AMN - TANZANIA: Black Rock construction ready at Mahenge

Black Rock Mining says it is now “construction ready” to build the first US$116 million stage of the new Mahenge graphite mine in Tanzania once final financing negotiations are finalised. Mahenge is regarded as the world’s fourth-largest graphite resource.

Speaking at Paydirt 2019 Africa Downunder mining conference in Perth, Black Rock’s managing director John de Vries said the company was looking at a blended finance model for the proposed high-purity graphite mine to ensure full leverage of its advantages.

“Our approach is to match the financing risks for Mahenge with those best placed to manage it. The current options include bonds, offshore debt, vendor bids, Tanzanian debt, offtake customer participation or a part sell down,” John de Vries said.

“This position is enhanced by the fact the construction protocols are already underwritten by pricing framework agreements, but the focus remains on identifying the least dilutive option for our shareholders and to act on their desires to ramp up our maiden start schedule.”

The 100%-owned Mahenge deposit has a JORC-compliant resource estimate of 212 million tonnes at 7.8% TGC, enabling a mine life of up to 350,000 tonnes of high spec graphite concentrate a year for a 26-year mine life.

The MD said Mahenge would come to market at a time of growing demand for energy storage and expanded graphite consumption – a demand curve likely to double graphite consumption volumes over the next decade.

The company’s road to commercial production includes the largest pilot plant of any graphite mine globally and other innovative on-site engineering and development schedules.

Black Rock has appointed Ironstone Capital as advisors to accelerate the financing choices including assessing what de Vries says are a solid number of inbound financing proposals and structures.

“A key strength of our business model is scalability. Being able to add capacity incrementally at Mahenge ensures we do not overcapitalise the asset with excessive redundant capacity but can respond to changes in market demand. This will ensure the asset is not developed unless market demand is present.

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

“Fundamentally, therefore, we are not directly competing with existing producers or trying to place product in highly contested lower specification markets,” he said.

www.blackrockmining.com.au