Tanzanian graphite developer Black Rock Mining Limited (ASX:BKT) has confirmed that new binding term sheets for Offtake have been agreed with the company’s existing Offtake customers for the supply of large flake graphite concentrate.
Black Rock, through its 100% owned Tanzanian subsidiary Mahenge Resources, has signed new binding term sheets for Offtake with two of its existing Offtake customers, Taihe Soar (Dalian) Supply Chain Management (Taihe Soar) and Qingdao Yujinxi New Material Co Ltd (New Materials). Previously, these commitments for allocated product were agreed in the form of Pricing and Volume Agreements. The binding term sheets revise product allocation to separately reserve 100% of fines (estimated at 25 ktpa – 30 ktpa) for POSCO.
Including POSCO’s tonnage allocation of 100% of fines, total binding Offtake is 60 ktpa, with an additional 15 ktpa of buyers options over uncontracted tonnage. The conversion to binding status now confirms the majority of large flake concentrate from Mahenge Module One is now allocated and provides for a higher level of contractual stability prior to commencing a debt finance process. The remaining 23 ktpa uncontracted tonnage is subject to a qualification process which is underway.
Large Scale Qualification
Operation of a large-scale pilot plant(Qualification Plant)to generate bulk concentrate samples to complete customer qualification for POSCO and selected large flake customers, recently commenced in Shandong province, China.
Stockpiled ore will be processed with milling expected to last around six weeks. The mill is the same as was used in Black Rock’s 18 tonne pilot plant operation in 2019.
The ore parcel being processed is composited from eighteen locations across the entire strike length of the Ulanzi orebody, from the Mahenge Graphite Project. Individual samples are extracted from drill hole collars and are designed to support reconciliation between drill and lab results to bulk samples to better forecast ultimate plant performance.
This supports a whole of orebody qualification, whereby customers and financiers have confidence in the project’s ability to supply qualified product over the long term. This sample strategy has been designed to represent the first ten years of the Ulanzi pit and is representative of the expected feed profile for Modules One and Two.
Operation of the plant was contemplated as part of POSCO’s US$7.5m investment which was completed in May 2021.
Large flake concentrate from the Qualification Plant will be placed with interested parties in Europe and Asia. Fines (<#100 mesh) will be used to qualify battery anode precursor products within POSCO’s customer supply chain.
Prior to operation of the Qualification Plant, individual bulk samples were sampled and tested by SGS Lakefield Laboratory in Canada in July 2021. Samples were processed to determine sizing at a targeted 95% carbon concentrate grade for commissioning and ramp-up. SGS’s test work cycle achieved an average of 96.8% carbon by LOI. Details are outlined in Table 2 below.
Black Rock Managing Director and CEO, John de Vries said the current round of testing indicates a slight increase in large flake and concentrate grade, in response to continued optimisation, management cautions that some size degradation will occur with plant scale up.
Offtake and prepayment negotiations with POSCO for 100% of fines from Mahenge Module One are progressing. Expected volumes of –#100 mesh concentrate attributable to POSCO are expected to be in the range of 25 ktpa to 30 ktpa tonnes. Conversion of strong expressions of interest for the remaining 20 ktpa of large flake not subject to contractual rights are subject to completion of qualification.
“Converting our Offtake agreements to a binding status delivers a higher level of confidence for our business model and is fundamental to our financing strategy. The company has been progressing these Offtake agreements in parallel to activities with respect to resolving the Tanzanian Government’s Free Carried Interest provisions,” Mrde Vries said.
“We continue to receive strong Offtake interest for large flake concentrate, subject to the ability to complete qualification. Access to adequate quantities of sample available for qualification supports our view that our entire planned production from Module One will be subject to binding Offtake before completion of construction.
“The outcome of 96.8% C by LOI grade from our metallurgical test work ahead of the Qualification Plant run should be seen in the context of actually trying to achieve a 95% C by LOI target concentrate grade to support a simpler commissioning and ramp up process. While the outcome is extremely pleasing, performance at scale through the qualification plant will demonstrate confidence in our ability to deliver contracted product grades and size fractions from day one.”