Black Rock Mining (ASX:BKT) has received a strong vote of confidence from investors with the graphite developer raising A$5 million for its Mahenge project in Tanzania despite difficult capital markets.
The company’s initial target of raising $4 million was increased due to strong interest from investors on the back of the best drilling results ever recorded at Mahenge, including grades as high as 17.7% total graphitic carbon (TGC).
The funds were raised via a placement of Black Rock shares at a price of $0.075 per share. Investors participating in the placement will also receive a free attaching one-for-two option exercisable at $0.075 per share, expiring on November 30, 2018.
Black Rock stock last closed at $0.08, which represents a 95% improvement since late last month.
The latest placement was supported strongly by key long-term investors including the Copulos Group, a related party to Black Rock chairman Stephen Copulos which controls 25% of the company and contributed $1 million to the fundraising effort.
The money will be used to establish a resource at Mahenge and pursue the acquisition and exploration of the new Bagamoyo graphite project, just 125 kilometres by road from Dar es Salaam export port.
Exploration at Bagamoyo as already begun, targeting an area that hosts exceptionally coarse flake graphite within an infrastructure corridor adjacent to Dar es Salaam.
Significant coarse flake graphite zone covering an area of approximately 1 kilometre by 200 metres of outcrop and extensive float rock has been identified so far.
The graphitic mineralisation is flat lying to shallow dipping on relatively flat ground and has an observed thickness of approximately 30 metres.
Field work is underway to assess the discovery outcrop area and to conduct regional reconnaissance. Black Rock is expected to complete mapping and evaluation of the central zone by late November. This will be followed by drilling to evaluate the depth and extent of graphite mineralisation.
Mahenge success
Funds from the placement will otherwise focus on Mahenge (including the Ulanzi and Cascade prospects), which has delivered exceptional exploration results in recent weeks.
Last week, assays from three Ulanzi holes returned 54 metres at 9.8% TGC (including 10 metres at 17.7% TGC), 52 metres at 8.95% TGC (including 18 metres at 10.3% TGC) and 70 metres at 9.5% TGC (including 54 metres at 10.1% TGC).
These represent the highest grads recorded at the site to date and confirm the potential of Ulanzi to be the company’s most prized development area.
Mineralisation remains open to the north and south, with at least another 30 holes of drilling in the area expected to resume at the end of the month.
Seventeen holes have been drilled to date along the 5.5-kilometre-long structure, generating results such as 54 metres at 10.1% TGC (including 14 metres at 12.5% TGC) and 60 metres at 9.9% TGC (including 12 metres at 13% TGC).
The upcoming drilling at Ulanzi will result in more than 2 kilometres of the structure being defined and is expected to generate sufficient information for a maiden JORC-compliant resource at the prospect.
After incorporating new exploration data from mapping, trench, pit and drill results, the exploration target for the overall Mahenge project has been established at between 84 million tonnes to 115 million tonnes at 8.66% to 10.34% TGC.
Analysis
The latest capital raising is significant in that it demonstrates the growing consensus that Black Rock is likely to be on the cusp of a large resource definition at Mahenge, a project which has consistently delivered outstanding graphite grades in a well-established graphite jurisdiction.
The raising also positions Black Rock to leverage its excellent exploration work at Mahenge since July 2014 and continue to add value to the company through portfolio development.
The acquisition of Bagamoyo, meanwhile, represents a significant strategic milestone, further establishing the company as a significant graphite explorer in Tanzania. The acquisition comes with a small price tag, including a cash component of only USD$50,000.
The company expects to complete mapping and evaluation of the central zone at Bagamoyo by late November, followed by drilling to evaluate the depth and extent of graphite mineralisation.
This work could represent another future price catalyst for Black Rock in addition to planned updates on the Ulanzi drill program.
Other significant milestones and key objectives the company is aiming to complete in the current quarter include the conclusion of due diligence at Bagamoyo as well as aerial surveying for Ulanzi north and west to generate a high-resolution contour map to be used for the Ulanzi resource estimate expected in December.
Metallurgical testwork is also underway for Ulanzi and Mahenge’s Epanko north prospect with results due in December.
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