Black Rock Mining completes resettlement action plan process for Mahenge graphite project

Black Rock Mining (ASX: BKT) announced it has completed the resettlement action plan (RAP) process for its Mahenge graphite project in Tanzania, a typically mandated condition precedent for debt funding and mining licences.

The company today confirmed its Tanzanian based consultant has finalised field activities for the process, which is expected to facilitate continued progress on financing the project.

The news follows Black Rock’s announcement at the start of the month that it is about to start negotiations relating to the Tanzanian government’s 16% free carried interest in the project.

RAP is a process used to assess land and property values and to support the relocation of people and properties.

Resettlement for Mahenge includes areas associated with the Mdindo, Kisewe, Nawenge and Makanga villages of Tanzania.

Field activities were undertaken by surveyors, valuers, sociologists, data entry and geographic information systems experts and included 148 meetings held with the Mahenge community since December 2019.

Black Rock said at the completion of RAP field activities, it recorded a 98% acceptance rate. The remaining parcels with appeals have been recorded and will complete a resolution process according to International Finance Corporation standards and Tanzanian government legislation.

“Being able to secure a 98% acceptance rate and having 99% of participants willing to voluntarily relocate before arbitration, should be considered as community validation of our project’s social licence to operate,” Black Rock managing director and chief executive officer John de Vries said.

“A successful RAP further differentiates Mahenge’s brand of clean and green graphite, to now include socially responsible graphite,” he added.

Mr de Vries attributed the high acceptance rate to the “thoroughness and diligence” of the company’s management team and consultants.

Relocation and compensation

As part of project development activities, Black Rock said it will need to acquire some land currently used for subsistence agriculture and relocate some village accommodation close to mining operations.

According to the company, all affected people will be compensated “where appropriate” and moved to “better quality properties with vastly improved amenities”.

All farming landowners will be compensated with cash, permitting them to buy and establish new farms or land of their choosing, Black Rock stated.

Once the data has been validated and disclosure conducted, the company said a finalised valuation report for expected compensation will be submitted to Tanzania’s chief government valuer’s office for approval before payment is made.

Enhanced definitive feasibility study

Black Rock said the offered compensation is consistent with the projected capital cost estimated in the project’s enhanced definitive feasibility study, which was completed in July 2019.

When fully implemented over four planned modules, the study envisages the project will create at least 970 full-time jobs for Tanzanian citizens and will contribute an estimated US$3.6 billion (A$5.49 billion) to the nation’s economy over Mahenge’s 26-year project life – or the equivalent of US$380,000 (A$580,000 ) per day.

The project is also expected to deliver new opportunities for Tanzanian businesses including ports, rail and power supply.

Free carried interest negotiations

Black Rock said it looks forward to starting formal free carried interest negotiations with the government, at which point it will be in a position to progress its debt negotiations, which will “ultimately be one of the sources of funding for compensation”.

The Mahenge graphite project is estimated to contain a JORC-compliant resource of 212 million tonnes at 7.8% total graphitic carbon content (TGC) and ore reserves of 70Mt at 8.5% TGC.

Black Rock was granted a mining licence on the project in February 2019 and has allocated planned production with up to 255,000tpa of graphite committed to sale by the third year of production, through pricing framework agreements.