Black Rock Mining Ltd Banking On Graphite Demand

Black Rock Mining Limited (ASX: BKT) came up with its quarterly activities report for the quarter ended on September 30, 2018, and the same were released on October 31, 2018.

The company’s Definitive feasibility test on Mahenge Graphite project in Tanzania, showed lowest peak capital per annual tonne of product, with highest purity flake graphite from the conventional flotation circuit processing and lowest cost to customers was noticed giving access to rail and major east African port from rail. The feasibility study was supported by its pilot plant. The plan has delivered approximately 8k tonnes of graphite concentrate from 90k tonnes of ore.

The company has bagged a binding offtake agreement from one of the largest vertically integrated graphite producers in China, Heilongjiang Bohao Graphite. The binding agreement includes 30 k tonnes in year one, 50k tonnes in the second year and up to 90k tonnes in the third year which will support the construction of the project.Â

The company will conduct detailed engineering after DFS and aims to commence the construction work from mid 2019 with its initial production is slated to be in the year 2020.

BKT in September got into a strategic cooperation agreement with Yantai Jinyuan Mining Machinery Limited; and both planned to work on the required plant and machinery processes and infrastructure in relation to Mahenge Graphite mine.

The key strength of the 100% owned subsidiary of the company, Mahenge Resources Limited is that approximately 30% of the product will contribute to the battery market. This clearly indicates that company has well established battery market to tap before the battery market takes off. The company has well established demand from the present markets and has huge potential to tap on the battery segment once the battery market shows growth path.

100% owned subsidiary of the company, Mahenge Resources Limited can produce large, pure graphite flakes. Its location delivers the best concentrated graphite on the market, and provides lowest cost to the customers in East Africa. Graphite demand is expected to double over the next decade largely driven by the growing demand for batteries for electric vehicle segments and stationary storages.

Looking at the bigger picture, the US has to import most part of its supplies. According to the recent reports published by the US geological Survey, approximately 95 US companies have recorded a consumption of around 24000 tons of natural graphite worth $US43 million and imported around 50,000 tons of graphite. Environmental issues arising from graphite production has raised concern for China and US manufacturers, facing supply shortages.

As per the recent market forecast, demand for the graphite from battery makers is expected to grow by 25% each year to 2028. Specialty applications such as fire retardant has huge demand for graphite.

Growing demand of graphite from the battery market and other specialty applications will certainly help Black Rock with its production schedule in line to tap the growing demand. At the current juncture, BKT traded at the levels of $0.031 and is expected to swing high with its huge potential to grow.


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