Blencowe Resources PLC (LSE:BRES) has received approval from the Ugandan authorities to export materials from its Orom-Cross graphite project for final metallurgical testing.
Chinese firm Jilin Huiyang will carry out the testing, which eliminates the need for Blencowe to build its own bulk testing facility on-site in the near term.
Uganda’s decision is a landmark move by the government, Blencowe added, as existing laws ban the export of unprocessed raw materials.
It reflects an understanding that testing is key to advancing Orom-Cross towards first production, added the statement.
The export permits for 100t of bulk raw ore to be used to assess the metallurgical processes on a commercial scale, including differing plant components to maximise the grade, recovery and flake sizing from the project.
An additional 150kg will be fast-tracked to Jilin while a groundwater sample will assess characteristics in terms of the reagents required under proposed site operating conditions.
Blencowe, which has already completed two stages of bench scale metallurgical testing in Canada, added it hoped this program will initially lead to non-binding MOUs for offtake and ultimately to binding sale agreements for a substantial portion of the initial 50,000tpa from stage one at Orom-Cross.
Cameron Pearce, Blencowe’s executive chairman, added: "China is currently the most mature graphite market worldwide and entering into an offtake relationship there would be very valuable to us given the highly attractive economics at Orom-Cross, which already has an NPV8 [net present value] of US$482mln based on an initial 14-year mine life.
“This bulk sample trial is significant as a precursor that ultimately leads us to a full offtake agreement."
Pearce added that economic forecasts are for a 300% rise in world demand for graphite by 2030 as the use of electric vehicles grows, noting prices have already started to rise in anticipation of this looming shortage.