study (PFS). The project’s post-tax IRR dropped from 50.1 percent (seen in the PFS) to 42.8 percent, and its post-tax NPV fell from US$1.1 billion to US$895 million at a 10-percent discount.

However, some numbers stayed the same, with core elements like life-of-mine remaining at 32 years and the average graphite concentrate production rate staying at 250,000 tonnes per year. Total life-of-mine concentrate production is set at 6.6 million tonnes.

“When setting out to deliver our Definitive Feasibility Study our primary objective was to develop the study to point where it would support a bankability level of due diligence,” Black Rock CEO John de Vries said in a statement on Wednesday (October 24).

“This study is about building a mine. The attention to detail, the level of data support, the effort and the engagement with stakeholders, positions the company to move into financing and construction.”

de Vries also said that a core element of the DFS was the operation of a 90-tonne pilot plant, which the Black Rock says is the largest plant ever run in the graphite space at the DFS stage. The plant produced 8 tonnes of graphite concentrate that the company will be able to use to engage customers.

The DFS results come hot on the heels of an offtake agreement for Black Rock with Heilongjiang Bohao Graphite Company, which was announced earlier this week.

The deal, set to last up to three years, will see Black Rock supply 30,000 tonnes of blended graphite concentrate in the first year, 50,000 tonnes in the second year and up to 90,000 tonnes in the third year.

According to the company, 90,000 tonnes a year is the largest offtake agreement signed by any graphite developer by magnitude, and underwrites the Mahenge construction strategy. Heilongjiang Bohao is one of China’s largest graphite suppliers for industrial purposes such as batteries.

Black Rock says further offtake deals are in the works, and the firm is targeting mid-2019 for the start of construction and mid-2020 for initial production. It plans to make a mining license application in the coming weeks. The company’s share price closed Wednesday at AU$0.033, up 6.45 percent.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.