PERTH (miningweekly.com) – ASX-listed Black Rock Mining has inked a non-binding memorandum of understanding (MoU) to secure grid power for the Mahenge graphite project, in Tanzania.

Black Rock on Monday announced the MoU with Tanzania Electricity Supply Company (Tanesco) to collaborate on the construction of a 229 kV transmission line to the Mahenge project, as well as local towns.

Black Rock CEO John de Vries told shareholders that grid power will provide Mahenge with a significant multiplier effect through low-cost sustainable power which should lock in the project’s position in the lowest quartile of the cost curve, low carbon which will differentiate Mahenge’s product in key consumer markets, and the provision of reliable power for the Ulanga and Mahenge areas, driving the win-win relationship developed under the government Framework Agreement and ratified by the Special Mining Licence.

“This MoU follows recent stakeholder discussions and presentations in Tanzania as part of a whole of government workshop forum which focused on collaboration to achieve key outcomes for the Mahenge graphite mine operation.

“Critically, as we navigate the debt and equity finance process, investors should look at this outcome and gain confidence that Black Rock and Faru are focused on our long-term plan to deliver a world-class, sustainable and responsible graphite project at Mahenge,” said De Vries.

Black Rock is exploring options to bring forward the construction of the power line to align with first production from Module 1. The company is currently in discussions with several parties to explore funding for the power line infrastructure project with Tanesco in parallel and separate to the Mahenge graphite project.

A recent independent review of the front-end engineering and design (FEED) 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 the 83 000 t/y of graphite to 89 000 t/y, with the mine life remaining unchanged at 26 years. Steady-state production have 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.

The project’s estimated net present value has declined from the $1.5-billion estimated in 2019 to $1.4-billion, while the expected post tax internal rate of return has declined from 45% to 36%.