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Black Rock achieves up to US$2,161 a tonne for Mahenge graphite product

The company believes its basket pricing commitments bode well for financier discussions.

A 3D model of Black Rock Mining’s flagship project Mahenge in Tanzania
Black Rock Mining’s flagship project Mahenge in Tanzania

Black Rock Mining Ltd (ASX:BKT) has secured pricing of US$1,117 to US$2,161 a tonne for graphite product from its Mahenge project in Tanzania, increasing production take commitments to 255,000 tonnes a year.

The company added one new production take agreement to the five it already held and reinked a number of agreements with new prices based on its products' demonstrated qualities.

READ: Black Rock Mining's non-executive director demonstrates confidence in the company

In March 2019, Black Rock undertook 18-tonne pilot plant operations in China to demonstrate it could produce Mahenge brand premium flake graphite concentrate.

The company’s demonstration work has returned results, with four of its five production take or offtake partners agreeing to the prices.

Black Rock said today the prices were consistent with its October 2018 definitive feasibility study (DFS).

The company is currently optimising its DFS to include a fourth module — to make its new 255,000 tonnes a year capacity target a possibility.

READ: Black Rock Mining makes appointments to drive Mahenge Graphite Project

Three products are included in Black Rock’s basket pricing with the production take or offtake partners.

These are a regular 94.5-95.5% nominal graphite graded (TGC) product priced at $US1,117 a tonne out of China, including cost insurance and freight (CIF China), but excluding duties.

Black Rock’s Premium Mahenge flake grading 97.5%-98.25% TGC attracted a US$1,490 a tonne CIF China price, while its Ultra high-quality product of more than 99% TGC grabbed a US$2,161 a tonne tonne CIF China premium.

Duties weren’t included in the pricing, with Black Rock noting many of the clients were in duty-exempt import-export zones.

READ: Black Rock Mining achieves improved concentrate grades in Chinese pilot plant test works

Black Rock chief executive officer John de Vries reported today the company was pleased its basket pricing had reflected the differentiation of its products.

De Vries told the market: “The basket price achieved is reflective of the absence of substitute Chinese domestic concentrates with similar properties to Mahenge Premium and Ultra products.

“Mahenge (produces) uniquely large-flake high-grade concentrates and continues to build our branding as a supplier of premium concentrates to the global market.”

De Vries expected the basket pricing commitments of its partners would help support the company’s contact with potential funding bodies.

He said: “The opportunity to validate Mahenge’s unique concentrate with our customers, who are now prepared to be named against a pricing framework, as an outcome of the pilot plant run in China, further supports our dialogue with financiers.

“We are now focused on delivering our optimised definitive feasibility study and securing financing based on the exceptional financial metrics of the Mahenge graphite mine.”

Mahenge project specifics

Black Rock’s wholly-owned and licensed Mahenge Graphite Project is 400 kilometres southwest of Tanzania’s principal port at Dar es Salaam.

Mahenge is only 70 kilometres by road from a Tanzania Zambia Railway Authority rail network that runs direct to the port.

A Tanzania Zambia Railway Authority rail network that runs direct to the port is only 70 kilometres from the project by road.

Black Rock’s company’s Mahenge project has one of the largest JORC-compliant flake-graphite mineral resource estimates in the world, with 212 million tonnes grading 7.8% total graphitic carbon (TGC).

Its ore reserve of 70 million tonnes grading 8.5% TGC could support a 25-year mine life where 250,000 tonnes of graphite are mined each year.

DEEP DIVE: Black Rock Mining's Chinese procurement work continues adding value to Mahenge graphite

Black Rock’s DFS for the project published in October modelled a 32-year mine valued at US$895 million (A$1.3 billion) using an after-tax unlevered net present value (NPV10) calculated at a 10% discount.

Mahenge project’s life-of-mine C1 costs free-on-board (FOB) at Dar port were US$401 a tonne, while its life-of-mine all-in sustaining costs at port were US$473 a tonne.

The concentrate basket FOB cost was US$1,301 a tonne.

FLASHBACK: Black Rock Mining DFS values Tanzania graphite project at US$895 million

The company’s three-phase production roll-out attracted capital expenditure (capex) of US$115 million for phase I, with a 10% contingency, for the first 83,000 tonnes a year module.

Phase II would add an 83,000 tonnes a year second module and have a US$69.5 million capex with a 15% contingency, while a phase III capex of US$84.2 million, with a 15% contingency, would fund a third module of the same size as the first two.

The maximum production capacity under the October DFS would be 249,000 tonnes.

Black Rock is revising its DFS to include a four-phase ramp-up with four production modules.

Its optimisation must take it to a minimum capacity of 255,000 tonnes a year, under its current agreements.


Quick facts: Black Rock Mining Ltd

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Market: ASX
Market Cap: $33.96 m

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