Black Rock Mining Secures Offtake Agreements and Advances Financing for Mahenge Graphite Project
BKT (BKT) Share Update July 2024 Tuesday 23rd
Black Rock Mining Announces Key Offtake Agreements and Project Financing Progress
Black Rock Mining Ltd (ASX: BKT) has announced significant progress in its Mahenge Graphite Project, including new offtake agreements and advancements in project financing.
Instant Summary:
- Executed full form offtake agreements with Muhui International Trade and Qingdao Yujinxi New Material.
- Progressed loan documentation for US$153 million in project debt facilities.
- Cash reserves of A$9.1 million as of 30 June 2024.
- Expected first production from Mahenge Graphite Project in 2026.
Offtake Agreements
On 27 June 2024, Black Rock Mining announced that its subsidiary, Faru Graphite Corporation, had signed binding offtake agreements with two key customers: Muhui International Trade (Dalian) Co. Ltd and Qingdao Yujinxi New Material Co. Ltd. Each agreement covers the supply of 15,000 tonnes per annum of large flake graphite concentrate, with an optional extra quantity of 10,000 tonnes per annum. The initial term of these agreements is three years, with an optional extension of two years. Pricing will be indexed to RefWin and ICC Sino indices, and transactions will be conducted in US dollars under CIF shipping terms.
Financing Progress
During the June 2024 quarter, Black Rock made significant progress in finalizing loan documentation for US$153 million in project debt facilities with the Development Bank of Southern Africa (DBSA), Industrial Development Corporation of South Africa (IDC), and CRDB Bank of Tanzania. This financing is crucial for the development of the Mahenge Graphite Project, which has an estimated capital cost of US$231 million. The company expects to finalize these agreements shortly, aligning with its goal to commence construction within 20 months of the Final Investment Decision (FID).
Community and ESG Initiatives
Black Rock has also been active in its Environmental, Social, and Governance (ESG) efforts. During the quarter, the company completed an 'interim' livelihood restoration program for households affected by the project. This included the construction of two new water wells and supplementary food support for vulnerable households. Additionally, the company held traffic and road awareness training sessions, providing helmets and hi-vis vests to attendees.
Local Developments
In a related development, the Tanzanian government confirmed the activation of the third turbine at the Julius Nyerere Hydropower Plant, which is expected to significantly increase the share of hydroelectricity in the national grid. This could make Black Rock's Mahenge graphite products some of the lowest carbon emissions per tonne in the world.
The signing of these offtake agreements and the progress in project financing are positive developments for Black Rock Mining. These steps reduce the risk associated with the Mahenge Graphite Project and provide a clearer path to production. The anticipated increase in hydroelectric power in Tanzania could further enhance the project's environmental credentials, potentially attracting more investors focused on ESG criteria.
Investor Reaction:
Analysts have reacted positively to the news, highlighting the importance of securing offtake agreements and advancing financing. 'These agreements provide a solid foundation for the project's future,' said one analyst. Investors are also optimistic about the potential for increased hydroelectric power, which could lower production costs and improve the project's carbon footprint.
Conclusion:
Investors should keep an eye on the finalization of the loan agreements and the commencement of construction activities. The successful execution of these plans could significantly enhance Black Rock Mining's market position and stock value. Stay tuned for further updates as the company moves closer to production.