Graphite and Graphene Notifications from Australia- BKT and FGR

Australia is a blessed country when it comes to resources. The lucky country has a hoard of metals and minerals under its soil, which not only attract foreign interventions but also boosts the country’s income and employment. Two power constituents of the sphere under discussion today are graphite and graphene.

Graphene is one atomic layer of graphite and is rightly referred to as a ‘wonder metal’. It has been doing discussion rounds, of late given its usage in powering electric cars. Graphite is composed of numerous layers of graphene and has a wide range of applications like creating lead for pencils, steel and glass making, iron processing and lithium-ion batteries, to name a few.

In this article, we would look at the businesses, recent updates and stock performances of the 2 ASX-listed companies, Black Rock Mining (ASX: BKT) and First Graphene Limited (ASX: FGR):

Black Rock Mining (ASX: BKT)

Company Profile: A metals and mining exploration company focussed on Tanzanian Graphite Projects, BKT has an IRR of 42.8 per cent and all-in operating cost of $400/t for a product that sells for approximately $1300/t. The company has a 100 per cent interest in the Mahenge Project.

Completion of trial exceeding Chinese Industry Benchmark yields: On 12 August 2019, the company pleasingly stated that it had concluded a large-scale spheronising and purification trial which used 400kg of sub 80 mesh concentrate generated during the March 2019 Pilot Plant run (as announced in April). The results have been magnificent, with a yield to final product being 48 per cent and 53 per cent, while the final purity being 99.98 per cent TGC, using commercial scale equipment in commercial processing and in dedicated research facilities. Chinese Industry Benchmark yields (35-45 per cent and 99.95 per cent purity) have been exceeded, using standard equipment and techniques.

Airflow turbine crushing and shaping system (Source: BKT’s Report)

The SPG produced in the trial, which is larger than BKT’s prior lab experiments, is presently undergoing further testing. Commenting on the results, CEO, John de Vries stated that the company had two objectives while at work- to ensure that the flow sheet developed for the Mahenge concentrator preserves the integrity of the flake and to demonstrate that offtake partners could achieve great performances using BKT’s flake in their existing facilities. Post the results, the company would finalise its financing discussions and document the shareholder agreement with the Tanzanian Government.

June 2019 Quarterly activities report: On 30 July 2019, BKT notified that its Mahenge Project was ranked in Top 5 Development Projects Globally by Mining Journal. During the quarter, BKT secured an additional two new offtake customers for the project- Qingdao Yujinxi New Energy Materials and Yantai Jinyuan Mining Machinery Co Ltd. The company has a second largest JORC Mineral Reserve globally with 69.6 Mt at 8.5% TGC, with 6 Mt of contained graphite. BKT appointed Ironstone Capital as its specialist Financial Advisor for the project.

The Phase 1 of Mahenge is likely to charge US$115 million. The next two stages are believed to be funded via Stage 1 cash flows. The company is active on the CSR front and partnered with a local community in Ulanga District to aid school children.

The cash flow statement of the company for the quarter ended 30 June 2019 is outlined below:

Particulars Amount (A$’000)
Net cash used in operating activities 1,688
Net cash from investing activities 8
Cash and cash equivalents at end of period 1,857
Estimated cash outflows for next quarter 1,287


Stock Performance: On 13 August 2019, the BKT stock was at A$0.080, trading flat (at AEST 12:24 PM), with a market capitalisation of A$46.84 million and ~585.55 million outstanding shares. The six-month return and YTD return of the stock is 11.11 per cent and 105.13 per cent, respectively.

First Graphene Limited (ASX: FGR)

Company Profile: A lead supplier of graphene products, FGR has a strong production base of high-purity raw materials and a graphene production capacity worth 100 tonne per annum. The primary production base is in Henderson, WA. FGR in the UK was incorporated as the First Graphene (UK) Ltd. It is also a Tier 1 partner at the GEIC.

Completion of option exercise program: On 12 August 2019, the company notified that the option exercise program had concluded, with exercise of options raising $5.6 million, since the commencement in April 2019. The exercise price increased to $0.20 per Option if exercised after 8 August 2019 but on or before 8 August 2020, and $0.25 per Option, if exercised after 8 August 2020 but on or before 8 August 2021.

The company has a robust working capital position, which would raise production efficiencies, market development and novel graphene applications and enhance supply capabilities, for the PureGRAPH® products.

June Quarterly Activities Review: Released on 29 July 2019, the June quarter was successful for FGR, with the grant of NICAS approval for PureGRAPH® in Australia. The fire retardancy test results conducted in the quarter depicted that PureGRAPH® improves polyurethane safety. The placement and early option exercise raised $4.8 million, with additional exercise funds of $1.32 million coming in since the close of the quarter.

The cash flow statement of the company for the quarter ended 30 June 2019 is outlined below:

Particulars Amount (A$’000)
Net cash used in operating activities 1,692
Net cash used in investing activities 397
Net cash from financing activities 3,998
Cash and cash equivalents at end of period 3,727
Estimated cash outflows for next quarter 1,130

Stock Performance: On 12 August 2019, the FGR stock was trading flat at A$0.0235, with a market capitalisation of A$111.52 million and ~474.56 million outstanding shares. The six-month return and YTD return of the stock is 62.07 per cent and 42.42 per cent, respectively.

With the progress been made in the last few weeks with these graphite and graphene companies, it would be interesting to watch the way in which the Australian economy would possibly benefit from the performance of these sectors in the days to come, and would these companies continue to attract investors – both domestic and foreign.   


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