Black Rock Mining Limited (Black Rock) is an ASX-listed graphite exploration and development company (ASX:BKT). Black Rock is focused on developing the 100%-owned Mahenge Graphite Project (MGP), situated in the East African country of Tanzania.
The project site is located 450 km by road from Tanzania’s largest port, Dar es Salaam and is contained within 520 km2 of exploration tenements in the Ulanga district. The Mahenge deposit is the fourth largest (JORC compliant) contained graphite resource in the world.
The project development area will be around the Ulanzi and Cascade deposits, which provide a nominal mine life of more than 32 years. Black Rock has recently further optimised the mine plan to significantly reduce the mining footprint by adopting processes to dewater mine waste, thereby avoiding the need for large areas of tailings facilities.
Black Rock has completed a feasibility study (FS) on the Mahenge Project and is moving towards securing project financing and progressing into construction and operations with first production targeted in 2020.
The financial analysis indicates a net present value (NPV) @10% (post tax, ungeared after 16% free carry) of US$895M for the base case production profile and price assumptions, which provide for an internal rate of return (IRR) of 46.9% (post tax, real). A maximum cash draw of US$120.5M is incurred 18 months after the commencement of construction.
The financial analysis indicates the project is financially viable and results in strong financial returns. With a short payback period of 3.1 years from first ore processed, the project has relatively low exposure to the key risk factor of long term commodity prices, mitigating exposure to the financial risk associated with the project’s capital funding requirements. The strong financial returns under the base case assumptions provide a positive risk versus reward assessment.