Blencowe confirm larger-scale high quality metallurgical test work with funding partner in sight

Blencowe announced last week completion of metallurgical test work at a 10x scale to previous test work which pathes the way for the bulk sampling test work programme in H1 2023. In addition, the company have signalled a potential funding partner near-term.

Blencowe are rapidly progressing the development of their 100% owned Orom Cross graphite project in Uganda with first production targeted for 2025, just as the graphite deficit is expected to bite driven by the huge increase in demand from but not limited to the EV battery sector.

The company this year have delivered a number of key de-risking milestones including a formal JORC Resource of 24.5m tonnes @ 6% TGC (just 2% of overall est. resource) and delivery of a robust PFS which exhibited strong economics including a US$482M NPV, 49% IRR at a US$62M Capex.

The company already hold a 21 year mining lease with full environmental and other approvals in place.

You can read my full research note on Blencowe here

2023 promises to be another busy year for the company as the bulk sampling testing programme kicks off in H1 at a pilot plant in China whilst in parallel Blencowe look to secure a strategic funding partner and progress the DFS.

Metallurgical Test Work

The company have just announced completion of a larger scale metallurgical test work programme on a composite mix from the Orom Cross project. The test work is roughly 10x the scale of previous test work and has again proven a high-grade, low impurity concentrate validating the product and initial flow-sheet design to be incorporated in the DFS.

The purpose of the larger-scale test work programme was ultimately to confirm that a larger sample meets the 95-98% TGC in the concentrate with low impurities and ~90% recoveries.

The objectives of the programme were met and in some cases exceeded and now importantly pathe the way to export the product to a Chinese pilot plant where a bulk sampling programme will be completed. This is subject to obtaining an export license from the Uganda government which is currently in progress.

As per recent RNS, A Chinese testing partner is already lined-up whereby they will take 100 tonnes of raw material for bulk testing. This will produce 6 tonnes of 96% concentrate that can then go into SPG and Expandable testing to up-scale the concentrate to 99.9% purity.

The resultant product will then go to various OEM’s and is expected to result in full binding off-take contracts (subject to successful bulk testing of course).

You can read more on the metallurgical test work in the RNS here

Funding Partner

In parallel, the company have been progressing talks with potential funding partners and CEO Mike Ralston has indicated that news on this may not be far way. The company are looking for a strategic partner that will not only help fund the DFS but most likely be pivotal in bringing the project into production. This of course may come at project-level investment (purely speculative on my part) but will negate the need for further costly and dilutive funding rounds, something many junior mining companies struggle with.

I like the approach Blencowe are taking here which is putting an emphasis at this stage on validating the product and importantly now at scale which will dramatically in my view improve any terms around a funding solution.

We’ll have to see what a funding partner entails, there are various options, equity/project/royalty or a combination of all those but with the impressive economics given in the PFS, if a project-level investment ultimately comes, Blencowe retaining a significant portion of the project and with potential free carry could see a major re-rate for early investors at todays sub £10m Market Cap!

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Research materials prepared based upon my own analysis and research. Accuracy cannot be guaranteed and research notes should not be taken as investment advice. Please always do your own research.


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