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Blencowe Resources #BRES – Major Milestone as Blencowe Delivers Substantial Pre-Feasibility Study for Orom-Cross Graphite Project

Highlights

  • Pre-Feasibility Study (PFS) completed on time and under budget.
  • PFS indicates a robust, long-term, profitable graphite mining operation at Orom-Cross.
  • Highlights include:
    • Initial life of mine 14 years which can be further incremented by additional drilling.
    • Net Present Value (post-tax) of US$496M / IRR (post-tax) of 50%.
    • Operating cost (FOB Mombasa port) of US$499/t, underlining Orom-Cross as one of the lowest cost graphite projects worldwide.
    • Valuable basket of end-products delivering a significant weighted average selling price of US$1,307/t, thereby ensuring a considerable operating margin per tonne.
    • US$1.398 billion EBITDA delivered from project over life of mine, with an average US$100M EBITDA per annum for 14 years.
    • US$1.10 billion cumulative Net Cash delivered from project over life of mine.
    • Initial Capital requirement of US$62M, inclusive of contingency, which is lower than previously reported capex (PEA 2021) by 23%.
    • Production to commence at rate to deliver ~36,000tpa end-products as 96-97% LOI concentrates in year 1, ramping up in stages thereafter to ~150,000tpa by year 10.
    • ~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 10-year corporate tax exemption.
  • PFS signed off by leading graphite technical experts Battery Limits Pty Limited (Australia), who have delivered several other leading graphite project feasibility studies in the past.
  • 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 mid-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 signed off on several other leading graphite project feasibility studies worldwide. 

Executive Chairman of Blencowe, Cameron Pearce commented:

“This PFS represents our first major milestone for Orom-Cross and the results are outstanding.  We have considerably outperformed the Preliminary Economic Assessment that we delivered in 2021 in all key areas and yet we have done this with an initial capital requirement that is now significantly lower than that shown within the PEA.” 

He added “The Orom-Cross NPV (Net Present Value) of US$496M is excellent, especially in relation to this lower capex, and proves that this graphite project is a standout.  It already has a long mine life that can be extended at any time with additional drilling and it delivers a high quality concentrate with specific element content that is unique and which will elevate 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. 

Various other graphite projects have indicated much larger start-up production tonnages than we have, which in some cases fabricate higher numbers for their project NPVs, but we do not believe that over-inflated early sales volumes are deliverable; as such we have adopted a more conservative profile for both start-up and the ramp-up thereafter.  Credibility is very important to us.  This helps delivers a lower initial capital requirement for Blencowe to commission the mine which is another big advantage.

Together all of these above are tremendous results for our Project and we will now begin focussing on bringing Orom-Cross to an initial stage production during 2H 2023 as our next significant milestone.”

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 400ktpa, moving to 2.4Mtpa at year 7
Average tonnes (concentrate) produced pa over life of mine 101,000tpa Start-up 36ktpa; moving to 150ktpa by year 7

1.42M tonnes over life of mine

Initial Capital Requirement US$62M Plant, camp, equipment, all infrastructure, plus working capital & contingency
Net Present Value (NPV) US$496M 10X return on capital invested
Internal Rate of Return (IRR) 50% Highlights strong rate of return on investment
Weighted Average Selling Price/t – life of mine 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$1.10Bn 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 500,000 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 35,000tpa of end-product as concentrates will be delivered from the plant which increments in two additional stages to 150,000tpa 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.

  1. Capital Requirement

Blencowe will commence main operations from 2025 at an initial output of 35,000tpa 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 30% from the USD80M capex as per the PEA in 2021).

Capital Item US$ M %
Processing Plant 27.3 44.0
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 8.3 13.4
Mining Capital, Workshops, Vehicles 2.6 4.2
Owners Costs 2.4 3.9
Contingency 4.9 8.0
 

TOTAL

 

62.0

 

100%

This requirement is expected to be funded by a combination of both debt and equity via strategic investors and funding partners.  The full capital requirement for each of the three stages is indicated in the table below.

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 start-up costs and working capital

2 2027/8 48 Additional 800,000tpa plant capacity, plus all associated infrastructure
3 2029/30 47 Additional 800,000tpa plant capacity, plus all associated infrastructure
  1. 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, and either solar or diesel generators will be used as backup.  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.

  1. 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 18.0
Processing 180 36.1
Fuel 3 0.6
Project Personnel 48 9.6
Project Services 35 7.0
Depreciation 18 3.6
Transport & Logistics 110 22.0
Sales & Marketing 15 3.1
 

TOTAL

 

499/t FOB port

 

100%

Mining will be owner-operated using equipment either purchased outright or 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 35,000tpa of end-products delivered as concentrates from year 1 that will expand to 150,000tpa 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.

  1. 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.

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.

  1. 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 initial plant 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.

  1. Cash Flow

The high net operating margin generates substantial cash flow from Orom-Cross, particularly from when the mine has fully ramped up to 150,000tpa capacity by year 10.  This in turn generates free cash net of all taxes of US$1.10 billion from the Project over the initial 14 years’ life of mine.  As only ~1% of the full Orom-Cross graphite deposit will have been mined out by then it is very likely that further drilling will result in an 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.

  1. 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.

  1. 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.

  1. 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 2H 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 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.

  1. 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.

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 7100 5100

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 in the Feasibility Study phase as it drives towards first production targeted for 2023.

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.

Akelikongo Nickel Project

Akelikongo is a highly prospective nickel sulphide exploration project that has previously had considerable work completed by Rio Tinto and Sipa to establish three mineralised lenses to date.  It represents an opportunity for Blencowe to add further value through a targeted work programme that will seek to delineate higher grade and thicker intercepts of nickel.

Nickel sulphide deposits are rare and valuable and the prospect of further exploration success gives Blencowe suitable incentive to develop this asset under a structured earn-in agreement, whereby 100% of the asset can ultimately be acquired for US$1.5m, 100% payable in shares.

Blencowe Resources #BRES Engages Leading Global Sustainability Consulting Firm ERM to Build Strong ESG Platform

Blencowe Resources (“Blencowe” or the “Company”) is pleased to announce that is has engaged with one of the leading worldwide consultancy firms specifically relating to life cycle sustainability and ESG (environmental, social and governance) credentials.  ERM has led the way in this field globally for some time and their involvement with Blencowe will greatly assist both the Company and its two resource projects deliver a more sustainable pathway into the future.

ERM have been engaged to consider all aspects in this regard and to map out a series of initiatives that will put Blencowe at the front end of the market in terms of delivering green graphite products.  As the world moves towards decarbonisation, electric vehicles (EVs) and clean energy technologies offer a path towards a more sustainable future, however these technologies are mineral intensive and the efficient production of these minerals will play a key role in the clean energy transition.  Graphite is the primary anode material and the single largest component of lithium-ion batteries and as such it has an important role within this drive towards sustainability, both in terms of what the end product is used for as well as how it is produced.  Green graphite may be described as graphite that is delivered with a low environmental footprint, including energy efficient production.

It is not enough that one of the principal uses of graphite moving forward will be within the lithium-ion battery that power EVs, and which ultimately will greatly reduce the number of fossil fuel-driven vehicles; it is also important to produce that graphite within a mining and processing environment that is life cycle sustainable and delivers as low emissions as possible.

Blencowe believes that delivery of green graphite will increase the demand for its products as end users are all coming under increasing pressure to audit their supply chains more closely to ensure the products they use are delivered by companies with strong ESG credentials.  Furthermore, Blencowe believes its Orom-Cross graphite project will be more likely to attract investors to finance production if it has these properties.  As a result the Company has engaged ERM to work with it to deliver a range of policies, targets and initiatives to ultimately deliver green graphite.

Some of the key messages Blencowe will underline within this programme include:

·    Publicly acknowledge global ESG initiatives and develop policies to ensure the Company is managing its projects (and ultimately operations) to the required standards.

·    Put policies in place within Blencowe to consider key areas such as climate control, supply chain responsibility, human rights, indigenous engagement, risk management and cultural awareness.

·    Actively supporting social responsibility within the local and regional communities.

·    Ensure governance is managed to highest possible standards

·    Continue to place environmental impact at the forefront of strategic development initiatives.

All of these focal points will be considered in day to day activities as well as the various feasibility studies that Blencowe is preparing in order to take Orom-Cross graphite project into production next year.  As practical examples the Company is already considering options to replace diesel generated power at the mining operation with solar farms, with use of hydro-electric power off the national grid as backup.  Electric drying of product through the processing facility will also be considered, plus dry tailings to improve the environmental footprint as well as the most energy efficient logistics solution to move end-product to market.

Legal Agreements are already in place providing the local community with compensation payments for use of their land, and this is already making a huge difference to their farming operations.  An ongoing Educational Trust is in place which is giving local community students the opportunity for further education opportunities that would not have been available prior, and this will continue and grow moving forward.

Blencowe will ensure that all of this is done within the delivery of a commercially viable operation as that remains the ultimate goal, but the Company believes both profitability and sustainability can and should be delivered together.

Executive Chairman Cameron Pearce commented:

“We acknowledge that the world is changing fast and ESG awareness is more prominent that ever before.  We believe we should do more than lip service in this regard, to play our role within this climate change revolution by constantly improving our environmental efficiency as well as building our social and governance credentials.  By bringing in one of the leading sustainability consultancy firms in the world to advise us we are underlining our commitment within this key area.  Green graphite is the way forward and we will target delivery of some of the cleanest end-products when we commence our graphite operation at Orom-Cross from 2023.”

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 7100 5100

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 through the Feasibility Study phase as it drives towards first production targeted for 2023.

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.

Akelikongo Nickel Project

Akelikongo is a highly prospective nickel sulphide exploration project that has previously had considerable work completed by Rio Tinto and Sipa to establish three mineralised lenses to date.  It represents an opportunity for Blencowe to add further value through a targeted work programme that will seek to delineate higher grade and thicker intercepts of nickel.

Nickel sulphide deposits are rare and valuable and the prospect of further exploration success gives Blencowe suitable incentive to develop this asset under a structured earn-in agreement, whereby 100% of the asset can ultimately be acquired for US$1.5m, 100% payable in shares.

Blencowe Resources #BRES Provides PFS Update for Orom-Cross Graphite Project in Uganda

Blencowe moving to complete PFS on Priority Project by mid-year as precursor to implementing First Graphite Production from 2023

Highlights

·    Blencowe acquired world class Orom-Cross graphite project less than 2 years ago; has been on fast-track development towards production ever since.

·    Extensive infill drilling programme was completed in 2021 to provide updated JORC Resource estimate for use within Pre-Feasibility Study (“PFS”)

·    Phase Three Metallurgical test work near completion to provide fact sheets to users on end products and process flows to achieve them

·    Work underway in all facets to deliver high quality PFS by mid-year target date

Blencowe Resources (“Blencowe” or the “Company”) is pleased to provide an update on its ongoing Pre-Feasibility Study at its priority Orom-Cross graphite project.  Orom-Cross is a substantial graphite deposit with an estimated 2-3 billion tonnes, of which the first 20 years life of mine has already been drilled out.  However the deposit is so vast that this represents less than 1% of the estimated graphite within the tenements.  Furthermore, the graphite is shallow and Blencowe will be mining to just 25 meters which means low cost mining from a free dig open cut operation.

The Preliminary Economic Assessment (“PEA”) for Orom-Cross (completed September 2021) provided the basis for a large scale 75,000tpa graphite operation, however Blencowe has indicated that it will scale this down in the early years to allow for a lower risk, lower capex start-up, around 25,000tpa of high grade concentrate.  There will be provision for ramping this plant size and production rate up quickly over the first ten years to accommodate what is expected to be a surge in demand for flake graphite, predominantly for use within lithium-ion batteries for electric vehicles (EVs).

The Company is working closely with its specialist technical partner Battery Limits to deliver a low cost mining operation that will put Orom-Cross in the lowest percentile of worldwide graphite producers, which not only provides more margin and earnings but also de-risks the operation significantly.  Low capital costs to implement and low operating costs once in production are massive advantages to any mining operation.

Currently Blencowe is awaiting the revised JORC Resource estimate for Orom-Cross, based on the extensive infill drilling programme from 2021, and its geological partner Minrom will provide this update shortly.  This JORC Resource is expected to increment the 16Mt at 6.0% TGC that was announced to market in 2021 and provide additional tonnes that can be utilised for a much longer mine life than previously indicated in the PEA.  In parallel work is being completed on Phase Three metallurgical test work to refine the end products that will be delivered as concentrate from Orom-Cross, and these results are also expected shortly.  Phase Two met test work indicated a high quality array of end products that should be sought after in the market, and Phase Three is expected to underline this further by confirming the marketable characteristics of the different mesh size products and producing concentrates for consumer testing prior to pilot plant production .

One of the key additions within the PFS (from the 2021 PEA) is the expectation that Blencowe will deliver a pilot plant by 2023 in order to product small quantities of these same end products to pre-qualify sales into end users.  This is seen as a necessary and integral step in order to sell higher quantities of graphite concentrate from 2025 onwards when the main plant is expected to be commissioned.

Furthermore, Blencowe is also looking at all options to deliver green graphite products via a project that leans heavily on renewable energy and other sustainable components.  This is seen as a very important objective within the PFS and the strategy moving beyond.

All other areas within the PFS are going to plan, with work underway on all key areas including infrastructure, energy, roads, water, tailings, logistics, sales and marketing, plus plant and camp design.

Cameron Pearce, Blencowe’s Executive Chairman commented;

“Blencowe is moving quickly to establish itself as a producer of premier grade green graphite products, delivered at a low operating cost to both de-risk and to ensure highest possible margins.  The PFS is exploring all options, including a pilot plant from 2023 as a precursor to the main plant commissioned by 2025.  Graphite demand is forecast to expand considerably from 2025 onwards and Blencowe wants to be positioned by then not only as a producer but also ready and able to expand quickly and cost-effectively to take advantage of growing worldwide demand.  Events in Eastern Europe over the past month have underlined the importance of supply chain diversification and we aim to provide a high quality alternative supply route for a key battery metal, within a low risk location.

We have also recently added a highly prospective nickel sulphide project into our portfolio as well, to further expand our upside.”

We have come a long way in the 2 years since we acquired Orom-Cross, and the upswing in demand that we are seeing for the products we will produce has fully justified our strategy.  The next important step will be to provide the market with a clear picture of what our production plans ahead look like, including pre-qualification of sales into end users over a longer period so they can all fully understand the characteristics of the products we will deliver prior to expansion into full production mode.”

 

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 7100 5100

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 through the Feasibility Study phase as it drives towards first production targeted for 2023.

Orom-Cross presents as a large, shallow open-pitable deposit, with a maiden JORC Indicated & Inferred Mineral Resource deposit of 16.3Mt @ 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.

Akelikongo Nickel Project

Akelikongo is a highly prospective nickel sulphide exploration project that has previously had considerable work completed by Rio Tinto and Sipa to establish three mineralised lenses to date.  It represents an opportunity for Blencowe to add further value through a targeted work programme that will seek to delineate higher grade and thicker intercepts of nickel.

Nickel sulphide deposits are rare and valuable and the prospect of further exploration success gives Blencowe suitable incentive to develop this asset under a structured earn-in agreement, whereby 100% of the asset can ultimately be acquired for US$1.5m, all payable in shares.

Blencowe Resources #BRES confirms Successful Infill Drilling on Northern Syncline Lode at Orom-Cross Graphite Project

Blencowe is pleased to provide a further update to the comprehensive JORC Resource diamond drilling program that was completed in 2H 2021 on its Orom-Cross Graphite Project in Uganda

Highlights

·    Drilling at the Northern Syncline Lode delivers some outstanding high grade graphite results in the oxide zone including:

ORNS-L902, 11 metres at 9.01%TGC from 4 metres

ORNS-L1502, 10 metres at 11.00% TGC from surface and 12m @10.91%TGC from 13 metres

ORNS-L1602, 17 metres at 8.97% TGC from surface

ORNS-L1206, 3 metres at 12.43%TGC from surface

ORNS-L1204, 6 metres at 10.12% TGC from 3 metres

ORNS-L1202, 20 metres at 9.24% TGC from 4 metres

·    These results will strengthen the updated JORC Standard Mineral Resource Estimate and

Reserve determination for the Northern Syncline Lode scheduled for release in late February

Blencowe Resources Plc (“Blencowe Resources”) (LSE: BRES) is pleased to announce exceptional high-grade drilling results which will help to strengthen the updated JORC Mineral Resource and Reserve Estimate update at its Orom-Cross graphite project in Uganda, scheduled for release by end February 2022.

The results highlight the quality of the Project’s mineralisation and ultimately its ability to be one of the lowest cost producers of graphite concentrate internationally.

The drilling targeted mainly infill zones the weathered zone of the Northern Syncline deposit, and was planned so as to provide a basis for upgrades in Resource classification as well as extensions to existing high-grade oxide mineralisation. The spectacular near-surface intercepts confirm existing geological interpretations as well as grade continuity over the strike length of the Northern Syncline in a similar way to the recent Camp Lode results as recently announced.

The Northern Syncline deposit has been subjected to a diamond drill hole program on a 25 metre by 12.5 metre grid. The drilling was specifically designed to provide sufficient information to enable the classification upgrade of resources at the Northern Syncline deposit into the Measured and Indicated categories and enable an updated JORC Resource Estimate on the Northern Syncline.

All the holes to date have returned visible grade graphite over the majority of 30m of intersection, with weathering extending to within 5m of the base of the holes in most cases. This may present Blencowe with further high-grade ore for initial mining which could have significant advantages to both mining costs and product quality.  Subsequent logging by the Company’s geologists has identified zones of large to jumbo flakes in the core.

The core has been assayed at SGS in Perth, Western Australia using the method C-IR18. The method is appropriate for understanding graphite deposits and is a total method.

Blencowe Resources continues to review the sample assays and QA/QC checks are expected to be completed shortly enabling the company to proceed to finalising the revised and upgraded Mineral Resource Estimate.

Executive Chairman Cameron Pearce commented; “Our drilling campaign for 2021 has returned very positive high grade results for both the Northern Syncline and Camp Lode deposits, which will assist Blencowe to complete a revised JORC Resource Estimate in the next few weeks.  We are also pleased to see options emerging for higher grade early stage mining which will positively impact operational costs.”

He added “We are largely completed in terms of drilling at Orom-Cross and we do not require any further major campaigns in order to commence mining ahead.”

 

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 7100 5100

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 16.3Mt @ 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 – Update on Work Programme for 2022 and Appointment of Country General Manager

Blencowe Resources Plc (“Blencowe Resources” or the “Company”) (LSE: BRES) is pleased to announce and update on all activities for 2022 as it seeks to drive its flagship Orom-Cross Graphite Project towards first production in 2023.

Highlights

  • Revised, upgraded JORC Standard Resource imminent
  • Further metallurgical test work underway with SGS in Canada
  • Initial Sales and Marketing Strategy being finalised
  • Commencement of Pre-Feasibility Study
  • Blencowe appoints experienced Project Manager to lead development of Orom-Cross Project in Uganda

JORC Standard Resource

A successful diamond drilling programme was completed in 2H 2021 and all assays have been completed; the Company’s technical partner Minrom is now working through a revised JORC Standard Resource which is expected for completion in the next month.

This programme was designed to infill the initial 2020 drilling programme and provide information for initial mine designs.  It is also expected to provide additional tonnes to the 16Mt already contained within the JORC Resource (Phase One) as well as deliver a higher overall in situ grade, as the high grade Camp Lode will be included for the first time.

This JORC Resource will provide enough tonnes for the first 15 years life of mine at expected mining levels, and no further drilling is therefore required prior to first production.

Blencowe notes that less than half of one percent of the overall deposit has been drilled to date, therefore the opportunity exists to substantially increase both production tonnes and life of mine via further drilling ahead once the market starts the exponential growth as forecast, to deliver considerably more tonnes of graphite for lithium-ion batteries than is currently demanded worldwide.

Stage Three Metallurgical Test Work

Samples from the 2H 2021 drill program were sent to SGS Lakeside in Toronto, Canada in 4Q 2021 and work has commenced on Stage Three metallurgical test work.  This work is expected to take around 60 days to provide final results, with the expectation that Blencowe will obtain final fact sheets for all its products as expected to be sold ahead.

This work will cover all additional properties not completed in the Stage Two (2021) metallurgical test programme, which was very successful and delivered an overall composite product of 97.3% TGC (Total Graphite Content) which is considerably higher than the entry level 94% required for battery grade graphite concentrate.  It also provided a +90% recovery rate which is high.

It will also provide critical information on impurities and other key indicators for sales and marketing.  Once completed the Company expects to work closely with its experienced Sales and Marketing advisor to identify potential offtake partners, and provide these parties with samples so the pre-qualification of end product process can start.

Sales and Marketing Strategy

The Company has been working closely with its experienced Sales and Marketing advisor, Lone Star (USA) to deliver a sales and Marketing strategy for 2022, to ultimately provide a channel for sales of graphite ahead.

Graphite is typically sold directly to end users and it is therefore important to understand the full properties of the end products prior to releasing samples to potential offtake partners for testing.  Thereafter it is expected those partners will require longer term delivery of some graphite products over a longer period to pre-qualify Orom-Cross products for consistency, and thus the Company expects to deliver a pilot plant in 2023 that will provide smaller quantities of graphite into these sales channels over a period of 18-24 months prior to the main production plant being commission in 2025.

Appointment of Country General Manager

Blencowe is pleased to note the appointment of an experienced Project Manager, Mr Nabil Alam, as its Country General Manager (Uganda) from January 2022.  Mr Alam is a Civil Engineer with considerable experience in delivering major projects into production and he has worked on major projects through EPC phase all over the world, including Europe, Africa and the Middle East, from his base in the UK.  He has now returned to live in Uganda.  His most recent project was leading the construction of a sugar co-generation plant as part of a large-scale steel project.

Mr Nabil will lead all Blencowe operations on the ground and will work closely with the Company’s senior executives to bring Orom-Cross towards first production, expected in 2023.  He has lived and worked in Uganda and therefore has deep understanding of the country and his contribution will be important to bringing the project towards delivery of first graphite ahead.

Cameron Pearce, Blencowe’s Executive Chairman commented;

“There is an enormous quantum of work underway in all areas related to the Orom-Cross Project and our team is progressing well in every aspect, continuing to value-add to this exceptional graphite project as we drive towards first production next year. 

We expect considerable news flow from all these areas as noted above during the first quarter of 2022 and all indications suggest we will continue to show that this is robust graphite project in amongst global peers.

We are especially delighted to welcome Nabil Alam into Blencowe and his experience and expertise will be vital to our success moving forward, driving operations in country as we prepare infrastructure and other areas within Orom-Cross towards first production over the medium term.” 

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 Limited

Jonathan Evans

Tel: +44 (0)20 7100 5100

jonathan.evans@tavirasecurities.com

First Equity Limited

Jason Robertson

Tel: +44(0) 203 192 1733

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 16.3Mt @ 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 – Mike Ralston discusses the fundraise and how the funds raised will be used to develop the Orom Cross graphite project

Blencowe CEO Mike Ralston discusses the oversubscribed £2m fundraise and how the funds raised will be used to develop the Orom Cross graphite project

Link here to listen 

Blencowe Resources #BRES – Over-Subscribed £2m Capital Raise

Company now fully funded through next 12 months of Project development, including Pre-Feasibility Study

Highlights;

Ø Over-Subscribed £2m fund-raise, including subscriptions from Blencowe Board

Ø Orom-Cross now fully funded through to completion of PFS

Ø Outlook for graphite market continues to strengthen, driven by EV sector

Blencowe Resources (LSE: BRES) (Blencowe or the Company) is pleased to announce the successful completion of an over-subscribed capital raise for £2 million at 5p through the issue of 40,000,000 new ordinary shares (“Fundraise”). This includes a subscription of £75,000 from the Directors and CEO. The Fundraise is subject to a simplified prospectus that is currently being approved by the FCA ahead of the seeking of shareholder approval at a general meeting to be arranged. The Company anticipates that admission of the new ordinary shares will be in approximately 21 days.  

Use of Funds

These funds will be used for the further development of the Company’s flagship Orom-Cross graphite project in Uganda, including:

· an updated JORC Resource early next quarter; and

· Delivery of a Pre-Feasibility Study (“PFS”) by mid-2022.

Blencowe announced results of the Preliminary Economic Assessment (“PEA”) for Orom-Cross in September 2021, which highlighted a long-life, low-cost graphite project that delivers significant operating margin per tonne; the resultant NPV (US$317 million) and IRR (49%) are considered exceptional and as such the Company has moved into PFS stage. The Company will further refine the project economics in the PFS and continue to use these studies to engage with strategic and industrial parties that are seeking graphite product.

Terms of the Fundraise

The capital raise was managed by the Company’s brokers First Equity and Brandon Hill Capital and was completed at 5p per new ordinary share with half a warrant per new ordinary share that is exercisable at 8p for 3 years from admission to trading. This price represents a minimal discount to the 10-day VWAP and illustrates the strong support for both the project and the wider battery metals market. Blencowe is also pleased to announce the inclusion of several institutional funds that have participated in the Fundraise.

A further announcement will be made regarding the timetable for admission of the shares to the LSE and issue of the prospectus following the expected near-term approval by the FCA.

Graphite is an essential, non-replaceable input material into lithium-ion batteries which will be manufactured in ever-increasing quantities ahead to power electric vehicles (EVs).  Analysts forecast that the current 14 million EVs worldwide will rise to somewhere between 100 – 500 million by 2030, all of which will require batteries.  Over the past three years the number of megafactories, designed and built to mass produce lithium-ion batteries, has risen from circa 50 worldwide to over 250 either in production or being commissioned, and the number continues to grow monthly.  Together these megafactories represent a substantial future demand for graphite.

With Orom-Cross representing a renewable energy source material there has been considerable interest from funds who wish to become more involved in green energy including the battery metals market.  This represents a significant milestone as the Company develops its profile, and it further underlines the potential within the Orom-Cross graphite project.

Cameron Pearce, Executive Chairman commented:

“We are grateful to all the existing and new shareholders that have supported the Fundraise. The Company is now fully funded through its next important phase of development and as we continue to develop Orom-Cross and it becomes increasingly apparent what a standout graphite project it is, I would expect to see the gap between our current market cap of circa US$9M and PEA-derived NPV of US$317M progressively converge.

We are focused on continuing to optimise the economics of Orom-Cross further, with the next step in this process being an updated JORC Resource early next quarter, targeting both resource expansion and further grade uplift”

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

Brandon Hill Capital Limited

Jonathan Evans

Tel: +44 (0)20 3463 5000

jonathan.evans@brandonhillcapital.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 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 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 16.3Mt @ 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 – Orom-Cross PEA Shows Potential for Long Life, Highly Profitable Graphite Project

Results of internal Preliminary Economic Assessment (“PEA”) demonstrate compelling case for the development of a major new graphite project, paving the way for a Pre-Feasibility Study.

Highlights 

Low operating costs and robust financials for mining operation:

· Net Present Value (NPV 8 ) of US$317M / IRR 49% over 13-year life of mine from 2025.

· Average nameplate production of 75,000tpa graphite sold as concentrate, with ability to extend this after further drilling.

· Life of mine C1 operating cost of US$498/t (CIF Mombasa port) which would make Orom-Cross one of the lower cost graphite projects worldwide.

· An initial capital cost of US$80M, inclusive of 15% contingency.

· Orom-Cross will generate an average US$40M pa in EBITDA over life of mine at a weighted average price of US$1,050/t for the full basket of all end-products sold from 2025 onwards.

· Cumulative post-tax net cash flow of US$351M generated over initial 13 years life of mine.

· 4-year payback on capital.

Next Steps:

· Work will now begin on Pre-Feasibility Study (PFS) using an independent consultant, including an upgraded JORC Standard Resource statement.

· Sales and marketing analysis to source potential off-take partners to commence immediately.

Attractive size and scale of deposit with high quality end-product:

· Estimated 2-3 billion tonnes flake graphite deposit at Orom-Cross, with 16.3Mt already drilled to JORC Resource standard, covering initial life of mine.

· High grade 97-98% TGC (Total Graphite Content) concentrate proven, with low impurities, high recoveries and strong mix of jumbo/large flakes within overall end-product.

Low risk operation:

· Shallow, free dig open pit mining operation with low strip ratio.

· Well established, proven plant design and process to deliver high grade concentrates.

· Key infrastructure (roads, electricity, water) all available at mine site.

· Stable jurisdiction to develop a long-term mining venture.

· 21 year mining licence granted in 2019

Cameron Pearce, Executive Chairman commented;

“We are pleased to announce the first full economic evaluation of the Orom-Cross graphite project based on prudent assumptions. The current internal PEA underpins our view that we have a robust Project that we will now advance to the next stage of development. We are confident that the Project economics can improve further, notably by extending the life of mine and/or increasing the levels of production.

The Project has several key attributes that underpin the decision to move forward with its development including the ability to upscale production volumes and/or extend the life of mine; high quality output via purity of end concentrates and a mix of different flakes sizes which delivers an excellent weighted average selling price for the entire basket; plus a low operating cost helped considerably by shallow free-dig mining and processing that does not require excessive crushing and grinding.

The Project will provide a range of high quality end-products that will be sold into what is generally forecast by most leading analysts as a rapidly growing demand for flake graphite ahead, particularly driven by electric vehicle expansion. 

All of these factors combine to deliver a standout PEA result that we believe confirms Orom-Cross as one of the premium graphite projects available worldwide, delivered from one of the safest locations for a long-term mining venture in Africa.

We still have further work ahead to deliver Orom-Cross into first production but we are making considerable progress.  The next step is the revised and upgraded JORC Standard Resource by end-2021 which will then underpin our Pre-Feasibility Study in 1H 2022, where we revisit all of these Project inputs within the model to build further layers of confidence everywhere.” 

Blencowe Resources (LSE:BRES ) is pleased to announce the results of its Preliminary Economic Assessment (PEA) for the Orom-Cross graphite project located in Uganda.  This PEA highlights the potential to deliver a long-life mining operation with strong financial returns.

The PEA indicates that Orom-Cross production is economic at forecast graphite prices and it supports Blencowe’s view that the Project is one of the best undeveloped graphite projects worldwide.

The PEA was compiled and completed internally by Blencowe’s management team using information and data largely provided by third party experts, including the JORC Standard Resource statement, metallurgical test studies, processing and plant design, operating costs (including logistics), product pricing and sales and marketing forecast information.  This PEA is an internal document which has not been reviewed or approved by a third party technical firm as that will be done within the Pre-Feasibility Study, which is the next stage in the development of this Project.

Cautionary Statement:

The PEA is a preliminary assessment based on lower accuracy technical and economic assessments (25-35% range), undertaken internally by Blencowe management to consider the full mining operation and to determine the financial viability of the Project prior to the PFS.  The PEA is insufficient to support the estimation of ore reserves or to provide assurance of an economic development case at this stage, or to provide certainty that the conclusions of the PEA will be realised.  Further work will be undertaken ahead to build the confidence in this model and provide additional reassurance in the outcomes.

The information in the PEA and this RNS that relates to metallurgical testwork and capital costing is based on information compiled and reviewed by Mr David Pass, who is a member of the Australian Institute of Mining and Metallurgy. Mr Pass is an employee of Battery Limits Pty Ltd. Mr Pass has sufficient experience relevant to the mineralogy and type of deposit under consideration and the typical beneficiation thereof to qualify as a Competent Person a defined by the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code, 2012 Edition). The information in the PEA and this RNS that relates to Mine Reserves, capital and operating costing is based on information compiled and reviewed by Mr Iain Wearing, who is a member of the Australian Institute of Mining and Metallurgy. Mr Wearing is an employee of Blencowe. Mr Wearing has sufficient experience relevant to the mineralogy and type of deposit under consideration and the typical operation thereof to qualify as a Competent Person a defined by the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code, 2012 Edition). Both Mr Wearing and Mr Pass consent to the inclusion in the PEA and this RNS of the matters based on the reviewed information in the form and context in which it appears.

This RNS includes statements that are, or may be deemed to be, “forward-looking statements”. Such statements appear in a number of places and include statements regarding the intentions, beliefs or current expectations of the Company and the Board concerning, among other things, results of operations, financial condition, capital resources, prospects, capital appreciation of the shares of the Company.  By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward- looking statements are not guarantees of future performances. The Company’s actual performance, results of operations, financial condition, distributions to Shareholders and the development of its financing strategies may differ materially from the forward-looking statements.

 

Key Performance Indicators (KPIs)

The following KPI’s illustrate the graphite mining operation considered at Orom-Cross:

KPI

Result

Life of Mine (LOM)

Initial 13 years

Further years will be added following additional resource drilling

Average Annual Production

75,000tpa

End-product as concentrate, split into four separate mesh sizes for sales

65% sold into battery metals market

Recovery Rate (end-product)

90%

Composite product – per metallurgical test work

Capital Cost, including 15% contingency

US$80M

Plant, all infrastructure, vehicles and camp

C1 Cash Operating Cost

US$498/t

CIF Mombasa (end-products as concentrate)

Weighted Average Selling Price

US$1,050/t

Using 2025 forecast pricing – overall for all four end-products as assumed sold

EBITDA

US$40M pa

Average pre-tax earnings over life of mine

Cumulative Free Cash

US$351M

Generated over first 13 years life of mine, after repayment of all debt

Net Present Value

US$317M

Pre-tax (8%) , inclusive of Government royalty

IRR

49%

Pre-tax (8%) , inclusive of Government royalty

Payback period on capital invested

4 years

Assumes upfront capital raised as debt: equity Split 60% : 40% respectively

 

 

Orom-Cross Graphite Project

Orom-Cross is a substantial graphite project located in northern Uganda, 100%-owned by Blencowe Resources since April 2020, with a 21-year Mining License awarded in 2019.

Mining & Processing

The Preliminary Economic Assessment conducted by Blencowe management assumes an open pit, owner-operated mining operation using existing resources (Indicated and Inferred) as drilled to JORC Resource Standard, delivering 1.4Mtpa ore on average for processing through the plant.  Strip ratio is 1: 1.1 which is low.  Plant recoveries are considered at 90% based upon the composite material most likely to be fed into the plant, as derived from metallurgical test work conducted by graphite expert SGS in Toronto.  Initial life of mine as contemplated within the PEA is just 13 years (18Mt total throughput into plant) but this will almost certainly be extended as Blencowe has only drilled a small percentage of the total graphite available, and further drilling in subsequent years will provide additional JORC Resources when considered necessary.

The plant will be located near to the first two major deposits of graphite to be mined and t he 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 followed by cleaner flotation.

The plant will feature separate circuits that ultimately deliver an average of 75,000tpa, made up from four separate end-products, being jumbo, large, medium and small flakes size concentrates.

The split of mesh sizes / respective tonnages within each of the four end-products is illustrated below:

End Product

(Flake size)

Mesh Size

Purity

% TGC

% of End Product

Tonnes pa

End Product

1

Super Jumbo/Jumbo

+32

+48

98.1%

98.0%

13.7%

10,275

2

X-Large/Large

+80

97.7%

22.5%

16,875

3

Medium

+100

+150

97.5%

97.0%

24.7%

18,525

4

Small

+200

+325

-325

96.9%

96.6%

95.7%

39.2%

29,400

Total

75,000

 

Manpower and Management

Orom-Cross will be owner-operated and managed by a workforce comprising of both national and expatriate personnel.  Wherever possible locals will be employed, but the quality and experience of senior executives will not be compromised as necessary to ensure that all objectives are delivered.

A work force of ~45 will be on-site at any one time, some of whom will be fly-in, fly-out from international locations.

Logistics

End-product as concentrate will be bagged at site and loaded into containers for bulk transport by road through Uganda and Kenya, to Mombasa port, and thereafter shipped to final destination(s).  Orom-Cross benefits from substantial container freight entering landlocked Uganda and South Sudan by road transport that currently returns under-utilised (imports exceed exports) and as such Blencowe may receive more favourable terms on backfill transport to port.

It is possible that the standard gauge rail line currently under construction between Mombasa and Kampala (via Nairobi) will be completed by anticipated 2025 Orom-Cross start-up date, but the PEA has not considered this rail option; for now only road transport has been included.  Presently this new rail line is around 60% completed.

When this rail option is completed it may potentially reduce logistical costs further, which are currently ~18% of the total operating cost for the end-product as delivered to port (CIF Mombasa).

Sales and Marketing

Sales and marketing are at a preliminary stage within Orom-Cross development as specific end-product specifications have only recently been formalised through metallurgical test studies.  Blencowe has identified several experienced sales and marketing consultants worldwide and has engaged with each to identify the most likely channels to locate potential offtake partners. Once end users are identified the Company will engage with each to assess their interest in Orom-Cross offtake.

Product pricing has been evaluated using advice and reports generated by industry accepted graphite experts including Benchmark Minerals Intelligence (BMI) and UBS, taking into consideration potential premiums that may be achieved for higher grade concentrates that Orom-Cross can deliver and future pricing as forecast from 2025 onwards.  Graphite pricing is largely opaque so forecast prices should be considered with some caution and Blencowe has chosen to adopt a conservative view on what prices may be achieved, to ensure reliability and credibility.

It is assumed for the PEA that 100% of the end-product that will produced at Orom-Cross will be sold, although there are no off-take agreements currently in place with Blencowe that can confirm this.  As the majority of end-product sold from the Project will be in the category that is required for the battery metals market (for use within the anode inside lithium-ion batteries), and as most leading analysts forecast that demand will outstrip supply in this category by the 2025, the anticipated Orom-Cross start date, it is assumed within this PEA that all end-product produced will be sold.

Infrastructure

There are existing roads all the way from the Orom-Cross site through Uganda/Kenya to Mombasa port.  The only section that is not currently a bituminised road is the final 90kms from Kitgum to Orom. Blencowe is currently in discussions with the relevant Ugandan Government departments to assist the Orom-Cross development by upgrading and bituminising this section of road.  Currently hydro-generated electricity comes into Orom village approximately 4kms from the proposed mine site so the Project will connect into the grid (with other redundancy power options as backup), and abundant fresh water is freely available in the area.

All key infrastructure is therefore either in place or readily available which makes a significant difference in cost savings to forecast capital expenditure to bring Orom-Cross into production.

Operating Estimate

Blencowe management has built the PEA model based on these above assumptions, with an expected life of mine operating cost (C1) of US$498/t (CIF Mombasa port).

Ongoing capital required to maintain the Project has been included as well as a 5% royalty to Government of Uganda.  A further amount has also been included for community welfare projects as Blencowe takes its ESG (environmental, social & governance) responsibilities seriously.

Operating Item

US$ / tonne

% Total

Mining

103/t

20.7%

Processing

181/t

36.3%

Transport and logistics

92/t

18.5%

Corporate, admin & personnel (includes ESG)

65/t

13.1%

Sales commissions

10/t

2.0%

Royalties

47/t

9.4%

Total Cost (C1)

US$498/t

100%

Capital Expenditure

The design and capital requirement for the plant has been derived from external technical firm Battery Limits / Mining Metals Technology Limited, a company with considerable graphite plant design experience.  A suitable contingency has been applied to ensure adequate provision for a plant that can deliver ~1Mtpa throughput.

Further capital has been considered for all associated infrastructure required, including the following non-process infrastructure that will be constructed to support operations:

· Power sub-station and power distribution

· Raw water supply and water treatment

· Accommodation village

· Airstrip

· Offices, stores, and workshops

· Communications

· Bulk fuel storage

· Secondary roads (on-site)

A sustaining capital is included within the operating cost to ensure necessary maintenance and refurbishment of items where necessary.  Capital costs are estimated to an accuracy of 25-35%.

A breakdown of the key capital cost items is shown below:

Capital Item

Cost

(us$ Millions)

Processing Plant/tailings

52

Site construction/EPCM

15

Vehicles & equipment

2

Camp & offices

5

Additional Resource Drilling

2

Mobilisation/demob & first fill

3

Community

1

TOTAL

US$80M

 

Note: 15% Contingency included in all items shown above

Project Economics

Financial analysis on Orom-Cross has been undertaken using a discount cash flow model with various sensitivities, and an 8% discount value has been used for this analysis which is consistent with current resource model forecasting and future anticipated rates pertaining to cost of capital.

It is assumed within the PEA that all upfront capital is raised from both equity and debt (35%: 65%).

A project Net Present Value of US$317M highlights the considerable value within the initial 13-year Orom-Cross Project and the IRR of 49% illustrates the attractive return on capital invested.  Payback on all capital employed is four years which is exceptional as the Orom-Cross Project is ultimately expected to run for a considerable period beyond this initial 13-year life of mine as considered.

US$40M pa EBITDA is returned on average over life of mine, with overall cumulative free cash of US$351M returned over the Project life of mine. 

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

Brandon Hill Capital Limited

Jonathan Evans

Tel: +44 (0)20 3463 5000

jonathan.evans@brandonhillcapital.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 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 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 16.3Mt @ 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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END

Blencowe Resources #BRES Completes Second Successful Drilling Program at Orom-Cross Project

The Company is pleased to provide a further update to the comprehensive JORC Resource diamond drilling program that has been completed on its Orom-Cross Graphite Project in Northern Uganda.

Highlights

·    Another successful drilling campaign now completed.

·    An additional 38 infill holes totalling 1,140m was completed in the Northern Syncline and a further 36 holes for 1,080m in the Camp Lode.

·    1,150 samples currently in transit to the JORC-accredited labs in Tanzania for sample preparation prior to assaying at SGS in Canada.

The company commenced a second phase of resource and in-fill drilling at its Orom-Cross project in May 2021 with the aim of upgrading resources at both the Camp Lode and Northern Syncline deposits. The company made steady progress on the program after easing of the Covid lockdown in country and successfully completed the planned JORC resource drill out of both the Northern Syncline Lode and the High-Grade Camp Lode with a combined total meterage of 2,220m drilled in both deposits. An additional 38 infill holes totalling 1,140m was completed in the Northern Syncline and a further 36 holes for 1,080m in the Camp Lode. Similarly to the first phase drilling program, these holes intersected significant bands of graphite over the length of the holes.

The drilling was planned to cover the top third of the deposit to approximately 25 meters, being the weathered free dig material, which will be the focus for the initial mining program. There is considerably more graphite below as fresh material which can be drilled at a later stage if required.  Each of these deposits are also open along strike.  Geological logging of the holes and core sample delineation is also completed with 1,150 samples currently in transit to the JORC-accredited labs in Tanzania for sample preparation prior to assaying at SGS in Canada.

Additional drillholes were completed for geotechnical samples to aid in mine design and these samples are currently in transit to the geotechnical consultants in South Africa for testing.

The drill sites are being rehabilitated and the drilling teams have departed from site on the weekend, with a local team remaining to maintain the site on care and maintenance.

Cameron Pearce, Executive Chairman’s commented;

“Once again we are pleased to report continued successful work out at site, being the second extensive drilling campaign to delineate a substantial JORC standard resource in the Indicated and/or Measured categories.  Our local partners have done a fantastic job in the face of Covid restrictions and completed this program on-time and to-budget.  We now expect to have enough tonnes drilled out to complete the first ten years’ mine life at Orom-Cross and we can continue to add to this cost-effectively, as required, to help meet the expected significant increase in graphite demand.

We will now commence work on the Preliminary Economic Assessment, being an internally generated first full commercial end-to-end study of the entire graphite project.  This will be completed in the next quarter and we will then move immediately into Pre-Feasibility Study stage. This will involve the creation of a Full Sales and Marketing Plan and the first steps towards finding potential offtake partners to sell our end product into.  We are comfortable with all the progress we have made over the past 15 months since we acquired Orom-Cross and we will continue to add value in all ways possible.”

For further information please contact:

 

Blencowe Resources Plc

Sam Quinn

 

 

Investor Relations

Sasha Sethi

 

 

www.blencoweresourcesplc.com

Tel: +44 (0)1624 681 250

info@lionsheadconsultants.com

 

Tel: +44 (0)7891  677 441

sasha@flowscomm.com

 

Brandon Hill Capital Limited

Jonathan Evans

 

Tel: +44 (0)20 3463 5000

jonathan.evans@brandonhillcapital.com

 

 First Equity Limited                                                         

 Jason Robertson                                                     

Twitter

https://twitter.com/BlencoweRes

LinkedIn

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

www.blencoweresourcesplc.com

Tel: +44 (0)1624 681 250

info@blencoweresourcesplc.com

Tel: +44 (0)7891  677 441

sasha@flowscomm.com

Tel: +44 (0)20 3463 5000

jonathan.evans@brandonhillcapital.com

 

 

Tel: +44(0)20 7330 1883

jasonrobertson@firstequitylimited.com

Background

Orom-Cross is a potential world class graphite project both by size and end-product quality, with a high component of larger flakes identified from previous work performed. A 21-year Mining Licence was issued by the Ugandan Government in 2019 following extensive historical work on the deposit and Blencowe is now moving into the studies 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 16.3Mt @ 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 – Invitation to Webinar

Blencowe Resources is pleased to invite investors to an investor webinar, hosted by Shares Magazine where CEO Mike Ralston will present Blencowe’s  plans to develop our potentially world-class Orom-Cross Graphite Project followed by an audience Q&A on Wednesday, Jul 21, 17:30 PM BST.

The webinar is open to all existing shareholders or potential investors.

To participate in this webinar, please register using the link:
 https://register.gotowebinar.com/register/8965032300449864207

The webinar will not require your participation in the form of audio or video, however, you will have the opportunity to ask questions via an online chat window during the webinar.

Whilst a Stage 2 drilling programme with the objective of further upgrading the higher-grade Resource at Orom-Cross is currently underway, next steps are in-flight to begin moving through development studies into pre-Feasibility and ultimately full Feasibility study in order to fully assess the project economics for Orom-Cross.

Following successful metallurgical testwork where graphite concentrate grades consistently ranged between 97-98% TGC, Blencowe is now better positioned to advance discussions with strategic groups in the knowledge it can deliver a range of high grade end products.

 

Please find below a link to our latest presentation:

https://blencoweresourcesplc.com/wp-content/uploads/sites/23/2021/05/Blencowe-Presentation-May-2021.pdf

ENDS

For further information please contact:

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

Brandon Hill Capital Limited

Jonathan Evans

Tel: +44 (0)20 3463 5000 jonathan.evans@brandonhillcapital.com

First Equity Limited

Jason Robertson

Tel: +44 (0)20 7330 1883

jasonrobertson@firstequitylimited.com

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