Blencowe announced last week the award of an export license for its Orom Cross graphite project in Uganda that allows it to send bulk samples to China for final metallurgical testing, pathing the way to binding off-takes.
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 last year 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
Export License Award
Blencowe announced last week that they had received full approval from the Ugandan Ministry of Energy and Mineral Development to export graphite concentrate from the Orom Cross graphite project for bulk sample metallurgical testing. This is a key input to the DFS and on completion of successful testing should pathe the way to securing binding off-take agreements.
The grant of the export permit is a ‘landmark’ decision given the Government do not normally allow the export of unprocessed raw materials and shows the continued support from and recognition of the importance of Orom Cross, by the Ugandan Government.
Final Metallurgical Testing
With the export permit granted, Blencowe can now commence the final metallurgical testing, as announced today.
The bulk sample test programme will be performed predominantly in China with additional testing planned in the USA (Additional 5kgs of concentrate sent to a leading US graphite technical firm, American Energy Technologies Co, for SPG and expandables testing and to confirm Orom-Cross concentrate further upgrades efficiently to a >99.95% battery grade product).
The Chinese test programme is essentially a two-fold process whereby a final 100 tonnes of raw material will be processed by strategic partner Jilin Huiyang New Material Technology Company (“Jilin”) at their pilot processing facility resulting in what is expected to be 6 tonnes of high quality concentrate.
This sample will be 600 times the size of previous test work completed in Perth as covered in my recent blog Blencowe confirm larger-scale high quality metallurgical test work with funding partner in sight and should confirm a high quality concentrate can be delivered in bulk, a pre-cursor to securing binding off-takes.
Ahead of the large scale bulk testing which should start near-term as the material is being mined, Blencowe has already sent 20kgs of concentrate (an output of the IMO Perth test programme) to the Wuhan University of Technology (WUT) for initial testing.
WUT work closely with Jilin and specialises in testing final concentrate products and defining their characteristics, in order to fine tune processing options and assess upgradability for use in batteries and other high value end applications.
Blencowe will also send 150kgs of raw material to Jilin by air-freight as a precursor to the main bulk sample.
As mentioned before, the final metallurgical test programme is a key input to the DFS. The Blencowe board realised at an early stage that to secure binding off-take agreements and of course strategic financing, they will need to ‘prove up’ their product at scale and in my view this sets them apart from other juniors in the space who have not yet embarked upon product testing at scale.
Blencowe have a clear plan that they are executing and in the correct order which should culminate in a robust DFS and pathe the way to first production in 2025.
Alongside the final test programme the company have indicated they are potentially close to securing a financing partner that could co-fund/fund the complete DFS and possibly be involved in the end project financing.
At just £10M cap Blencowe remains one of the most undervalued graphite developers in my opinion yet they are showing continued progress and a robust plan with many value drivers expected in 2023. Company broker First Equity agree having raise their share price target to 64p, a significant up-lift from the current share price of 5p!
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Disclaimer
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.
