Black Rock’s Interim CEO and Executive Director, John de Vries commented:
“The Optimisation Study successfully builds out our crawl, walk, run strategy, ultimately delivering a
world-class mine based on any metrics. At a maximum run rate of 250k tonnes per annum, of the highest
purity graphite concentrate on the market, with exceptionally low opex, and capex, this study places us
in a strong competitive strategic position.
As the market progressively starts to benefit from increased
demand driven by the transition from petrol to electric vehicles, and demand for fire proofed panels for
high rise buildings grows, demand for Mahenge’s premium product will grow.
“We continue to be highly confident we have the most compelling development stage graphite project globally and intend to quickly move into our DFS phase to ensure construction risks are minimised.”
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Graphite Pricing Assumptions
A point of consternation in the market appears to be the appropriate basket price assumption to model to deliver
realistic financial metrics for development stage graphite projects.
In the absence of an exchange traded market, the Company has used independently sourced three year trailing
Chinese prices. These prices are for 94% to 95% concentrates. The Company has added US$100 per tonne per
increased percent of grade. It has then deducted US$30 per tonne to represent the additional freight costs of shipping
its product from Africa to China to ensure the prices are presented on a like-for-like basis. This has resulted in an
average basket price of US$1,241.
Other developers have used significantly higher basket price assumptions on the basis an increase in purity is likely
to deliver a greater benefit to graphite users than US$100 per tonne per percent of grade increase. Ultimately, the Company believes it has the highest purity product proven by appropriate test works of any global developer.
It also believes it has one of the strongest flake size distributions skewed towards larger higher priced flakes. As a result, it believes its average basket price assumption may be bettered in production.
Tanzanian Mining Legislation and State Agreements
On 12 July 2017 the Company released to the ASX a “Tanzania Update” that discussed proposed legislation changes
to mining in Tanzania that included a 16% Free Carried Interest and an increase in the royalty rate from 3.3% to 4.3%.
The Company now understands there is an ability to negotiate a State Agreement for the Mahenge Graphite Mine that can override certain elements of the new legislation.
The Company has commenced a process to negotiate a State Agreement that is likely to consider the Free Carried Interest, royalty rate and fiscal stimulus options with a view to providing the market, off take and funding partners with sufficient certainty to ensure the project’s success.
with exceptionally low opex, and capex, this study places us
