Blencowe Resources PLC (LSE:BRES) said it received an approach from a Chinese group which could potentially provide an offtake, funding and development scenario for its 100% owned Orom-Cross graphite project in Uganda.
As a result, Blencowe agreed to send roughly 100 tonnes of samples from Orom-Cross to China for further metallurgical testing by the potential strategic party, subject to receiving the necessary permits, the company said in a statement.
“We believe this bulk sample trial will prove highly significant and is potentially a precursor to a full offtake agreement and subsequent project funding, which in turn would enable us to kick start production with a critical mass of product sold to drive profitability and cash flow,” said Blencowe chief executive Cameron Pearce.
The mineral exploration and development company said it has already been able to share significant data with its potential Chinese strategic partner, having completed two previous stages of bench scale metallurgical testing.
Next, it said testing will be done on a larger scale to give both parties more knowledge on the idea of what can be produced at Orom-Cross, with the hope this will lead to an initially non-binding agreement for offtake, ultimately ending in a binding sales agreement.
Blencowe added there may also be potential for funding contracts coming from this relationship, which could meet capital expenditure requirements for production.
Plans to build an on-site pilot plant facility at Orom-Cross have been postponed, Blencowe noted, due to binding offtake contracts to purchase the project likely removing the need for the facility, meaning it does not need to raise roughly US$10mln.