ASX-listed in 2018 and headquartered in West Perth, Australia, metals & mining player, BlackEarth Minerals NL (ASX: BEM) is primarily focused on the development of its wholly owned graphite projects in Madagascar, namely Maniry and Ianapera.
Madagascar Projects’ Location (Source: Company’s Report)
The company is also engaged in early exploration activities on projects in Western Australia. Eyeing a deficit for natural graphite flake across the globe in 2023, the company has directed its focus towards assets rich in graphite, with the aim of delivering value to shareholders.
On 22 August 2019, the company announced to have secured commitments from investors for a placement, aimed at raising gross proceeds of approximately AUD 1.68 million before costs. Under the placement, the company would issue approximately 28 million new fully paid ordinary shares in BEM.
The shares would be issued at a price of AUD 0.06, with the price representing a discount of 15.5 per cent to AUD 0.07 per share, the company’s last closing price on 19 August 2019. Moreover, the price represents a discount of 14.5 per cent to the 10-day volume weighted average price (VWAP) of AUD 0.07 per share and 14.7 per cent to the 15-day VWAP of AUD 0.07 per share. Of the total shares to be issued, 3,008,333 new shares would be placed within BEM’s 15 per cent placement capacity under ASX Listing Rule 7.1, while the remaining 3,008,333 new shares would be placed within BEM’s placement facility that was granted approval as Resolution 2 during the shareholders’ meeting on 30 May 2019.
Peloton Capital Pty Ltd, which is acting as the lead manager for the placement, assisted the company in the successful completion of the bookbuild and securing investors’ commitments. Peloton would receive 4 million options, which are exercisable at AUD 0.08 and scheduled for expiry in three years after the date of issue under the company’s existing Listing Rule 7.1 capacity. The options’ issue is in consideration for services provided by Peloton, which would continue to serve BlackEarth Minerals as its corporate advisor.
Since the company is issuing new shares under the placement without disclosure under the Corporations Act, the placement does not require approval from shareholders. Moreover, all the newly issued shares would rank equally with the company’s existing fully paid ordinary shares. BEM expects to complete the placement on or about 28 August 2019.
BlackEarth Minerals plans to direct the proceeds from the placement towards fast tracking its graphite projects in the southern region of the African country, Madagascar. The company would use the funds majorly for bulk trial mining and export of ore to a pilot plant, pilot trial and activities related to a bankable feasibility study, in addition to fees for consultants and contractors. Additionally, the funds raised would be used for working capital purposes.
Meanwhile, BEM Managing Director Tom Revy thanked new as well as existing shareholders of the company for their continued support. Mr Revy stated that the company would use the funds to lay the platform for the next stages of project development, which is in accordance with its fast track development strategy.
Current Status of BEM’s Southern Madagascar Projects:
Maniry Project – With a life of 10 years, the Maniry project is anticipated to have an annual graphite production of 30,000 tonnes per annum under the first stage (initial one to three years) and 60,000 tonnes per annum under the second stage (fourth year onwards), according to the scoping study results.
Pilot Work at ALS (Source: Company Website)
Recently on 12 August 2019, the company announced encouraging results from the testing of concentrate from the Maniry graphite project, being consistent with specifications required by lithium-ion anode material manufacturers. In the testing, the spherical graphite manufacturing yields of up to 52 per cent were attained, compared with an industry average of 40%. Additionally, the test results received positive feedback from the producers of spherical graphite and manufacturers of anode materials in China. For a detailed look on the company’s progress towards the project, please read here.
Spheroidization Results (Source: Company’s Report)
These positive test results and expandable graphite test results announced to the market by the company on 4 June 2019 reinforced the project’s potential to produce quality graphite that the company intends to cater to the growing high value global graphite markets. BEM expects to complete a feasibility study into the project during 2020 and commence commissioning in 2021.
Ianapera Project – BEM’s second southern Madagascar based project, Ianapera, is located 75 km north of the Maniry graphite project and is within 10 km of the ‘world class’ Molo graphite deposit. According to the company, the Ianapera project has the potential to host a series of graphite deposits (large-scale).
In the month of March 2019, the company released results from the final assay from the trenching program at the project, unveiling an exploration target of 20 Mt to 34 Mt at 10 per cent to 20 per cent TGC. During the trenching program, which was concluded in the last month of 2018, the company excavated 29 trenches for 1,874.1 metres and collated 965 samples for analysis.
The company is reviewing an exploration program at the project, subject to available funds. It expects to undertake further exploration, including drilling during 2019/20.
Ampanihy Regional Geology and Graphite Projects (Source: Company’s Report)
The Company’s enterprise value at $5-6M appears to be significantly below its graphite peers at the same stage of development. BlackEarth, as “new kids on the block” in the graphite space, appear to have been overlooked in market value, and given what they have accomplished to date and the speed that they have delivered key milestones, have the potential to be re-rated on the short term.
Stock Information: With a market cap of AUD 5.4 million, the stock of BEM closed the day’s trade on 22 August 2019 at AUD 0.063. It has delivered returns of 10.94 per cent and 26.79 per cent in the last one month and three months, respectively.
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