REG - Blencowe Resources - DFC Grant Completed

Blencowe ResourcesAnnouncement

22/09/2023 07:00

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RNS Number : 3496N  Blencowe Resources PLC  22 September 2023

Date: 22 September
2023                             Blencowe
Resources Plc

 
     ("Blencowe" or the "Company")

 

 

Blencowe Awarded US$5 Million Grant from Development Finance Corporation for
Orom-Cross Graphite Project

Orom-Cross is the first pre-production graphite project to achieve DFC (US
Govt) funding support

DFC to co-fund the Definitive Feasibility Study and also to be lead partner
for the project financing ahead to take Orom-Cross project into production

 

Highlights:

·    Ground-breaking technical assistance agreement signed with a tier one
financial institution to provide Blencowe with significant funding for the
Definitive Feasibility Study ("DFS") programme.

·    US$5 million to be input by Development Finance Corporation ("DFC")
as a grant, with a 20% upfront contribution (US$1 million) to be paid
immediately.

·    Further DFC payments will be made upon as-agreed feasibility study
milestones being achieved.

·    US International Development Finance Corporation is America's leading
development finance institution that partners with the private sector to
provide finance solutions for project development in markets deemed as
critical to US interests.

·    DFC is geared to provide funding assistance for Orom-Cross as part of
the US Government's strategic drive to secure a reliable supply chain of
critical minerals and metals, within its wider US$1 trillion Biden-renewables
strategy.

·    As part of the US$5 million Technical Assistance Grant ("TAG") the
DFC has a right of first refusal on commercial terms to arrange project
financing for the Orom-Cross project, which may deliver Blencowe with a full
funded solution to bring Orom-Cross into production with support from a major
financial institution.

·    The DFC partnership opens up the opportunity for Blencowe to consider
a larger scale project with potentially far greater returns within the DFS.
This will have material ramifications on overall Orom-Cross project value
ahead.

 

 

Blencowe Resources Plc ("Blencowe" or the "Company") (LSE: BRES) is pleased to
announce it has signed a US$5 million agreement with the DFC in order to
provide substantial funding for the Orom Cross DFS programme, via a Technical
Assistance Grant.  The DFC is a proxy for the US Government which funds the
organisation and ultimately sets its vision, parameters and funding
distribution.

 

Cameron Pearce, Executive Chairman commented;

"This funding relationship with the DFC is a unique and game-changing event
for Blencowe. To the best of our knowledge there has been no other graphite
project worldwide that has received a similar type grant to date from the
DFC.  We appreciate and we value this support and we will do everything we
can to build their trust within this relationship, to ensure we deliver a high
quality project together.

 

We believe that having DFC as our strategic project partner substantially
de-risks Orom-Cross and provides us with the means to deliver a world class
project from here.  Blencowe presented an excellent US$482 million NPV for
Orom-Cross within the Pre-Feasibility Study last year but we are now
optimistic that we can deliver an even greater value NPV within the Definitive
Feasibility Study as we can significantly expand the project horizons.

 

With the support of the DFC we can address one of the major challenges and
risks to any mining operation, being the clear pathway to fund the project
into production. We now have the opportunity to build Orom-Cross with the
comfort of having a partner with the means to deliver this."

 

Mr Pearce added "Graphite demand is rising fast and will continue to do so.
It is one of the under-rated but key components of the lithium-ion battery and
it is irreplaceable in this regard.  As such any future anticipated surge in
demand for these batteries, not just for electric vehicles but for energy
storage in all other renewable capacities, will continue to accelerate demand
for graphite.  We now have the means to deliver one of the leading graphite
projects in the world and a highly incentivised tier one partner with whom we
will work with to do that."

 

 

DFC Technical Assistance Grant (TAG)

This is an innovative funding mechanism for the DFC to become involved at an
early stage with key projects that they consider to be within their direct
scope and strategy.  As Orom-Cross contains an estimated 2-3 billion tonnes
of graphite and is one of the largest, high quality deposits worldwide it has
considerable long term appeal to the DFC.  Graphite remains high on the US
Government critical metals and minerals list, hence this relationship with
Blencowe opens a potential supply chain for high value end-product over a very
long life of mine.

DFC has been working closely with Blencowe through this TAG process and both
the Company and the Orom-Cross project have been subjected to all necessary
due diligence in order to progress DFC interest into this monetised initial
funding solution.  Both parties see considerable long term value in their
association with one another and Blencowe is confident this relationship will
assist to provide a larger project funding solution ahead.  One of the key
terms within the TAG Agreement is for DFC to be mandated to provide financing
for the full Orom-Cross project on commercial terms.

Prospective new graphite producers need to think outside the box to find
innovative funding solutions in order to deliver their projects and the DFC
relationship provides this for Orom-Cross.  Not only does the US$5 million
grant cover a significant portion of the DFS costs, which materially reduces
the dilutionary impact to Blencowe of funding the full DFS itself, but it also
provides a highly motivated full mine implementation funding partner ahead.
 Furthermore, the credibility associated with partnering one of the leading
tier one financial institutions worldwide will open a variety of other
relationships ahead as key players in the graphite market (including end user
OEMs) can see a new high quality graphite project emerging that now has a more
certain pathway to production.

Blencowe will immediately request the upfront payment of the initial 20% of
the TAG (US$1 million), which together with the Company's existing funds
provides the means to continue DFS work underway and deliver the next
as-agreed milestone payment with DFC.  Once this next milestone is achieved
further DFC funds are unlocked and so on, until the full grant is utilised and
ultimately the DFS is completed.

One substantial advantage that now comes into play with the DFC relationship
is that Blencowe is able to consider a larger-scale production strategy than
it could do under the base-case scenario that the Company was considering
whilst funding solo.  The implications of this are enormous and the Company
will provide a further update on this once the revised strategy is
finalised.  The expectation would be for a larger project from day one with a
downstream processing facility built in-country to produce an uncoated
battery-ready 99.95% SPG product.  These factors above will ultimately
deliver a considerably higher Net Present Value than the US$482 million NPV
achieved within the 2022 Pre-Feasibility Study.

 

About International Development Finance Corporation

The DFC is the primary US Government finance institution set up to provide
financially sound funding solutions for private-sector initiatives pertaining
to critical challenges facing the world, in this case the drive towards
increased sustainability across the planet.  It is an agency of the United
States federal government and represents US interests.

DFC's lending capacity is used to provide loans, guarantees, equity
investments and political-risk insurance for private-sector led development
projects, feasibility studies and technical assistance.  DFC invests across
several sectors with stated goals of empowerment, innovation, investment into
Africa, green energy and climate change.

Orom-Cross is directly linked with several of these goals.  This project may
ultimately become one of the largest graphite producing operations in the
world over a very long mine life, delivering an end-product in a sustainable
manner which is a non-replaceable input component to lithium-ion batteries.
Demand for graphite is accelerating at a rate where it is doubling every few
years, and is expected to continue growing exponentially into the future.
Graphite is therefore high on the US Government critical metals and minerals
list and assisting to open up long term supply chain of graphite is a key
strategy.

Orom-Cross will also deliver a 'green' graphite product through a variety of
production initiatives, including the use of hydro-electric power for all
mining and processing energy requirements.  Orom-Cross aims to become one of
the leading sustainable mining projects worldwide and this is a very important
component of the DFC charter and critical within a rapidly changing landscape
where every participant along the EV supply chain will be audited on their
sustainability credentials by OEMs.

Orom-Cross's potential ability to aid in the further development of the
Ugandan economy, empowering its population and driving investment and future
development has also proved attractive to the DFC.

 

 

 

 

For further information please contact:

 

   Blencowe Resources Plc    www.blencoweresourcesplc.com

 Sam Quinn                   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)

 First Equity Limited        Tel: +44(0)20 7330 1833

 Jason Robertson             jasonrobertson@firstequitylimited.com
                             (mailto:jasonrobertson@firstequitylimited.com)

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 coarse
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.  Blencowe
completed a successful Pre-Feasibility Study on the Project in July 2022 and
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 an initial
JORC Indicated & Inferred Mineral Resource of 24.5Mt @ 6.0% TGC (Total
Graphite Content). This Resource has been defined from only ~2% of the total
tenement area which presents considerable upside potential ahead.
Development of the resource is expected to benefit from a low strip ratio and
free dig operations together with abundant inexpensive hydro-electric power
off the national grid, thereby ensuring low operating costs.  With all major
infrastructure available at or near to site the capital costs will also be
relatively low in comparison to most graphite peers.

 

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