As China moves to limit critical minerals exports including graphite, Blencowe announce the US DFC as DFS project funding partner alongside completion of key test work.
In my last blog, I explained why I believe that Blencowe will succeed in its development of its 100% owned Orom-Cross graphite project in Uganda and make it to production when 90% of other junior mining companies probably won’t. You can read that blog here as I provide some interesting rationale.
So far Blencowe are proving me right with three important pieces of news in short succession that shows this is a serious mining company in the making. Before I touch on these, lets just absorb some news out of China in the last week.
China limit exports of graphite
Last week China announced that it was going to limit exports of certain graphite products in the interests of ‘national security’.
China is the world’s largest graphite producer and exporter and refines 90% of the material used in EV batteries (the anode portion of the battery)
Graphite seems to be the latest critical battery mineral subject to such conditions and this must be a concern to the West given the Europe and US have both recently highlighted graphite amongst other minerals as critical.
Car makers themselves have been making noises that if necessary they’ll look to get involved in funding of new graphite projects to secure supply.
Essentially, the West specifically are going to need to look at alternative sources for securing graphite and there aren’t many options, in fact they’ll probably need to start looking closely at Africa which is probably why its no co-incidence that Blencowe have just announced the US Development Finance Corporation (DFC) as a funding partner for their DFS with the DFC having first right of refusal on the full project funding!
Whilst a number of junior mining companies on the AIM circuit have been putting out meaningless corporate updates to keep investors interested, Blencowe in contrast have been putting news out on major milestones that are progressively de-risking the project, lets summarise here…
Completion of Bulk Test work
Blencowe announced in early September that they had completed their 100 tonne bulk sample test-work programme and as hoped, it confirmed at a commercial scale, that a high-grade, low impurity concentrate (95-97% TGC) can be delivered from the Orom-Cross graphite project in Uganda.
This is an excellent result as the high quality of this concentrate then lends itself to more straight forwards refining but importantly demonstrates to potential off-takers the quality of the concentrate/product at scale. You can read more detail in the company press release here
Completion of SPG test Work
Following on from completion of the bulk sample test work proving up the quality of the Orom-Cross graphite concentrate, Blencowe have just announced successful completion of the SPG test-work.
What is this? This is where you take graphite concentrate and produce ‘Spheronised Purified Graphite’, the end product to go into the EV battery (anode).
Blencowe have again been meticulous here in how they’ve had the product tested by virtue of the fact they have had the product tested by two separate graphite technical experts (American Energy Technology and Wuhan University).
Results yielded SPG with purity values of 99.99% and 99.96wt%c respectively. These results prove that Orom-Cross graphite can upgrade into one of the purist SPG products, which will strengthen off-take negotiations, not to mention provide comfort to any project funding entities. On that subject…
DFC Grant Secured
As touched upon earlier in this blog, Blencowe announced in late September that they had been awarded a $5M grant from the US Development Finance Corporation (DFC). The grant was awarded to co-fund the DFS that Blencowe are completing, this is no desk-top DFS either, they are going for the ‘real gravy’ and this is something I have touched upon before, you NEED to prove your product (tick!). then you need to produce a DFS that stands up to scrutiny given graphite projects are notoriously hard to fund.
By the way, Blencowe’s Orom-Cross graphite project is the first pre-production graphite project to achieve DFC (US Govt.) funding support. If this isn’t a clear indicator of the potential, part of the funding agreement states that the DFC has a right of first refusal on commercial terms to arrange project financing for the Orom-Cross project, which may deliver Blencowe with a fully funded solution to bring Orom-Cross into production with support from a major financial institution.
Blencowe has already received their first $1M tranche of the $5M and remaining tranches will be un-locked on further DFS milestones of which I believe test-work results just reported will contribute too.
Crazy market, crazy valuations…
I’ll finish this blog by saying that in my opinion I think the current Market Capitalisation of £10M for Blencowe is absolutely nuts. The Management team must be scratching their heads thinking the same given the sheer pace of delivery this year and the significant de-risking milestones they have already delivered.
To my mind, the biggest piece of news was the funding partnership with the DFC, I mean you don’t get more Tier 1 than the US Government!
But the other thing here aside of the sheer size and scale of the project (not under the control of the Chinese who effectively control the graphite market, I’ll add), is the extent of the test work they have done and the results of that work for that matter.
I believe Blencowe are now in a position to secure binding off-take agreements if they wish although there is no rush for that on their part given graphite prices could be set for a big run up given the impending deficit and constrained supply, but I do bet there are plenty of potential off-takers sweating and in a rush to close off-take agreements 🙂
Look out for more news on DFS milestones and further tranches of the DFC grant to come, one thing for sure is Blencowe aren’t hanging around, the pace of delivery has been nothing short of phenominal and I believe all of a sudden the ‘Eureka’ moment will come where the market wakes up to the investment opportunity in Blencowe and the team.
I hold a position.
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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.