Aspiring resources developer Black Rock Mining (ASX: BKT) has signed a maiden offtake agreement for natural flake graphite from its Mahenge mine in Tanzania with China’s Heilongjiang Bohao Graphite.
Signed via the company’s wholly-owned subsidiary Mahenge Resources, the three-year agreement will cover approximately 37.5% of the mine’s proposed steady-state annual production of 240,000 tonnes per annum when operations commence in late 2019.
It is believed to be the largest agreement of its kind signed by any developer by an order of magnitude.
Under the terms of the agreement, Black Rock Mining will supply Heilongjiang Bohao with 30,000t of natural graphite flake in the first year, 50,000t the following year and up to 90,000t in the final year.
Pricing for the offtake will be determined via a formal agreement to be signed within the next 12 months and will be set quarterly with reference to market price for flake size and concentrate grade.
All terms are subject to Black Rock Mining completing construction of the Mahenge mine and associated infrastructure, and commencement of operations.
Heilongjiang Bohao is one of the largest integrated graphite producers in China, mining its own graphite in Heilongjiang province and manufacturing a range of related products including graphite paper, expandable graphite and spherical graphite for export to the United States, Japan, Korea, Taiwan and the European Union.
Black Rock Mining said it plans to hold discussions with additional potential customers with a view to signing binding supply contracts for the balance of its annual production.
Moving closer to production
The Mahenge graphite project – spread across 324 square kilometres of exploration tenements in Tanzania’s Ulanga district – contains one of the world’s largest JORC-compliant flake graphite mineral resource estimates of 211.9 million tonnes at 7.8% total graphite content for 16.6mt of contained graphite, including a high grade proportion of 25mt at 8.6% total graphite content.
Black Rock Mining is moving closer to its target first production date of late 2019 with a view to delivering 250,000 tonnes per annum over a 31-year mine life.
Last month, the company signed a strategic co-operation agreement with China’s Yantai Jinyuan Mining Machinery to supply process plant machinery and related infrastructure for the mine’s construction phase.
Yantai also committed to working with Black Rock Mining to secure up to US$40 million in project finance from Chinese groups including the government import export credit agency.
The company has over 30 years’ experience in graphite process plants and has constructed multiple plants in China.
Its “Build Operate Transfer” delivery model aligns with Tanzania’s new mining code, and provides for training and skills transfer to Mahenge Resource’s Tanzanian operations team, who will assume management responsibility on completion of performance testing.
At midday, shares in Black Rock Mining were up 13.33% to $0.034.