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#BRES Blencowe Resources PLC – Metallurgical Test Work Update

Larger sample confirms same high quality end product as previous metallurgical test work.

Highlights:

·   Blencowe successfully completes critical metallurgical test work on substantially up-scaled quantities of Orom-Cross composite mix, as per what was previously tested by SGS in Canada.

·    Results continue to highlight a high grade, low impurity concentrate can be delivered from Orom-Cross.

·    Duplication of bench scale testing results now completed through to bulk sample test stage.

·    Test work completed by leading Australian metallurgical test firm IMO.

·    Blencowe now has considerably more volume of end product to send to interested end users for testing.

Blencowe Resources Plc (“Blencowe” or the “Company”), is pleased to announce that additional metallurgical test work on its Orom-Cross graphite project in Northern Uganda has been completed by leading technical specialist firm IMO based in Perth, Australia. This work is critical to understanding the quality of the end-product that Orom-Cross can deliver as a high-grade graphite concentrate, as well as what the process flow will look like to achieve this on a pre-commercial scale.  It also provides significantly greater quantum of end product for end user testing which is critical for the Definitive Feasibility Study.

Blencowe appointed IMO to undertake metallurgical test work on material gathered from its drilling campaigns which covered both the Northern Syncline and Camp lode areas within Orom-Cross. The program was designed to deliver the following objectives:

1.  Confirm a 95-97% TGC (Total Graphite Content) pure concentrate is possible with low impurities (Thorium and Vanadium).

2.    Confirm ~90% recovery is achievable for this concentrate.

3.  Confirm the liberation process in order to maintain a high percentage of Jumbo/XL/Large flakes within the concentrate.

4.    Confirm the process flow diagram for plant design as part of the Definitive Feasibility Study.

5.    Deliver bulk concentrate samples to allow Blencowe to initiate discussions with potential off-take partners.

Blencowe is pleased to announce that all 5 objectives have been met or exceeded in this latest round of test work.  Open cycle floatation testing produced recoveries between 90-92% and concentrate grades consistently range between 95-98% which are battery grade.

The additional metallurgical test work was commissioned to test the upgradeability of the bench scale test work completed by SGS in Lakefield. A total of 1,400kg was processed (as compared to 100kg within SGS test work) and all metallurgical test-work undertaken to date shows a robust flowsheet capable of repeatable metallurgy for a wide range of feed samples from Orom-Cross.

A total of eight rougher and cleaner flotation tests were carried out on the Master composite that culminated in the flowsheet that is atypical of similar graphite projects.  The flowsheet consists of a flash and rougher flotation stage followed by a primary cleaning circuit with a polishing mill followed by three stages of cleaner flotation. The intermediate concentrate is classified and then further upgraded in secondary cleaning circuits with stirred media mills (SMM) followed by cleaner flotation.

The proposed flowsheet was employed in a continuous pilot operation to determine the metallurgical response under typical operating conditions. The final concentrate graded 96.4% C(t) at 90.6% total carbon recovery which exceeded the company’s expectations and places the end product recovered at the higher end of the spectrum in comparison to its peers. 

Test work was focussed on the 5 points above and not geared towards optimising the flake size fractions.  As the resultant splits using an unoptimised circuit are within 5% of the fractions as determined by the original SGS bench scale works there may be further incremental value to be added by optimising ahead. The key takeaway from these results is that the scaling factors in the metallurgical testing will likely replicate the original test work and results through to commercial scale production.

At the end of this larger scale metallurgical program, approximately 80kg of concentrate was produced (versus 5-8kgs from SGS in Canada) which will be forwarded to potential end-users and project partners for additional test work on screening splits and grade analysis, as well as suitability for further downstream processing of the concentrate.

The design of the processing plant will be based on both the SGS and IMO test-work and best practice in similar operations. Importantly, the process requires no primary crushing or grinding of the ore, thus preserving the larger flake sizes, which is a material advantage over hard-rock graphite deposits.

 

Executive Chairman Cameron Pearce commented:

“We are delighted with these IMO met test results as they not only continue to underpin Orom-Cross concentrate as high quality in all key areas relevant to end users but the test work has highlighted that we can now deliver these end results on a much greater scale of raw material as processed.  This is a key steps towards commercial stage production testing in a pilot plant facility.  It also highlights the potential to increase the percentage of the more valuable coarse flake products through further optimisation of the processing circuits and this will be considered in the next round of testing. 

This latest set of results sets us up nicely for the bulk sample trial we will be conducting on 100 tonnes of Orom-Cross composite in 1H 2023 and if these same results are produced from that exercise we will be largely pre-qualified in terms of end products delivered as concentrate.”

 

 

 

 

 

 

 

For further information please contact:

 

 Blencowe Resources Plc

 Sam Quinn

 

www.blencoweresourcesplc.com

Tel: +44 (0)1624 681 250

info@blencoweresourcesplc.com

 

Investor Relations

Sasha Sethi

Tel: +44 (0) 7891 677 441

sasha@flowcomms.com

 

Tavira Financial

Jonathan Evans

Tel: +44 (0)20 3192 1733

jonathan.evans@tavira.group

 

First Equity Limited

Jason Robertson

Tel: +44(0)20 7330 1833

jasonrobertson@firstequitylimited.com

 

Twitter https://twitter.com/BlencoweRes

LinkedIn https://www.linkedin.com/company/72382491/admin/

Background

Orom-Cross Graphite Project

Orom-Cross is a potential world class graphite project both by size and end-product quality, with a high component of more valuable larger flakes within the deposit.

A 21-year Mining Licence for the project was issued by the Ugandan Government in 2019 following extensive historical work on the deposit and Blencowe is moving into the Definitive Feasibility Study phase shortly as it drives towards first production.

Orom-Cross presents as a large, shallow open-pitable deposit, with a maiden JORC Indicated & Inferred Mineral Resource deposit of 24.5Mt @ 6.0% Total Graphite Content. Development of the resource is expected to benefit from a low strip ratio and free dig operations, thereby ensuring lower operating and capital costs.

Alan Green covers Cora Gold #CORA & Blencowe Resources #BRES on this week’s Stockbox Research Talks

Alan Green covers Cora Gold #CORA & Blencowe Resources #BRES on this week’s Stockbox Research Talks

Blencowe Resources #BRES – Issue of Options

Issue of Options

Blencowe Resources (LSE:BRES), the natural resources company focussed on the development of the Orom-Cross Graphite Project in Uganda, reports the issue of options (“Options”) to directors and senior management.

Given the stage of development of the Company and to further align Directors and Senior Management with shareholders, the Company now announces the grant of 5 million Options as set out below, at 5p per share, for a period of five years.

Vesting Conditions

These options will not vest unless the share price of the Company trades in excess of 10p per share for 10 consecutive trading days. In addition, the options granted to the CEO and COO will have certain vesting conditions including either the signing of a strategic investor at project level, funding and delivery of a pilot plant, or the completion of a definitive feasibility study.

The Options represent 2.3% of the current issued share capital being 177,929, 950 or 2.5% of the enlarged share capital of 196,679,950 from Monday 31 October 2022 following the recent issue of shares regarding the strategic investment.

Amount

Exercise Price *

Mike Ralston (CEO)

1,500,000

£0.05

Iain Wearing (COO)

1,000,000

£0.05

Cameron Pearce (Chairman)

1,000,000

£0.05

Lionshead Consultants Ltd (Sam Quinn) (Non Exec Director)

1,000,000

£0.05

Alexander Passmore (Non Exec Director)

500,000

£0.05

 

*subject to vesting conditions being satisfied. Share price must be in excess of 10p for 10 consecutive trading days.

Warrants

The Company also notifies that 3m warrants have been issued to a consultant pursuant to a consulting services agreement, which are exercisable at 8p per share, for a period of 3 years, conditional on the delivery of 3 non-binding memorandums of understanding for the sale of graphite concentrate from Orom-Cross.

Blencowe Resources #BRES – Strategic Investment by AIM-Listed Jangada Mines plc and Two Existing Major Shareholders

Blencowe Resources Plc (“Blencowe Resources” or the “Company”) (LSE: BRES) is pleased to announce a placing of 18,750,000 new ordinary shares (“Placing Shares”) at 4 pence per share to raise a total of £750,000 (“Placing”) from three existing shareholders. The placees will receive 1 warrant per 2 Placing Shares, exercisable at 8p for 3 years from admission (“Investor Warrants”).

Highlights

  • £750,000 raised at 4p per share with 3 existing investors
  • Jangada Mines plc to increase holding from 2% to 9.5% of enlarged share capital
  • Existing major shareholders RAB Capital and JUB Capital continue to invest pro rata to their existing 10.0% and 8.2% shareholdings respectively
  • Asset-level transactions now targeted for DFS and ultimate development of Orom-Cross

The Placing was cornerstoned by Jangada Mines plc whom invested £610,000, which has increased their holding from 2% to 9.5%. Also, the Company’s two other largest institutional investors RAB Capital and JUB Capital have subscribed for the remaining £140,000 in the Placing, on a pro rata basis, to maintain their respective 10.0% and 8.2% holdings in the enlarged share capital of the Company following the Placing.

Use of Proceeds

The funds will be dedicated to fund the delivery of a 100 tonne bulk sample from Orom-Cross to China and general working capital.

On 3 October 2022, the Company reported an approach from a potential strategic party looking to undertake further off-site testing ahead of potentially providing an offtake and funding solution for the development of Orom-Cross. This successful capital raise will enable the Company to accelerate the bulk sampling plans and build on the highly encouraging PFS results.

Admission of Shares to Trading

The Company has made an application for 18,750,000 ordinary shares to be admitted to trading on the official list and the London Stock Exchange with effect from 8.00 a.m. on 31 October 2022 (“Admission”).

In accordance with the FCA’s Disclosure Guidance and Transparency Rules, the Company confirms that following Admission, the Company’s enlarged issued ordinary share capital will comprise 196,679,950 Ordinary Shares. The Company does not hold any Ordinary Shares in Treasury.

Therefore, following Admission, the above figure may be used by shareholders in the Company as the denominator for the calculations to determine if they are required to notify their interest in, or a change to their interest in the Company, under the FCA’s Disclosure Guidance and Transparency Rules.

Executive Chairman of Blencowe Cameron Pearce commented:

“I am delighted to welcome Jangada Mines as a new significant shareholder in the Company. They share our view of the inherent value of Orom-Cross, which has already returned a NPV of US$482M from a fraction of our broader resource. I would also like to thank our two major shareholders for their continued support and maintaining their holdings through participation in the Placing. At a time when raising capital for junior resource companies remains difficult, we are delighted to have secured funding sufficient to provide working capital for a year at the plc level and also enable us to commence the process to deliver a 100 tonne bulk sample to our potential strategic partner in China.

As we have previously stated, given the substantial disconnect between our market capitalisation and asset value, the focus of the Company is to enter strategic transactions at the asset level for material development, thereby minimising shareholder dilution and capturing a fairer reflection of value. The Company has previously advised it hopes to execute its first asset level transaction in the current quarter, which is expected to provide sufficient funds to complete the DFS. This is running in parallel with the ongoing discussions with our potential strategic partner in China.

I look forward to updating shareholders as appropriate.”

For further information please contact:

 

Blencowe Resources Plc

Sam Quinn

 

www.blencoweresourcesplc.com

Tel: +44 (0)1624 681 250

info@blencoweresourcesplc.com

 

Investor Relations

Sasha Sethi

Tel: +44 (0) 7891 677 441

sasha@flowcomms.com

 

Tavira Securities 

Jonathan Evans

Tel: +44 (0)20 3192 1733

jonathan.evans@tavirasecurities.com

 

First Equity Limited

Jason Robertson

Tel: +44(0)20 7330 1833

jasonrobertson@firstequitylimited.com

 

Twitter  https://twitter.com/BlencoweRes

LinkedIn  https://www.linkedin.com/company/72382491/admin/

#BRES Blencowe Resources Plc – Webinar call

Blencowe Resources (BRES:LON), is pleased to announce that it will be presenting a live investor webinar via Zoom conferencing on Tuesday 11th October 2022 at 12:30 pm UK time.

The event will be hosted by First Equity Limited, with Blencowe’s CEO, Mike Ralston discussing the recent announcement regarding an approach from a strategic party in China and work being conducted on the Definitive Feasibility Study (DFS) at the Orom-Cross graphite project.

The event is open to all existing and prospective investors and will be followed by a Q&A session.  

Registration Details

Investors who have not yet registered are invited to do so using the following link:

https://bit.ly/3M5jyzL

The most recent copy of the Company’s corporate presentation can be found at the following link:  https://blencoweresourcesplc.com/presentation/

Interested investors can also sign up for the Company Newsletter here:

https://blencoweresourcesplc.com/contact/

 

**ENDS**

 

Contacts

 

Blencowe Resources Plc

 

Sam Quinn (London Director) 

 

www.blencoweresourcesplc.com

 

+44 (0)1624 681 250

info@blencoweresourcesplc.com

 

Investor Enquiries

Sasha Sethi

Tel: +44 (0) 7891 677 441

sasha@flowcomms.com

 

 

Tavira Financial

Jonathan Evans

 

Tel: +44 (0)20 7100 5100

jonathan.evans@tavirasecurities.com

First Equity Limited

Jason Robertson

Tel: +44 (0)20 7330 1883

jasonrobertson@firstequitylimited.com

Blencowe Resources #BRES – Approach from Potential Strategic Party in China

Blencowe Resources Plc (“Blencowe Resources” or the “Company”) (LSE: BRES) is pleased to announce it has received an approach from a group in China that has the potential to ultimately provide an offtake, funding and development scenario for its 100% owned Orom-Cross graphite project in Uganda.

Highlights:

  • Approach received from a strategic party in China with extensive experience in graphite.
  • Potential to provide offtake contracts and project funding solution for Orom-Cross.
  • Additional bulk samples to be delivered to China for further off-site testing.
  • Pilot plant strategy in Uganda suspended, removing material near-term capital requirement.
  • End-product samples as 96% LOI concentrate to be shipped to Chinese and European firms for trials to lift to 99.9995% LOI product for batteries.
  • Technical Data Sheets sent to prospective end users to confirm interest and support for Orom-Cross concentrates. Feedback, interest and discussions already underway.

Based on these discussions, the Company has agreed to send a bulk sample of ~100 tonnes from Orom-Cross to China as soon as possible to enable further metallurgical test work to be undertaken by the potential strategic party.  This is subject to the Company receiving necessary permits to move this raw material from Uganda, which are being sought immediately.

Blencowe has already been able to share significant data with the potential strategic party having previouslycompleted two stages of bench scale metallurgical testing with SGS in Canada (30kgs) and more recently a further round of testing via a small pilot plant (130kgs) in Perth, Australia.  This next-level proposed test in China, using their existing infrastructure and experience, would be done on a considerably larger scale which will give all parties more knowledge of the end product that can be produced in an enlarged scenario from Orom-Cross.  It is hoped that this program will initially lead to non-binding MOUs for offtake, and ultimately to binding sale agreements for a substantial portion of the initial 50,000tpa product to be produced from stage one within Orom-Cross. There may also be potential for EPC and funding contracts emanating from this relationship, potentially providing a solution to the CAPEX requirement to production.

Given this interest out of China and the relatively short period to complete this test work over the next 6-9 months the Company has taken the decision to postpone its plans to build an on-site pilot plant facility of 2,000tpa at Orom-Cross. Binding offtake contracts to purchase Orom-Cross graphite would likely remove the need for a pilot plant, as the principal rationale for its implementation was to provide product to would-be offtakers to enable them to assess its viability for their own uses. A direct impact of this decision is that there is no longer a requirement to raise substantial cash (circa US$10M) in the near term via the equity markets to fund the on-site pilot plant.

The Company will continue to keep the market informed of progress on these discussions, as well as further key milestones achieved from the ongoing DFS (please see RNS of 26 September 2022 for further information).

Cameron Pearce, Executive Chairman commented;

“China is currently the most mature graphite market worldwide and entering into an offtake relationship there would be very valuable to us given the highly attractive economics at Orom-Cross, which already has an NPV8 of US$482M based on a 14-year mine life from just 2% of our broader graphite resource as currently drilled out. 

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”.

The graphite market is evolving very quickly and we will see a lot of change ahead as the world drives towards 100 million expected electric vehicles by 2030. The Chinese market remains the largest by far, and will remain so for some time. Establishing a strong and commercial relationship with Chinese partners is therefore decisive and is a natural progression for the Company. Given this positive development we have elected to postpone any decision on a pilot plant on-site until these trials and discussions have reached a conclusion as it is expected a positive result will remove the need for a pilot plant, with the project instead moving straight into full development.  This decision will not only save us considerable cash outlay right now, but potentially expedite the development of Orom-Cross.”

For further information please contact:

 

Blencowe Resources Plc

Sam Quinn

 

www.blencoweresourcesplc.com

Tel: +44 (0)1624 681 250

info@blencoweresourcesplc.com

 

Investor Relations

Sasha Sethi

Tel: +44 (0) 7891 677 441

sasha@flowcomms.com

 

Tavira Securities 

Jonathan Evans

Tel: +44 (0)20 3192 1733

jonathan.evans@tavirasecurities.com

 

First Equity Limited

Jason Robertson

Tel: +44(0)20 7330 1833

jasonrobertson@firstequitylimited.com

 

Twitter https://twitter.com/BlencoweRes

LinkedIn https://www.linkedin.com/company/72382491/admin/

Background

Orom-Cross Graphite Project

Orom-Cross is a potential world class graphite project both by size and end-product quality, with a high component of more valuable larger coarse flakes within the deposit.

A 21-year Mining Licence for the project was issued by the Ugandan Government in 2019 following extensive historical work on the deposit and Blencowe is now moving into the Definitive Feasibility Study phase as it drives towards first production.

Orom-Cross presents as a large, shallow open-pitable deposit, with a maiden JORC Indicated & Inferred Mineral Resource deposit of 24.5Mt @ 6.0% Total Graphite Content. Development of the resource is expected to benefit from a low strip ratio and free dig operations, thereby ensuring lower operating and capital costs.

Blencowe Resources #BRES – Change of Registered Office

Change of registered office

Blencowe announces today that the Company’s registered office address has changed to 167-169 Great Portland Street, Fifth Floor London, W1W 5PF.

Blencowe Resources #BRES – Definitive Feasibility Study Commences on Orom-Cross Graphite Project

Blencowe Resources Plc (“Blencowe Resources” or the “Company”) (LSE: BRES) is pleased to announce that it has commenced the Definitive Feasibility Study for its flagship Orom-Cross graphite project located in Uganda, East Africa.

Highlights

·    Definitive Feasibility Study (DFS) commences with target completion date 2H-2023.

·    Engagement with specialist graphite engineering firm to manage the DFS.

·    Blencowe currently reviewing various options for strategic alliances in key areas within the Orom-Cross project, including;

Offtake

Funding

EPC (Engineering, procurement and construction of plant)

This follows outstanding Pre-Feasibility Study results (NPV8 US$482M: IRR8 49%) as presented to the market in July 2022, which have prompted the Company to move quickly on to this next stage of project development.  The DFS is the last step in terms of major studies prior to the board making a decision to mine.

Blencowe is currently in the final stages of a process to select an experienced independent engineering firm to manage and ultimately sign off on the DFS. The Company anticipates announcing the engineering partner in the near term.

The Company is also assembling a strong management advisory team to assist with all key aspects of the study, including plant design, engineering, infrastructure, mining, operations, sales and marketing (offtake), environmental and social aspects, and all project funding.  This team will comprise of resource executives who have considerable experience delivering projects through to production in Africa, as well as specific graphite experience.  They will assist the existing Blencowe management team at all levels to deliver a successful DFS.

Metallurgical test work already completed in both Canada and Australia indicates that Orom-Cross can produce several high-quality end products as a 96-97% LOI concentrate. Additional metallurgical test work is anticipated in 2023, as part of the DFS, to test the expandability, spheroidisation and spherical graphite purification (SPG) properties, as the ability to cost-effectively further upgrade Orom-Cross concentrates is expected to add significant additional value to the project.

The Company will continue to keep the market informed of progress as key milestones within the DFS process are completed.

Cameron Pearce, Executive Chairman commented;

“We continue to make substantial progress at Orom-Cross, having moved from project acquisition through JORC Resource drilling and Pre-Feasibility Studies and now into the Definitive Feasibility Study stage, all within just 2.5 years.  The quality and value of Orom-Cross graphite continues to inspire us to move as quickly as possible towards a decision to mine but at the same time we are ensuring all key areas are thoroughly analysed including third party reviews by industry experts.  Quality and consistency of end product remain critical to building strong buyer relationships and we will continue to test the properties of our graphite as necessary to ensure our product is considered at the highest levels compared to other graphite products available worldwide.  This is an ongoing exercise but more end product value is being added at each stage.”

He added “Graphite demand is growing fast as forecast and as the market becomes increasingly more aware that there are very few new graphite mines scheduled to commence production in the near term this demand-pull will potentially drive further price rises ahead, particularly for the products found at Orom-Cross.  Blencowe owns 100% of one of the largest, high-quality graphite projects in the world and is therefore uniquely placed and significantly leveraged to take advantage of this emerging market moving forward.”

For further information please contact:

 

  Blencowe Resources Plc

Sam Quinn

www.blencoweresourcesplc.com

Tel: +44 (0)1624 681 250

info@blencoweresourcesplc.com

Investor Relations

Sasha Sethi

Tel: +44 (0) 7891 677 441

sasha@flowcomms.com

 

Tavira Financial

Jonathan Evans

Tel: +44 (0)20 3192 1733

jonathan.evans@tavirasecurities.com

 

First Equity Limited

Jason Robertson

Tel: +44(0)20 7330 1833

jasonrobertson@firstequitylimited.com

 

Twitter https://twitter.com/BlencoweRes

LinkedIn https://www.linkedin.com/company/72382491/admin/

Background

Orom-Cross Graphite Project

Orom-Cross is a potential world class graphite project both by size and end-product quality, with a high component of more valuable larger coarse flakes within the deposit.

A 21-year Mining Licence for the project was issued by the Ugandan Government in 2019 following extensive historical work on the deposit and Blencowe is now moving into the Definitive Feasibility Study phase as it drives towards first production.

Orom-Cross presents as a large, shallow open-pitable deposit, with a maiden JORC Indicated & Inferred Mineral Resource deposit of 24.5Mt @ 6.0% Total Graphite Content. Development of the resource is expected to benefit from a low strip ratio and free dig operations, thereby ensuring lower operating and capital costs.

Blencowe Resources #BRES – Pre-Feasibility Study Results for Orom-Cross

Pre-Feasibility Study (PFS)

Highlights:

 Net Present Value (post-tax) of US$482M, a 52% increase on previously reported Preliminary Economic Assessment (PEA)

 IRR (post-tax) of 49%

 14-year mine life, which can be increased by additional drilling

 US$499/t operating cost (FOB Mombasa port), underlining one of the lowest cost graphite projects worldwide

 US$1,307/t weighted average sales price for basket of end-products

 Initial Capital requirement reduced by 23% from PEA 2021 to US$62M

 US$1.398 billion EBITDA delivered over life of mine, average US$100M EBITDA p.a.

 US$1.073 billion cumulative Net Cash delivered from project over life of mine

 36,000tpa end-products as 96-97% LOI concentrates in year 1, ramping up in stages thereafter to 147,000tpa

 ~50% of end-product in higher value +100 to +50 mesh fractions

 Blencowe to apply for Free Trade Zone License (FTZL) in 2H 2022, which in turn will bring considerable advantages, including a 10-year corporate tax exemption

· Pre-Feasibility Study (PFS) completed on time and under budget

· PFS indicates a robust, long-term, profitable graphite mining operation at Orom-Cross

· PFS managed by leading graphite technical experts Battery Limits Pty Limited (Australia), who have delivered several other leading graphite project feasibility studies in the past

· Scope to expand resource and ramp up production as global markets dictate

· Flake graphite forecast to move into significant supply deficit medium term as increased demand for electric vehicles (EVs) lifts demand for lithium-ion batteries.  Graphite is a non-replaceable input material into lithium-ion batteries

· Blencowe will now move towards Initial Stage production at Orom-Cross by 2H-2023

Blencowe Resources (“Blencowe” or the “Company”) (LSE: BRES) is pleased to announce results of the Pre-Feasibility Study it has been conducting at its flagship Orom-Cross Graphite Project in Uganda.  These results highlight an exceptional long-life project that delivers considerable returns over an initial life of mine period of fourteen years.  In addition, the PFS indicates an initial capital requirement that has been lowered by 23% since the Preliminary Economic Assessment (“PEA”) announced in 2021.

The PFS has been delivered in conjunction with leading graphite technical expert Battery Limits Pty Ltd (“Battery Limits”) who have managed several other leading graphite project feasibility studies worldwide.

 

Executive Chairman of Blencowe, Cameron Pearce commented:

“This PFS represents a major milestone for the Orom-Cross Project and the results are outstanding.  We have considerably outperformed the 2021 Preliminary Economic Assessment in all key areas, whilst also reducing the initial capital requirement by 23% to just US$62M.”

“The Orom-Cross NPV (Net Present Value) of US$482M is excellent, especially in relation to this lower capex, and proves that this is a standout graphite project.  The 14-year long mine life can be extended at any time with additional drilling at Orom-Cross, whilst the concentrate is of high quality with specific element content that is unique and which will elevate market demand for all of the end-products we sell.  Selling graphite is one of the key challenges for a successful operation so this is critical.

As a result of 50% of these end-products being larger flake size categories Orom-Cross has a substantial weighted average selling price for its basket of end-products, yet it also has one of the lowest total operating costs of any graphite project worldwide.  This ensures considerable operating margins over life of mine, which in turn will deliver over US$1 billion free cash to Blencowe as return on investment.

We have adopted a more conservative production profile for both start-up and the ramp-up thereafter to maintain the integrity and viability of delivering new graphite product into the market. We could have chosen to boost the NPV further by expanding production and sales of graphite but we don’t see that as a credible base case. Also, this modest production profile helps delivers a lower initial capital requirement for Blencowe to commission the mine which is another big advantage.

These are tremendous results for our Project and once again highlight the disconnect between the value of Orom-Cross and our current public market valuation. With a current market cap of circa £4M, excluding our nickel project and existing cash, we are trading at approximately 1% of our NPV and at 5% of our expected average annual EBITDA figure. With the PFS now finalised we would expect interest to grow and the inherent value in the Company to be recognised.”

Orom-Cross Graphite Project: Pre-Feasibility Study

The following areas highlight the quality of the project, and provide the basis for Blencowe to move towards Initial Stage production within the next 12-18 months.  Main production is targeted for 2025.

 

Key Performance Indicator

 

 

Comment

Life of Mine

14 years

Can extend at any stage with further drilling

Average tonnes mined pa

1.6Mtpa

Start-up 600ktpa, moving to 2.4Mtpa at year 7

Average tonnes (concentrate) produced pa over life of mine

101,000tpa

Start-up 36ktpa; moving to 147ktpa by year 7

1.41M tonnes over life of mine

Initial Capital Requirement

US$62M

Plant, infrastructure and contingency

Net Present Value ( NPV )

US$482M

8X return on initial capital invested

Internal Rate of Return ( IRR )

50%

Highlights strong rate of return on investment

Weighted Average Selling Price/t – starting position

US$1,307/t

5 different end-products produced, with ~50% in the higher value +100 to +50 mesh fraction sizes

Operating Cost (FOB Mombasa port) – average life of mine

US$499/t

C2 costs, including mining, processing, admin, manpower, logistics, sales and marketing costs

Average EBITDA per annum – life of mine

US$100M

US$1.398Bn total EBITDA earned over life of mine

Free Cash Generated

US$1.073Bn

Net Cash (after tax and royalties) delivered to Company over life of mine

 

1.  Mining and Processing

 

Orom-Cross has an existing JORC Standard Resource of 24.5Mt at 6.0% presenting from surface, which provides for a shallow, low cost, open pit mining operation.  All mining within this first 14 years will be done from 0-25m depth.  Approximately 600,000 tonnes of ore will be mined per annum from commissioning date and this will increase to 2.4Mtpa by the time the project is fully ramped up in year 10.  The existing JORC Resource provides an initial mine life of 14 years and further resources, higher production volumes and an extended mine life can all be obtained at any stage via drilling additional ready-targets. This is however not considered a priority at the moment.

 

Mining will be free-dig with no drill and blast requirement.  Initial ore will come from saprolite (clay) but is expected to move into fresh around 15-20m depth on average.  Both of the deposits identified in the drilling programmes (Northern Syncline and Camp Lode) will be mined and a composite blend of both will be input into the processing plant that will be constructed on-site.

 

An initial 36,000tpa of end-product as concentrates will be delivered from the plant which increments in two additional stages to 147,000tpa once the mine is fully ramped up.  Considerable metallurgical test work has been done on the end-products to determine their chemistry and characteristics and this shows that Orom-Cross can deliver a high quality >96% LOI concentrate that is unique in several key aspects, as highlighted in the June 2022 announcement on final met test results.  Circa 35% of these end-products will be coarse flakes and ~50% will be in the +100 to +50 mesh higher value categories.  The remaining smaller flake products can be sold into the fast-emerging battery market, which is forecast to grow considerably over the long term thus providing a channel for incremental growth and sales.

 

2.  Capital Requirement

 

Blencowe will commence main operations from 2025 at an initial output of 36,000tpa end-product, which is considerably lower than the initial start-up volume as per the PEA (2021). 

 

This is due to guidance from Blencowe’s experienced graphite sales and marketing advisors targeting a more conservative ramp up profile to ensure all products are able to be sold on start-up into various markets as identified.  It is likely that various different products will be sold into all of the key graphite markets, including engineered products, thermal management and energy storage. 

 

Pre-qualification of all end-products will commence from initial stage smaller scale production facility at Orom-Cross from 2023, which will deliver bulk samples over a period of 12-24 months prior to the main plant being commissioned, in order to build relationships with end-users over that period.  This will ensure that all end-products are qualified and can be locked into binding sales agreements once main stage production commences in 2025.

 

This lower volume start-up position has resulted in a reduced initial capital requirement of US$62M (down by 23% from the US$80M capex as per the PEA in 2021).

 

Capital Item

US$ M

%

Processing Plant

27.3

44.1

EPCM

5.3

8.5

Other Indirect Costs

3.1

5.0

Plant Infrastructure, including Tailings Storage Facility (TSF)

8.1

13.1

Camp and Facilities

8.4

13.5

Mining Capital

2.6

4.2

Owners Costs

2.4

3.8

Contingency

4.8

7.8

TOTAL

62.0

100%

 

This requirement is expected to be funded post-DFS by a combination of both debt and equity via strategic investors and funding partners.  The full capital requirement by stages is indicated in the table below, with subsequent future requirements to be funded internally from free cash generated by the mining operation itself.

 

Stage

Year

Capital Requirement

US$ M

Use of Funds

1

2024/5

62

Initial 800,000tpa plant

All infrastructure, including power, roads, TSF, communications and mine camp.

Includes mining capital and contingencies

2

2027/8

52

Additional 800,000tpa plant capacity, plus all associated infrastructure

3

2029/30

45

Additional 800,000tpa plant capacity, plus all associated infrastructure

 

 

3.  Infrastructure

 

Orom-Cross benefits by considerable key infrastructure already in place, which in turn lowers the capital required to commission the mine.  There are existing tarred roads from the regional centre Kitgum (90kms from site) all the way through to Mombasa port in neighbouring Kenya, and the road from Kitgum to nearby Orom (10kms from site) will be tarred by 2025; work on that is already underway.  Blencowe will establish local roads required around the mine site.

 

Power will be connected to the national grid which is currently nearby at Orom and will provide lower cost, energy-efficient hydro-power.  Wireless communications will be connected on site giving all range of phone and internet options.  There is plentiful water on and around the site and bores will be sunk for clean water.

 

A smaller processing facility and mine camp will be set up for initial stage production from 2023 to deliver bulk samples for pre-qualification, and a larger camp will be constructed together with additional plant, storage, admin offices and a larger tailings facility, prior to 2025 main start-up.

 

4.  Operating Costs

 

Orom-Cross benefits from several key attributes that combine to deliver one of the lowest operating cost graphite projects worldwide. 

 

Specifically these include:

· Low strip ratio for open pit mining (graphite presents from 0-25m below surface)

· No drill and blast required and minimal crushing (no hard rock)

· Lower energy costs (low cost hydro power off the national grid)

· Lower labour costs; and

· A simple process flow through a standard floatation plant.

 

Cost Centre

 

Average Cost per tonne (USD/t)

% Total

Mining

90

18.1

Processing

180

36.1

Fuel

3

0.6

Project Personnel

48

9.6

Project Services

35

7.0

Depreciation

17

3.4

Transport & Logistics

110

22.0

Sales & Marketing

16

3.2

 

TOTAL

 

499/t FOB port

 

100%

 

Mining will be owner-operated using equipment assumed as leased.  Training will be given to locals to fill positions wherever possible and Blencowe intends to build a strong base of experienced in-country personnel for all positions over life of mine.

 

Ore will be mined from both the Northern Syncline and Camp Lode deposits and stockpiled for processing through the plant, which will be located on-site and near to the mining operations.  An initial 500,000tpa of ore will be throughput but this will expand to 2.4mtpa over a series of ramp ups during the first ten years’ life of mine.  This will result in 36,000tpa of end-products delivered as concentrates from year 1 that will expand to 147,000tpa by year 10.  Operating costs per tonne will reduce over the life of mine as the production tonnage ramps up.

 

The processing flowsheet consists of a flash and rougher flotation stage followed by a primary cleaning circuit with a polishing mill, followed by three stages of cleaner flotation. The intermediate concentrate is classified and then further upgraded in secondary cleaning circuits with stirred media mills (SMM) followed by cleaner flotation.

Orom-Cross will deliver at least five different end-products, characterised by different mesh size fractions; namely +50 mesh, + 80 mesh, +100 mesh, +150 mesh and -100 mesh.  These products will all have different markets and will be branded and packaged at site.  Blencowe intends to apply for a Ugandan Free Trade Zone License (FTZL) in 2H 2022 which will allow for all goods for export to be custom-cleared at the mine site before being transported to Mombasa port by truck for shipment to end-users.

Initially the transport to port will be done via road but it is expected that by 2025 main plant start-up there may be a rail option available nearby which would lower logistics costs further.  Orom-Cross will be able to utilise cheaper backfill options for road transport as both Uganda and South Sudan are land-locked countries and therefore require substantial volumes of imported goods delivered by trucks, which often return to Mombasa port empty.  This is a key advantage.

 

5.  Weighted Average Selling Price

 

The basket of end-products that Orom-Cross produces will deliver a strong weighted average sales price of ~US$1,307/t.  Prices have been determined using updated Lone Star Tech Minerals (leading graphite sales and marketing expert) graphite pricing data, with forecast increments through to proposed 2025 start for the main production facility.  Thereafter a price increment of 2.5% p.a. is included for small flake products only taking into consideration higher demand as forecast for these products ahead.

 

The weighted average selling price is made up as follows:

 

Flake Size

Mesh Size

96-97% LOI

2025

%

End Product

Weighted Average US$/t

Jumbo

+32

3,510

1.5

53

Jumbo

+50

2,830

12.2

345

Large

+80

1,474

22.5

332

Large

+100

1,091

10.6

116

Medium

+150

990

15.1

149

Small

-100 / -200

982 / 752

11.9/26.0

117/196

 

 

 

 

1,307

 

The table shows a wide range of price differentiation between coarse and fine flake sizes for 96-97% LOI (loss on ignition) concentrates, and both current prices as well as forecast prices for 2025 expected start-up date.  Orom-Cross benefits from having ~35% of its end-products as jumbo or large flake sizes (+80 mesh) as these products sell into markets at a considerable premium to the smaller flake/mesh sizes.  The concentrates also benefit from having very low impurities.

 

Strong anticipated future demand for smaller flake product that can be upgraded to 99.9% SPG and used within batteries for EVs presents growth potential for further demand ahead, with this forecast to positively impact prices considerably over the next decade and beyond.  The market has already seen an upward shift in the price of these mesh sizes during 2022.

 

6.  Sales and Marketing

 

Blencowe has been working closely with experienced graphite marketing consultant Lone Star Tech Minerals LLC (USA) during the PFS period to identify products and markets to sell its graphite products into ahead.  Lone Star have over 30 years’ direct experience in graphite sales and their expertise has been valuable in all facets, including metallurgical test work, identifying product specifications, branding, packaging, customer identification, interaction and liaison.  Blencowe will continue to work with Lone Star as Orom-Cross moves towards first production.

 

Blencowe’s marketing strategy will be to construct a smaller scale plant initially at Orom-Cross from 2023 that will deliver 1,500tpa of end-products as concentrates for bulk sample sales into end-users.  This process of pre-qualifying will continue in parallel to the main plant being constructed in 2024 for target 2025 start-up, with all products thereby having had 12-24 months’ history of sales into customers before more extensive production commences. 

 

Blencowe intends to seek key ISO certifications for its plant and products through this pre-qualification period to ensure highest possible standards which will then be reflected in higher demand for its products, and potentially higher prices.

 

7.  Cash Flow

 

The high net operating margin generates substantial cash flow from Orom-Cross, particularly from when the mine has fully ramped up to 147,000tpa capacity by year 10.  This in turn generates free cash net of all taxes of US$1.073 billion from the Project over the initial 14 years’ life of mine.  As only a small percentage of the full Orom-Cross graphite deposit will have been mined out by then it is likely that further drilling will result in a considerable extension to the life of mine well beyond the initial 14 years, and with that significant additional net cash flow.

 

Royalties of 5% have been added and a 10-year exemption from corporate tax is also included in the model.  Thereafter a standard rate of 30% corporate tax is used.  Whilst Blencowe will not apply for any tax exemption until the Definitive Feasibility Study is completed the Company has been made aware the investment quantum for Orom-Cross and the nature of the exported end-products, plus certain other features, will allow for such an exemption to likely be granted; as such it has been included within the modelling.

 

Provision has been made for payments to the local community as dictated by the existing Local Community Agreement already in place, and for other means for Blencowe to assist such as water bores, health and educational support and various minor infrastructure.

 

8.  Management and staffing

 

Blencowe will ensure operational delivery of end-product via experienced management at Orom-Cross, specifically in key areas such as the processing plant.  However the Company will focus on training local staff wherever possible to transfer skills and to ensure participation. Ultimately the full operation will have >400 persons employed, operating in shifts to ensure constant mining and processing all year round.  Mining is will be owner-operated using dry hire equipment, as opposed to contract mining.

 

9.  ESG (Environmental, Social & Governance)

 

Blencowe is taking a firm stance from the outset on life cycle sustainability at Orom-Cross with every effort made to ensure the project operates using renewable energy sources wherever possible, and any non-renewable options are only considered as emergency or backup where no other alternative is possible. 

 

Orom-Cross benefits from the ability to utilise hydro-electric power sourced from the Ugandan national grid and various solar options are under consideration and will be examined further within the Definitive Feasibility Study stage.

 

Social programmes are already in place to ensure the local community benefits from a successful mining operation, and Blencowe will continue to work closely with the local community ahead to ensure its continued support.  Strong governance and risk management are critical to the success of the Project and Blencowe will monitor these aspects at all times to international standards.

 

10.  Strategy Forward and Timing

 

Blencowe is committed to bringing Orom-Cross into first production as soon as practically possible.  Subject to further revisions due to prevailing circumstances the following strategy and associated timings reflect the Company’s plan to advance Orom-Cross over the medium term:

 

Milestones

 

Dates

Comments

Stage 1 (pilot plant) feasibility study

3Q 2022

Specific study for 1,500tpa plant for bulk sample sales to end-users from 2023 onwards

Stage 1 plant implementation

1H 2023

Processing plant and associated infrastructure for initial stage production

Stage 1 plant commissioning

2H 2023

Commencement of operations at Orom-Cross

 

Definitive Feasibility Study

End-2023

DFS on main plant in parallel with development of Stage 1 main plant and infrastructure

Decision to Mine (main plant)

 

End-2023

Completion of DFS and decision to raise necessary funds for main plant implementation

Funding & implementation (main plant)

2024

Construction of main plant on-site

Main plant commissioning

 

2025

Commencement of operations (main plant)

 

As highlighted above, Blencowe anticipates moving into initial stage production at Orom-Cross during 2023 and building relationships with end-users via delivery of bulk samples sold over a period thereafter whilst the Company completes the DFS and builds the main production facility.

 

11.  Graphite demand within World Markets

 

Graphite is used in many different applications and there will be a different demand profile ahead for each based on prevailing circumstances, and as these products are in different sectors of the market they do not necessarily impact one another.  Blencowe will be looking to sell end-products into each of these market segments below:

 

· Engineered Products

Electronics, agriculture, automotive, lubricants, ceramics, government defence, carbon brush and foils products that use natural flake graphite products.  Other example applications that use graphite powder additives include friction, powder metallurgy, ceramics, foils, fire retardants, pencil, lubricants, dispersions, and carbon brush.

 

· Thermal Management

Applications that require graphite powder in various mesh or micron sizes as a thermal insulator or conductor in a wide range of applications including traditional and advanced graphite products for high end refractories, standard refractories, HMF (Hot Metal Forging), HMT (Hot Metal Toppings), crucibles, foundry and geothermal.

 

· Energy Storage

The energy sector continues to require new producers of consistent and high quality advanced carbon and graphite products to meet the needs of the global population for consumer goods, grid stabilisation, transportation, communications, aerospace and medical device advances. Applications and markets within the energy storage group will experience increased demand for innovative high tech graphite solutions.

The applications that are receiving the least attention requiring significant volumes of high purity micronised carbon powders are secondary battery (cathode) and primary battery (alkaline); both of which use high purity (99.9% LOI MIN) micronised carbon or graphite powder as a conductive additive without the need for any additional morphology modification.

There is significant discussion on the current and future needs of advanced battery technologies for critical raw material supply; specifically lithium, carbon and graphite products. Advances in battery and raw material technologies require increasing higher quality in advanced carbon or graphite products. These advances need to meet not only energy density requirements, but power density and energy requirements as industrial and consumer electronics become more sophisticated. Blencowe is making strategic steps to meet those future challenges. Electrochemistry applications that use carbon or graphite powders as a conductive additive include batteries, fuel cells, & super-capacitors.

 

Price points for each market group are not the same for every application and can vary significantly from one to another.  A traditional or advanced graphite powder production facility must possess the capability to produce multiple products created from a single source or feedstock with processes and packaging to meet specific customer requirements. This will encompass serving multiple product families with various combinations resulting in large number of unique permutations. Specific target applications have the potential to deliver significant incremental revenue and profits creating long term sustainability and future growth for the Company.

An advanced carbon powder manufacturing program will include certifications to include ISO: 9001 (QA/QC) and ISO: 14001 (EMS) in line with industry, application and customer requirements.  Blencowe Resource’s Orom-Cross graphite project is set to be part of the next generation of traditional and innovative advanced carbon powder products for the global market. It is prudent in any graphite business strategy to diversify product offerings and target market focus to provide for progressive revenue streams to weather a variety of market dynamics that could potentially affect one market or another.

 

Due to graphite’s metallurgical rarity, its unique physical and chemical properties, and its growing importance in high technology applications and green energy initiatives, natural graphite has been declared a strategic mineral by both the USA and European Union (EU).  Natural Graphite is positioned as one of 24 critical raw materials out of 54 candidate materials.

The critical success factor for Blencowe Resources will be the Company’s manufacturing focus on delivering higher quality, consistent flake graphite products and not focusing solely on selling bulk tonnes of lower quality flake graphite at lower prices; a strategic position of quality over quantity.

 

Blencowe Resources #BRES relinquishes Akelikongo Nickel Project to focus on Orom-Cross

Blencowe Resources Plc (“Blencowe Resources” or the “Company”) (LSE: BRES) announces that is has terminated its agreement with SIPA Resources (“SIPA”) with respect to the Akelikongo nickel project.

The decision by Blencowe to terminate the agreement means it is no longer required to issue US$350,000 of shares  to SIPA as part of the consideration following the completion of Stage 1.  It also means that the US$500,000 spend obligation by February 2023, for Stage 2, is no longer required.

The decision to relinquish its exposure to the Akelikongo project has been driven primarily by the truly exceptional results from the Pre-Feasibility Study (PFS) on the Company’s flagship Orom-Cross graphite project, which yielded a post-tax NPV8 of US$482M and an IRR 49% (for more information please see 19 July 2022 RNS). Accordingly, the Company believes it is in the best interests of its shareholders to focus all of its attention and resources on unlocking the inherent value at Orom-Cross.

Blencowe has targeted bringing Orom-Cross into initial production before the end of 2023, in order to commence the pre-qualification process of selling end product as concentrate into offtake parties.  Given the disconnect between plc market valuation (US$5M market cap) and the value of the Orom-Cross Project (NPV US$482M) the Company is focused on completing an asset-level transaction to fund the project through development and into production. Further updates will be provided as and when appropriate.

Cameron Pearce, Executive Chairman commented;

“We have considered the merits of running two projects in parallel and at this particular point we believe that concentrating solely on our priority graphite project makes most sense.  The excellent PFS results for Orom-Cross reaffirmed its value. Whilst this has yet to be reflected in our public markets valuation, we are now seeing heightened interest from industry and private equity. Accordingly we believe now is the appropriate time to focus solely on Orom-Cross, whilst removing any unnecessary plc dilution at this depressed level. 

We do still see the synergistic benefits of another battery metal project near to Orom-Cross and we may revisit a nickel strategy in the future. However, we are seeing a fundamental shift in the graphite market right now with the price of small fines rising substantially over recent months as projected demand-supply issues finally begin to impact. The resource used in our US$482M NPV represents less than 2% of the total Orom-Cross resource base. We believe the scalability of Orom-Cross will hold significant appeal for prospective partners, particularly given a mining licence is already in place. We are focused on reaching this milestone and unlocking the value for all our stakeholders and look forward to updating shareholders in due course.”

For further information please contact:

  Blencowe Resources Plc

Sam Quinn

www.blencoweresourcesplc.com

Tel: +44 (0)1624 681 250

info@blencoweresourcesplc.com

 

Investor Relations

Sasha Sethi

Tel: +44 (0) 7891 677 441

sasha@flowcomms.com

 

Tavira Securities 

Jonathan Evans

Tel: +44 (0)20 3192 1733

jonathan.evans@tavirasecurities.com

 

First Equity Limited

Jason Robertson

Tel: +44(0)20 7330 1833

jasonrobertson@firstequitylimited.com

 

Twitter https://twitter.com/BlencoweRes

LinkedIn https://www.linkedin.com/company/72382491/admin/

Background

Orom-Cross Graphite Project

Orom-Cross is a potential world class graphite project both by size and end-product quality, with a high component of more valuable larger coarse flakes within the deposit. A 21-year Mining Licence for the project was issued by the Ugandan Government in 2019 following extensive historical work on the deposit and Blencowe is moving into the studies phase shortly as it drives towards first production.

Orom-Cross presents as a large, shallow open-pitable deposit, with a maiden JORC Indicated & Inferred Mineral Resource deposit of 24.5Mt @ 6.0% Total Graphite Content. Development of the resource is expected to benefit from a low strip ratio and free dig operations, thereby ensuring lower operating and capital costs.

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