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Technical Studies

BLACK ROCK MINING PFS CONFIRMS HIGH MARGIN, LOW CAPEX POTENTIAL FOR MAHENGE GRAPHITE MINE

The Company completed and reported its Scoping Study Report on 22 March 2016.

Highlights:

  • Preliminary Feasibility Study (PFS) completed for Mahenge Graphite Mine, delivering:
    • Post-tax unlevered project NPV10 of US$624m (NPV8 of US$798m)
    • Post-tax, unlevered IRR of 48.2%
    • EBITDA in first full year of production US$135 million (EBITDA margin of 66%)
    • Two 83k tonnes per annum staged modules with second module being self-funded
    • 32-year life of mine with average grade of 8.9% TGC
  • Ore Reserve declared of 48.3 million tonnes at average grade of 8.7% Total Graphite Contained (TGC)
  • More than 75% of the 32-year Life of Mine (LoM) is from Reserves, with the first 10 years based primarily on Reserves
  • Strip Ratio of 0.8:1 delivers sustained low cost operations throughout mine life
  • Steady state production of 167k tonnes per annum of high purity graphite with a concentrate grade between 98%-99% from a two-phase construction program
  • DFS expected to benefit from further phases given size and scale of Resource
  • Operational expenditure (“opex”) in full production estimated at US$382/tonne
  • Average (basket) price of US$1,241/tonne
  • Pre-production capital expenditure (“capex”) estimated at US$90.1 million including a 15% contingency
  • Total capex estimated at US$159 million including 15% contingency
  • PFS prepared by independent engineering firm Battery Limits
  • Encouraging discussions underway with potential partners for financing, offtake, product development and sales and marketing
  • Construction partner discussions advanced with preferred partner confirmation expected Q2 2017
  • Commencement of construction remains on track for 2018 with initial production in 2019.

Tanzanian graphite developer Black Rock Mining Limited (BKT: ASX) (“Black Rock” or “the Company”) is pleased to announce it has completed the Preliminary Feasibility Study (“PFS”) for its 100%-owned Mahenge Graphite Project (“the Project”), confirming its outstanding potential as a long life, low capex, high margin operation. 

The PFS is based on mining and milling 61.1 million tonnes of Resource and Reserve at an average grade of 8.9% TGC for a life of mine (LoM) production of 5.1 million tonnes of concentrate. The LoM strip ratio is exceptionally low, at 0.8:1, benefiting from an even distribution of mining material at high grades through both pits. Metallurgical test work indicates the concentrate will have commercially desirable product size, and purity attributes. The mine plan is also advantaged by bulking in all mineralisation above cut-off grade resulting in limited need for costly selective mining methods.

The Ore Reserve is inclusive of the broader Mineral Resource Estimate (“MRE”) for the Mahenge Project, of 202.9 million tonnes at an average grade of 7.8% TGC (ASX 12/12/2016).

Black Rock’s Interim CEO and Executive Director, John de Vries commented:

“The PFS builds on a compelling scoping study and reconfirms the Mahenge Graphite Project’s potential to be a globally significant graphite producer, with industry leading low capex, and sustained high margins.   The mine metrics are driven by low strip ratios and high grade ore, that can be relatively simply converted into large high purity, premium flake concentrates.  

“Mahenge is financeable with a unique combination of ultra-low pre-preproduction capex, sustained bottom quartile operating costs and a premium high purity large flake product, that as an investment, is simply not available in any other projects.

“Our staged development model, of two 83kt per annum modules is unique in our sector. The approach is to be large enough to be investable, but small enough not to disrupt the overall flake market, while generating sufficient cash to self-fund the second module. The self-funding, sequential module strategy is sized to accommodate the expanding market in high purity flake without being overly disruptive. It simplifies and de-risks our build by utilising modular assembly and flat-pack, off-site construction where possible.

“We are now completing negotiations with DFS, and construction partners, and expect to commence work quickly on optimising the PFS and commencing detailed engineering with a view to commencing construction in 2018.”

To read the full PFS announcement, please click here

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