Tanzanian graphite developer Black Rock Mining Limited (ASX:BKT) has received its completed Independent Technical Expert review of Module 1 and the Front- End Engineering Design (FEED) works and update of the eDFS, which reconfirms the Tier 1 scale Mahenge Graphite Project in Tanzania, as a robust project with attractive forecast returns.
Highlights
* Independent Technical Expert completes review of Front-End Engineering Design (FEED)
* eDFS Update reconfirms Mahenge’s compelling projected returns
* Peer analysis confirms Mahenge’s 1st quartile position on the global cost curve
* Draft ESIA being updated to Equator Principles (EP4) and IFC Performance Standards
* FEED outcomes support debt financing for Module 1, term sheets expected Q4 CY22
Background
As announced on April 26, 2022, the company engaged highly experienced engineering design and construction company, CPC Engineering (CPC) to undertake a FEED workstream which was designed to ensure the Project is construction ready, subject to finance.
Key deliverables of the FEED work included detailed engineering, cost estimation, schedule optimisation, development of Project Execution and Operational Readiness plans, and tenders for long lead equipment items.
The FEED works and supporting Environmental and Social Impact Assessment (ESIA) updates have been subject to an Independent Technical Expert review as part of a project debt financing process for Mahenge.
The completion of FEED works enables the company to update the Mahenge project metrics and progress the debt finance process prior to a Final Investment Decision.
FEED Outcomes
All targeted outcomes were achieved by the FEED work for Module 1 which has been reviewed by an Independent Technical Expert (ITE). The ITE was selected from a shortlist of potential candidates based on discussions and feedback with potential project finance lenders. In its report for lenders, the ITE wrote:
“No fatal flaws were identified in any of the areas of the Project with the underlying studies completed by BKT having reached a DFS level of confidence.”
Key outcomes of the FEED workstream included:
* Finalisation of Project execution strategy and key technical decisions;
* Optimised plant design;
* Technical documents required for detailed plant design;
* Confirmation of commercial graphite product types to customer specifications;
* Refined budget, scope and schedule for the Project;
* Documented Project procedures and systems; and
* Preparation and progress of tenders for key long lead procurement items.
Findings from the FEED work come against a backdrop of steady increases in the graphite price and an exceptionally strong supply-demand market outlook.
Based on the FEED work, the updated capital cost estimate for the development of the Mahenge Graphite Mine is US$182m, including a contingency allowance of US$22m or 13.8% (US$22m/US$160m)
The increase in capex since the eDFS in July 2019 was driven by:
* Inflation in the cost of building materials, labour, energy and other consumables (32% of the increase);
* Project optimisation and debottlenecking enhancements to improve the flowsheet and to provide additional operational flexibility to de-risk the production of high-purity graphite concentrates (24% of the increase);
* An increase in the cost of relocation and resettlement to ensure the Company adheres to the highest global standards of ESG compliance and community stakeholder engagement (21% of the increase); and
* Additional contingency added (16% of the increase).
The ESIA has been updated to reflect Project evolution and to ensure full compliance with the updated Equator Principles (EP4) and the IFC Performance Standards.
For further information please visit: https://blackrockmining.com.au/
