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The statement, from CEO John de Vries, comes as the ASX-listed developer finalised a binding offtake agreement with South Korean conglomerate POSCO that includes a US$10 million prepayment to top up Black Rock's accounts as it seeks to finalise its development finance and commence construction.
Market entry finalised
De Vries said a major component of Black Rock's market entry strategy was now in place.
"The binding agreements with POSCO provide critical customer validation that we have a commercial and high value graphite product that will be sold as a qualified product into consumer markets under a long term contracted offtake," he said.
POSCO is Black Rock's largest shareholder with 13%.
The binding deal is for 100% of the fines to be produced from Mahenge's initial module, with a minimum 20,000tpa, and assuming annual production of 30,000tpa.
Pricing will be based on industry benchmarks.
The pair last week expanded their original 2021 graphite offtake agreement with a memorandum of understanding for delivery of 600 tonnes per annum of large natural flake graphite concentrate from stage one.
Black Rock is looking to secure debt financing with credit-approved term sheets next quarter, although it is also considering other options, including bringing in a partner at the project level given inbound interest from battery and equipment makers, private equity and sovereign wealth funds.
Lowest quartile producer
A review of its definitive feasibility study last October confirmed Mahenge as a low-cost, tier-one production opportunity, although inflation has hit the capital costs with an increase to $182 million capital cost for the 1.15Mtpa module one that will produce 89,000tpa of graphite concentrate.
Construction is expected to take around two years.
A second module, which could be developed in tandem with stage one, would cost $107 million and would be largely funded by US-based Urbix.
Mahenge is ultimately designed as a four-module operation processing 4Mtpa of open pit ore to produce 347,000tpa at steady state.
The studies show it should have average C1 cash costs over the first decade of $466/t, some of the lowest globally. Consensus pricing of $1709/t gives good margins.
Black Rock owns 84% of the project, carrying Tanzania's government's 16% share.
The company started the quarter with around A$7.6 million cash.
Black Rock shares, which have traded at A10c-22c over the past year were last traded at 11.5c, valuing the company at $113 million.
