Name of the Project
Mahenge Liandu graphite project.

Location
South-east Tanzania.

Project Owner/s
Aim-listed Armadale Capital.

Project Description
An updated definitive feasibility study (DFS) has reaffirmed Mahenge as a long-life low-cost graphite project.

The updated DFS envisages a staged ramp-up to facilitate near-term production, with 60 000 t/y graphite concentrate to be produced for the first three years (Stage 1) before increasing to a life-of-mine (LoM) average of 109 000 t/y (Stage 2).

The LoM has decreased from 17 years in the DFS to 15 years in the updated DFS using only 25% of the project’s resource, which remains open in multiple directions offering significant upside to the project.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The project’s net present value has increased from $358-million in the March 2020 DFS to $430-million in the June 2020 updated DFS. The internal rate of return has remained the same and the project has a 1.6-year payback after tax.

Capital Expenditure
Capital expenditure for Stage 1 has increased marginally from $38.6-million in the DFS to $39.7-million in the updated DFS.

Stage 2 is expected to be funded from cash flow.

Planned Start/End Date
The projected timeline to first production is expected to be about 10 to 12 months from the start of construction.

Latest Developments
Black Rock Mining has converted two existing Chinese pricing and volume agreements into binding termsheets for offtake at its Mahenge project.

The termsheets have been signed with existing offtake customers Taihe Soar Supply Chain Management and Qingdao Yujinxi New Material Company for the supply of large flake graphite concentrate.

Under the terms of the agreement, Taihe Soar will take 20 000 t/y of concentrate over a three-year term, with the option to extend the offtake agreement by a further two years. The offtaker will also have the option of taking a further 10 000 t of uncontracted concentrate.

New Materials will take 10 000 t/y over a three-year term, also with the option to extend the offtake period by a further two years. New Materials also has the option of taking an additional 5 000 t of uncontracted concentrate.

The conversion to binding status now confirms that the majority of large flake concentrate from Mahenge Module 1 is now allocated and provides for a higher level of contractual stability prior to starting a debt finance process. The remaining 23 000 t/y uncontracted tonnage is subject to a qualification process, which is under way.

Offtake and prepayment negotiations with Korean major POSCO for 100% of fines from Mahenge Module 1 are progressing. POSCO recently took a 15% stake in Black Rock Mining by investing A$7.5-million in the company.

Key Contracts, Suppliers and Consultants
None stated.

Contact Details for Project Information
Armadale Capital, tel +44 20 7236 1177 or email info@armadalecapitalplc.com.