PERTH (miningweekly.com) – Tanzanian graphite developer Black Rock Mining has inked a non-binding memorandum of understanding (MoU) with Korean major POSCO International Corporation over a potential long-term graphite fines offtake agreement from Module 2 of the Mahenge project.
The agreement envisages the long-term supply of fines graphite from planned production of Mahenge Module 2 in exchange for an additional investment in Black Rock of up to $40-million, or an equity stake of 19.99%, subject to approvals.
Black Rock said this week that negotiations were underway to secure a binding agreement.
The agreement builds on the strategic partnership between Black Rock and POSCO which is working towards developing the Mahenge graphite project to provide a significant new source of natural graphite into a highly dependent global market driven by clean energy demand.
Black Rock and POSCO have previously signed a binding offtake agreement covering all of the planned graphite fines from Module 1 of the Mahenge project, with the agreement including a $10-million pre-payment commitment which is linked to an industry pricing benchmark, with the funding to be used as part of the construction financing for the Mahenge project.
“We are extremely pleased to be further deepening our relationship with POSCO and we believe today’s announcement represents a strong endorsement of the promising future of the Mahenge graphite project,” said Black Rock CEO John de Vries.
“POSCO’s confirmed interest in Mahenge Module 2 also represents a major de-risking milestone for the company, providing increased confidence for all of our stakeholders as well as improved visibility on funding and our pathway to production.”
A recent independent review of the front-end engineering design and an updated definitive feasibility study (eDFS) for the Mahenge graphite project has increased the project’s costs from the $116-million considered in the 2019 definitive feasibility study to $182-million.
The eDFS has increased the estimated Phase 1 production from 83 000 t/y of graphite to 89 000 t/y, with the mine life remaining unchanged at 26 years. Steady-state production has increased from an expected 340 000 t/y of graphite to 347 000 t/y, with the all-in sustaining cost now estimated at $518/t, up from the $494/t estimated in 2019, with throughput rates increasing from 1-million tonnes a year to 1.15-million tonnes year.