Attempting to Develop "World-Class" African Graphite Project

• Black Rock Mining, a Tanzanian graphite developer, recently secured $25 million in funding to accelerate its development of a world-class graphite project, targeting the rapidly growing electric vehicle (EV) market.
• The company aims to play a significant role in both advancing Africa and decarbonizing the planet, capitalizing on the shift from graphite being primarily used in steel mills to its increasing demand in energy storage and EV batteries.
• The funding will enable Black Rock Mining to commence the early works program and move towards construction later in the year, with a modular approach that allows for scalable, efficient development.
• The company has pre-qualification contracts with various international partners, including one South Korean, one Japanese, and six Chinese companies, reinforcing China's dominance in the graphite industry.
• Black Rock Mining emphasizes its commitment to ESG (Environmental, Social, Governance) principles, including water reclamation and low strip ratio mining, and aims to start production by the end of next year.

John DeVries, CEO of Black Rock Mining, discusses his company's plans to develop a world-class graphite project in Tanzania as demand for graphite in electric vehicle batteries is set to surge.

Modular, Phased Development Mitigates Risk

DeVries explains how Black Rock is taking a modular, phased approach to developing its Mahenge graphite project, starting with a modest 1 million ton per year production module. This approach allows the company to minimize risk and quickly react to market signals by adding additional modules without having to requalify each new stage. The short 15-18 month construction period for each module also minimizes exposure to cost inflation.

Extensive Product Qualification De-Risks Market Access

Black Rock has undertaken an extensive 4-year qualification process, including producing 90 tons of concentrate for testing by 29 different groups. This has enabled the company to understand that its high-quality graphite performs better in lithium-ion batteries compared to many competitors. A key partnership with South Korean steelmaker Posco has also been secured, demonstrating market acceptance of Black Rock's product.

Strong Project Economics Underpinned by Conservative Pricing

Despite using conservative price assumptions based on Chinese pricing indices rather than higher Western prices, Black Rock's Mahenge project still delivers robust forecast economics. The initial module is projected to have operating costs of just $400/ton against basket prices above $1100/ton, generating an after-tax NPV10 of $1.5 billion. There is significant upside potential if higher Western prices can be achieved.

Realigned Interests with Tanzanian Government

After initially challenging negotiations, the Tanzanian government's 16% free carry interest means it now shares Black Rock's motivation to develop the project quickly and responsibly. The country's British-derived legal system provides relative certainty compared to other African jurisdictions. Black Rock aims to develop Mahenge as a net benefit for Tanzania.

ESG Integral to Project Design

Black Rock has designed Mahenge from the outset to meet high ESG standards, from running the mine off the grid with hydropower through to dry stacking tailings and minimizing competition for local water supplies. This provides multiple benefits and will help secure project financing. The short modular development timeline also minimizes the overall disruption.

Financing Milestone to Trigger Development

With A$25 million recently raised and Posco's offtake agreement being finalized, Black Rock is targeting debt financing arrangements to be secured in Q3/Q4 2022. This will enable the company to commence early works with the aim of commissioning production from the first module in 2023. Further modules can then be rapidly rolled out to scale production.

Strong Outlook for Natural Graphite Demand

Global graphite demand is forecast to expand significantly as electric vehicle adoption accelerates. While synthetic graphite currently dominates the EV battery anode market, Black Rock believes natural graphite's superior performance, lower processing intensity and ability to meet stricter ESG standards will drive a major resurgence. Its high-quality Mahenge product is well positioned to benefit.

Conclusion

With an exceptional asset, disciplined approach, advanced stage of development and looming supply deficit in natural graphite, Black Rock Mining appears primed to help deliver the graphite needed for the global energy transition in a responsibly sourced and sustainable manner. The company's imminent development timeline offers investors an attractive opportunity to capitalize on the coming boom in graphite demand.

While Black Rock Mining's Mahenge graphite project has several positive attributes, investors should exercise some caution given the complex and opaque nature of the graphite market. Although electric vehicle growth is expected to drive graphite demand, predicting future pricing and market dynamics is challenging. Additionally, in the current difficult equities market, financing risks remain for an undeveloped mining project. While Mahenge appears to have good long-term potential, investors should wait for further de-risking milestones and analyze graphite market dynamics before making any investment decisions. Exercising patience and caution could allow entering at a more favorable valuation once execution risks have been reduced.