REG - Blencowe Resources - MoU signed for Graphite Beneficiation in Uganda

Blencowe ResourcesAnnouncement

05/09/2024 07:00

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RNS Number : 9396C  Blencowe Resources PLC  05 September 2024

Date: 5 Sept 2024

                           Blencowe Resources Plc

                              ("Blencowe" or the "Company")

 

 MOU Signed to Pioneer Graphite Beneficiation in Uganda

Strategic Initiative to Drive Increased Commercial Returns at Orom-Cross

 

Blencowe Resources (LSE: BRES.L) has signed a Memorandum of Understanding
("MOU") with Singaporean graphite sales and marketing specialist Triessence
Limited ("Triessence") and a leading Asian SPG and Anode material producer
("SPG Partner"). This partnership aims to establish Joint Venture (JV) for a
graphite beneficiation facility in Uganda producing 99.95% purified graphite
for lithium-ion batteries. This venture will set Blencowe apart from
competitors focused solely on producing graphite concentrate and provides a
life-of-mine offtake partner near the Orom-Cross Project, offering significant
additional commercial advantages.

With this JV, Blencowe's has strategically aligned with two highly experienced
Asian graphite specialists to ensure successful delivery.

Highlights:

·      JV Formation: Blencowe and Triessence will each hold a 50% stake
in in the SPG facility, with the SPG Partner providing operational expertise.
Blencowe retains 100% ownership of Orom-Cross.

·      Value Addition: Upgrading 96% graphite concentrate to high-value
battery ready 99.95% uncoated SPG significantly enhances commercial returns
compared to selling concentrate.

·      Risk Mitigation: Partnering with graphite industry experts
mitigates operational risk.

·      Capital Investment:  Triessence will fund 50% of capital costs
for the SPG facility.

·      SPG Offtake Secured: Triessence will purchase all end product,
ensuring consistent revenue and premium pricing for some of the first 99.95%
SPG produced ex-China.

·      Non-China Focus: SPG product ultimately to be sold to OEMs
outside China via Triessence, providing strong political, commercial and
funding advantages.

·      Next steps:  Definitive Feasibility Study (DFS) for the SPG
facility will be integrated with Orom-Cross DFS for a comprehensive
development strategy.

 

Executive Chairman Cameron Pearce commented:

"Blencowe has long recognised the substantial advantages downstream upgrading
of graphite in-country can offer and securing experienced partners who have
the expertise to help us deliver successful SPG production was essential.  I
am delighted to say that this MOU is another significant milestone in
enhancing both the value and distinctiveness for our Company."

"Our JV team will now focus on the SPG facility feasibility study and
integrating it with the Orom-Cross DFS, providing a comprehensive solution
that adds considerable value.  We anticipate minimal additional costs for
this study as we are utilising our partners' existing vast experience for all
costings and design work, and no further bulk sample testing or further
resource drilling is needed."

 

In-Country SPG Strategy

Selling 99.95% uncoated SPG (spheronised purified graphite) unlocks
significantly higher returns than small flake 96% concentrate, leveraging the
value from additional processing. Providing high-value SPG products into world
markets, and particularly products generated outside of China, addresses a
significant market gap, especially if China restricts purified graphite
exports.

Blencowe's exclusive sale of Orom-Cross concentrate to the proposed SPG
facility ensures a life-of-mine offtake partner, whilst also allowing the
Company to benefit by participating in the downstream sale of higher-value
99.95% uncoated SPG products.  As one of the only ex-China producers of
uncoated SPG this facility will likely command premium prices from OEMs
seeking to diversify their SPG supply chains outside of China.

This downstream SPG strategy focuses only on upgrading the lower value small
flake concentrate, which is roughly half of Orom-Cross's output, while the
more valuable large flake concentrate will continue to be sold into
traditional graphite markets as concentrate.  Blencowe recently announced its
first MOU for sale of 15,000tpa large flake concentrate.

 

SPG Joint Venture

A new Ugandan company will be established for the JV to develop the SPG
facility.

A feasibility study for the SPG facility, using Orom-Cross concentrate, will
be initiated and will leverage the SPG Partner's experience for costing and
design work, with Blencowe handling in-country requirements.  With the
upgrade of substantial Orom-Cross concentrate to uncoated SPG as part of the
600-tonne bulk sample test process, a key part of the technical DFS has
already been completed and paid for.  This SPG study will later integrate
into the broader Orom-Cross DFS, aligning both projects.  Triessence will
finance 50% of construction and handle international SPG sales.  The SPG
Partner, a global leader and one of the largest graphite companies in the
world currently producing around 100,000tpa of uncoated SPG, will oversee
operations under a management contract.

The SPG facility's proximity to the Orom-Cross mine considerably reduces
logistics costs for Blencowe and access to low-cost Ugandan hydropower
supports a premium grade green 99.95% SPG product.

 

Commercial Advantages

By channelling Orom-Cross small flake concentrate into the nearby JV SPG
facility Blencowe bypasses pricing pressures that other graphite peers will
face selling their concentrate into competitive Asian markets.  This will
secure both sales volumes and favourable market pricing for Orom-Cross.

With a 50% stake in the SPG facility, Blencowe will further benefit from
selling uncoated 99.95% SPG at a higher ~US$2,000 per tonne compared to
~US$500 per tonne for 96% concentrate. Proximity to the SPG facility will
materially lower Orom-Cross current logistics and operating costs, enhancing
overall project economics.

This downstream processing strategy, backed by experienced partners, may
attract additional funding options from entities who recognise this long-term
value opportunity.  The U.S. International Development Finance Corporation
(DFC) remains the preferred funding partner for Orom-Cross and supports this
strategy, as does the Ugandan Government.  Both offer valuable backing.

 

 

For further information please contact:

   Blencowe Resources Plc

  Sam Quinn                 www.blencoweresourcesplc.com

                            Tel: +44 (0)1624 681 250

                            info@blencoweresourcesplc.com (mailto:info@blencoweresourcesplc.com)
 Investor Relations         Tel: +44 (0) 7891 677 441

 Sasha Sethi                sasha@flowcomms.com (mailto:sasha@flowcomms.com)
 Tavira Financial           Tel: +44 (0)20 3192 1733

 Jonathan Evans             jonathan.evans@tavira.group (mailto:jonathan.evans@tavira.group)

Twitter https://twitter.com/BlencoweRes (https://twitter.com/BlencoweRes)

LinkedIn https://www.linkedin.com/company/72382491/admin/
(https://www.linkedin.com/company/72382491/admin/)

 

Background

Orom-Cross Graphite Project

Orom-Cross is a potential world class graphite project both by size and
end-product quality, with a high component of more valuable larger flakes
within the deposit.

A 21-year Mining Licence for the project was issued by the Ugandan Government
in 2019 following extensive historical work on the deposit and Blencowe is now
within the Definitive Feasibility Study phase as it drives towards first
production.

Orom-Cross presents as a large, shallow open-pitable deposit, with a maiden
JORC Indicated & Inferred Mineral Resource deposit of 24.5Mt @ 6.0% Total
Graphite Content. Development of the resource is expected to benefit from a
low strip ratio and free dig operations, thereby ensuring lower operating and
capital costs.

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