Based in West Perth, BlackEarth Minerals NL (ASX: BEM) is a graphite explorer and developer focused on fast-tracking its Maniry Graphite Project, located in the southern region of Madagascar. The company is targeting to produce high value, high demand, coarse flake product, backed by a positive outlook for large flake high quality graphite for the upcoming 10-15 years.
So far, with respect to the flagship project, the company has achieved significant milestones. The current project study results have highlighted the Maniry project in southern Madagascan project as “a robust and financially attractive graphite project by international standards.”
Let us have a look at the seven factors that are supporting the company towards mining success.
- Geopolitics - Madagascar is an African country, with a history of more than 100 years of graphite mining and global exports. The country has the presence of unique and incredibly profitable graphite reserves, and is a pro-mining jurisdiction with the presence of resource majors, including Total and Rio Tinto, attractive fiscal regime with a robust growth outlook (corporate tax rate of 20% and mining royalty of 2%).
As per Company reports, major economies such as the US, China and India continue to increase their imports of natural graphite from Madagascar. Over the past 18 months (as on September 2019) the shipment of flake graphite to China from Madagascar increased by over 12% per month and the exports continues to increase. Over a similar time period, the exports to India have grown by 4% per month. The US has also significantly increased the import of graphite from Madagascar, which is now its 5th largest supplier of natural graphite.
- Product - Graphite is one of the most crucial components in batteries for electric and hybrid electric vehicles, energy storage, expandables, refractories and other applications. BlackEarth Minerals’ strategy revolves around flake graphite, which is a type of commercially available natural graphite and is anticipated to be in a deficit by 2023 at a global level.
Over the next four-year period, demand for graphite is projected to register a growth of over 200 per cent, as per data released by Benchmark Mineral Intelligence. The demand will be driven by the use of graphite as anode material in Li-ion batteries.
- Presence of a high distribution ratio of large flakes in graphite ore owned by BlackEarth Minerals NL, confirmed by the Beijing General Research Institute for Mining and Metallurgy (BGRIMM);
- Yields of 52% achieved with the testing on concentrate from the Maniry Graphite Project (industry average of spherical graphite production yields is 40%);
- Positive feedback from spherical graphite producers and anode material manufacturers in China related to the test results of Maniry ore concentrate.
- Resource, Mining and Process –
Resource – The Maniry Graphite Project includes the Razafy Resource. According to a company announcement in August 2018, the Razafy graphite deposit, which is predominantly located in the mining lease, is estimated to have an Indicated and Inferred Resource of 11.2Mt at the rate of 7.10 per cent total graphitic carbon (maiden JORC compliant mineral resource estimation).
Mining – The company is targeting an open pit low strip ratio contract mining, using a simple processing method.
- Soft to medium ore hardness
- Dilution factored into ore feed grade / financial model
- Ore / waste contact well defined
- Waste: Ore Ratio = 0.5:1 (Years 1-3) 0.9:1 (LOM)
- Simple mine plan focused on early high grade and low waste movement to maximise financial return and
- Contract mining assumed – available low-cost groups in Madagascar.
- Infrastructure - Maniry Graphite Project has access to robust infrastructure.
- Numerous wells in the immediate area contain water suitable for processing ore and a closed quarry containing significant water.
- Nearby port for shipping, Port d’Ehoala, has a secure container storage area and a 15-metre draft capable of berthing up to Panamax sized cargo vessels.
- To meet power needs, the company plans to use diesel fired generators, with diesel potentially sourced from either Ampanihy (30 kilometres) or from the ports of either Toliara or d’Ehoala (Fort Dauphin).
- Land Tenure – The majority of the current resource sits on a 40-year granted mining lease, PE/5394, which is scheduled to expire on 19 November 2042; however, the company also holds an option to extend the lease tenure. Consequently, the Maniry project has a Life of Mine of greater than eight years, just on resources located on its granted mining licences and more than twenty years for total resources at the project.
BlackEarth Minerals plans to convert its remaining exploration licences to mining licences in FY2020.
- People - BEM is led by a team of highly experienced management and board members, holding broad expertise in areas including finance, mineral exploration, project acquisition, development and operation. Each of the members hold experience of at least 20 years in the resources sector, handling project management and commercial operations in Australia, Africa and other regions.
- Financial Return – The below figure highlights the results from a scoping study into the project.
Feasibility study of the Maniry Graphite Project is planned in 2020, while the company is expecting project commissioning in 2021.
The stock of BEM was trading at $ 0.055 on 11 November 2019 (AEST: 1:09PM), with a market cap of $ 6.2 million. The company has approx. 113 million outstanding shares.
Considering the company’s position so far with respect to each of the abovementioned factors, it can be assumed that BlackEarth Minerals is on track to achieve success and benefit from expected higher graphite prices.
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