Blencowe Resources (BRES) has released details of its recently completed definitive feasibility study for the 100%-owned Orom-Cross graphite project in Uganda.
The DFS envisages an initial 15 year life of mine for the project, even allowing that only around 2% of the total deposit has been drilled.
It sets the net present value at over US$1bn, using a 10% discount, and shows the internal rate of return as likely to be higher than 95%.
Free cash flow will be more than US$2 billion over the initial 15 years of mine life.
Average annual earnings will be in the order of US$230 million.
The plan now is to initiate phase one, fast-track, small scale production for the second half of 2027, and producing at a rate of up to 20,000 tonnes per year of concentrate. This phase is designed to be profitable from the get-go.
The plan also envisages an in-country beneficiation facility to produce purified graphite.
In the second phase of production, Blencowe then plans to expand output to up to 70,000 tpa of concentrate and to build a 20,000 tpa USPG 9 uncoated spheronised purified graphite) facility nearby.
And looking to the longer-term, production could eventually move to 175,000 tpa concentrates and 80,000 tpa purified products.
Intriguingly for a project that has delivered such big numbers in terms of production and cash flow, the capex is fairly modest, at US$40 million for phase one, to take output to 20,000 tpa of concentrate. A bigger outlay is required to take the project into the second phase, of course, after which it will be entirely self-funding.
Non-binding offtake agreements already cover phase one production, and Blencowe has been carefully building high-level relationships with a number of big players in the industry. Existing agreements will transition to binding status post-financing. Blencowe expects further offtake interest following DFS all the way to first production, particularly given the growing mix of Western and Asian end-users including tier-one groups such as NASA, US DoW, and the EU SAFELOOP initiative, all currently testing Orom-Cross products.
Key technical relationships with AET, TaiDa Graphite, ADT and others remain in place, while Orom-Cross’s Minerals Security Partnership accreditation continues to enhance funding and offtake visibility.
“Achieving such strong NPV and IRR metrics from a relatively low capital base is a world-class outcome,” said Cameron Pearce, Blencowe’s executive chairman.
“It is rare to see a project with such consistent strength across all fundamentals, and these have combined to deliver the tremendous results as highlighted above. This study marks a transformational moment for Blencowe. The DFS confirms Orom-Cross as a tier one graphite project and we now move our focus onto the financing process and then first production as our next major goals. With the project now considerably de-risked, graphite markets improving and a clear plan to leverage our unique position, we believe Blencowe is exceptionally well placed for a significant re-rating as investors realise the scale of the opportunity ahead.”
View from Vox
The DFS showcases Orom-Cross as a world class, tier one graphite project, delivering strong margins from a low capital base, and incorporating a downstream beneficiation facility to produce uncoated spheronised purified graphite product in-country. The timetable now set in place puts first production at less than two years away, but first there is the small matter of raising the construction finance. Chief executive Mike Ralston has a full schedule during London Mining Week, which starts today, and no doubt several conversations at a very high level will be taking place. This is a great result for Blencowe, but there’s still more work to be done.