Name of the Project
Mahenge graphite project.

Location
South-east Tanzania.

Project Owner/s
Black Rock Mining.

Project Description
Mahenge will be an openpit mining operation based on mining the Ulanzi and Cascade deposits using a conventional truck-and-shovel method.

The deposit is the fourth-biggest Joint Ore Reserves Committee-compliant contained graphite resource in the world.

The project has a mineral resources estimate of 212-million tonnes grading 7.8% total graphitic carbon (TGC) for more than 16-million tonnes of contained graphite.

Total proven and probable reserves are estimated at 70-million tonnes grading 8.5% TGC.

In July 2019, Black Rock released an enhanced definitive feasibility study (DFS) on the project.

Ore will now will be processed using a four-module approach over 26 years, a decrease of the life-of-mine (LoM) of 32 years estimated in the DFS. Total LoM production has increased from 6.6-million tonnes in the DFS to 7.4-million tonnes in the enhanced DFS.

Mining will be undertaken using conventional opencut techniques.

Processing will be undertaken using well-proven crushing, grinding and flotation methods, comprising:

Module 1, which will include a processing plant and infrastructure at a nominal design basis rate of one-million tonnes a year to produce up to 83 000 t/y of graphite concentrate in the first two years of production. The plant will be based at the Ulanzi pit.

Module 2, which will include a second one-million-tonne-a-year plant and associated additional infrastructure, doubling throughput to two-million tonnes a year, and graphite concentrate production to 167 000 t/y from Year 3 of operation. Module 2 includes some shared equipment with Module 1. The plant will be based at the Ulanzi pit.

Module 3, which will include a third one-million-tonne-a-year plant and associated additional infrastructure, increasing throughput to three-million tonnes a year, and graphite concentrate production of up to 250 000 t/y from Year 3 of operation.

Module 4, which will produce an additional 85 000 t/y of graphite concentrate, increasing total steady-state production to between 340 000 t/y to 350 000 t/y of graphite concentrate.

The additional mill feed in the enhanced DFS will be sourced by developing a third pit at the Epanko deposit.

Epanko ore is exclusively incorporated into Module 4, with production starting in Year 7 of the compressed schedule.

Epanko will contribute 9.9-million tonnes at 6.7% TGC for an additional 660 000 t of concentrate

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The projected after-tax net present value of the project has increased by 30%, from $895-million in the DFS to $1.16-billion in the updated DFS, with the internal rate of return having increased from 42.8% to an estimated 44.8%.

Capital Expenditure
Total capital expenditure for all four modules is estimated at $337-million.

Module 1 capital costs have increased from the $115-million estimated in the original DFS to $116-million in the updated DFS.

Module 2 capital costs are estimated at $69.5-million.

Module 3’s capital costs have increased marginally from $84.2-million in the DFS to $85.3-million in the enhanced DFS.

Module 4 will cost $67.1-million.

The $222-million required for modules 2, 3 and 4 will be funded from in-house cash flow.

Planned Start/End Date
First production from Mahenge has been targeted for between 2020 and 2021, with the timing of the first production subject to finance.

The enhanced DFS has noted that the development schedule, subject to financing and confirmation of the Tanzania government’s 16% free carried interest, will consider four production modules, one a year after the first module, rather than every two years as indicated in the DFS.

Latest Developments
POSCO has completed its final in-house approval process for a $7.5-million investment in Black Rock Mining.

The two companies struck an agreement in December last year under which POSCO would acquire a 15% interest in Black Rock Mining.

Under the terms of the agreement, Black Rock will issue more than 126-million shares, at an issue price of 8.2c each, representing a 23% premium to the company’s 30-day volume weighted average share price.

The companies said at the time that they would negotiate an offtake and prepayment agreement, under which POSCO would acquire between 20 000 t/y and 40 000 t/y of graphite over the life-of-mine production from the Module 1 plant to be built at the Mahenge project, in Tanzania.

The terms of the purchase will be negotiated as part of the offtake and prepayment agreement.

In addition, POSCO has also indicated its preparedness to provide between $10-million and $20-million as a prepayment facility, which can be used to fund the Mahenge project.

Black Rock has said that positive discussions with POSCO are ongoing with regard to the offtake agreement, including the prepayment facility.

POSCO’s investment in Black Rock is still subject to several conditions, including Foreign Investment Review Board and Tanzanian government approvals.

Key Contracts, Suppliers and Consultants
None stated.

Contact Details for Project Information
Black Rock Mining, tel +61 8 9320 7550 or email info@blackrockmining.com.au.