REG - Blencowe Resources - Shareholder Question & Answers

Blencowe ResourcesAnnouncement

19/11/2024 08:00

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20241119:nRSS7779Ma&default-theme=true

RNS Number : 7779M  Blencowe Resources PLC  19 November 2024

Date: 19 November
2024
 

Blencowe Resources Plc

("Blencowe" or the "Company")

 

 

The Orom-Cross Graphite Project - Asset, Development Strategy and Value

 Responses to Shareholder Questions Following Recent Funding

 

Blencowe Resources Plc (LSE: BRES), the London listed graphite company
advancing the 100% owned Orom-Cross Graphite Project in Uganda ('Orom-Cross'
or the 'Project'), is pleased to provide a Questions and Answers ("Q&A")
session.  This follows the recent £1.6 million capital raise to fund the
completion of the Project's Definitive Feasibility Study ('DFS'), in which
senior management invested £500,000.

 

Why is Orom-Cross considered a standout project?

Orom-Cross with an estimated 2-3 billion tonnes of graphite, of which most is
near surface, is one of the largest deposits globally.  Importantly, 75% of
the in-situ material is jumbo or large flake placing it at the high value end
of the market.  The JORC Standard Resource/Reserve is currently 24.5Mt at
6.0% Total Carbon ('TC') based on only approximately 2% of the total deposit
drilled to date, which means further drilling can be conducted at any future
point to continue to increment the resource size.

Blencowe owns 100% of the Project and has a 21-year mining license in hand as
well as all the necessary permits, approvals and community agreements to bring
Orom-Cross into production. The Project has already attracted a US$5 million
grant from the US Government via the Development Finance Corporation ("DFC")
to assist with the DFS costs. Uganda is a stable jurisdiction with attractive
tax incentives and strong Government support for a long term mining projects.

Graphite demand is forecast to accelerate over the next decade in response to
its non-replaceable role within lithium-ion batteries that are used to store
renewable energy, and Orom-Cross will play a key role in fulfilling that
demand ahead.

 

What work has Blencowe done over the past five years to highlight the quality
of the Orom-Cross Project?

Blencowe has invested substantial funds to date in the development of
Orom-Cross and has conducted multiple geological exploration programmes,
technical evaluation and economic studies, which all consistently highlight
the quality of the Project.  Over 6,000 metres of drilling has been completed
in two phases with a further programme now underway.

Significant metallurgical test work has confirmed the very high quality of the
end products, both as concentrates and as more purified graphite.  Over the
past 15 months Blencowe has conducted bulk sample testing of all products
within commercial scale facilities in China (first using 100 tonnes raw
material from Orom-Cross and then 600 tonnes), to become pre-qualified and to
provide substantial samples of end products to OEMs.  This is a critical step
to obtaining offtake agreements and successful bulk scale testing has allowed
the Company to now transition to MOUs and Sale Agreements.

A Scoping Study and Pre-Feasibility Study ("PFS") have both been completed
with the PFS indicating a low cost, high margin, long life mining operation
delivering a US$482 million NPV over an initial 14 years' life of mine.  A
DFS is now being completed with the financial matrix expected to improve
further when finalised in Q2 2025.

 

How does Orom-Cross differentiate from other graphite peers?

Orom-Cross has some of the lowest projected operating costs in the sector
combined with extremely low capital costs for an operational start-up.  When
combined these key factors are a rarity in the graphite market.  The Project
already has all major infrastructure in place including roads, rail,
(hydro-electric) power off the national grid, water and communications, which
together lower the capital cost significantly. If you overlay the high quality
of end products produced this adds yet another layer of differentiation.

The world is transitioning from fossil fuels to renewables which requires
lithium-Ion, sodium and vanadium redox batteries to store energy produced, and
graphite is a non-replaceable input to all of these.  This means that
graphite demand is set to soar with predictions between 2-3 times current
levels by 2030.

Very few graphite projects have all the key factors highlighted above and
missing any one of low operating costs, low capital costs or high purity of
end products can be a showstopper.  As a result, most peer projects will be
unable to transition into sustainable, cost-efficient and profitable
production.  Orom-Cross has all these essential requirements and can become
one of only a select few graphite producers worldwide with the ability to
supply graphite into this accelerated demand.

 

What is different about Blencowe's strategy that sets it apart from other
graphite companies?

Blencowe does not believe that selling graphite concentrate-only is sufficient
to provide the returns necessary to fund a project into production and/or
deliver long term commercial success. There is a need to include value-adding
products such as downstream processing where graphite is further purified, and
where returns can be maximised.

Blencowe has successfully formed an alliance with a world-leading spheronised,
purified graphite ("SPG") producer to build and operate an SPG facility in
Uganda within a Joint Venture, to deliver upgraded 99.95% SPG.  As one of the
first operations of this kind in the world outside of China, this proposed
facility already has huge interest from OEMs who want to de-risk their
purchase of purified graphite solely coming from China. This SPG facility will
become an offtaker for life for approximately half of Orom-Cross's output as
concentrate and will be located near to the mine, thus substantially reducing
the transport cost of moving lower value concentrate all the way to the end
user as previously anticipated.

On top of requiring an experienced partner to succeed, this SPG facility
requires abundant low cost power as it is highly energy intensive, and Uganda
provides that; hence another advantage to locate this facility in-country.

Furthermore, Blencowe will benefit from half of the profits within the SPG
facility as a Joint Venture partner, providing dramatically improved returns
for investors.

This strategy sets Blencowe apart as it will deliver higher value products and
greater returns, and it provides differentiation from other graphite peers who
would struggle to replicate this elsewhere.

 

What key relationships does Blencowe have that sets apart Orom-Cross from
other market participants?

Blencowe received a US$5 million technical assistance grant from the US
Government in September 2023 via its private sector funding arm, the
Development Finance Corporation ("DFC"), to assist with the DFS costs.
Blencowe is the first pre-production graphite company in the world to receive
such support and the credibility DFC provides through its participation is
enormous.

Looking ahead DFC has first rights to provide the debt funding for Orom-Cross
project implementation and Blencowe is confident that DFC will become its
cornerstone funding partner for production.  Recently DFC announced they were
providing a +US$150 million funding facility for Syrah Resources (graphite
peer located in Mozambique) which underlines DFC's ongoing commitment to
support the graphite sector.

In September Blencowe was awarded full accreditation by the Minerals Security
Partnership, an influential, high level, quasi-Government body that seeks to
overcome dependence on China for all critical minerals via tangible MSP
support programmes.  This is a rare and very prestigious award and it
highlights the value of Orom-Cross and its potential role in the global energy
transition ahead.

As noted in the previous question, Blencowe has created an alliance with one
of the largest and most experienced SPG producers in the world to produce
purified graphite within Uganda.  Yet another example of a unique
relationship that underpins the Project's investment thesis.

 

What is the funding status of the DFS and how does Blencowe see Orom-Cross
being funded into production?

The DFS strategy has been optimised to incorporate two important value-adding
components, being downstream processing to further purify graphite beyond
concentrate and a drill programme to increase the current 24.5Mt at 6.0% TC
JORC Standard Resource, to provide important geotechnical information for mine
designs and further infill to add to current Reserves.  These value-adding
components are included in the DFS to maximise the potential value of the
Project.

To date the Company has raised ~£5m (including the most recent £1.6m) for
DFS work, on top of the US$5m (£4m) grant received from the US Government via
their private sector lending arm, the Development Finance Corporation.  At
this point US$1.5 million of the DFC grant funds remain undrawn but will be
accessed as DFS work completes.  The latest capital raise included £500,000
from senior management which is a significant commitment, as was the £1.2
million in fees taken as shares by key project partners including the
Orom-Cross drillers.  Additionally, the Company is in advanced discussions
with selected strategic investors who have expressed interest in providing
capital to secure exposure to the Project.  The Company is seeking to
complete the DFS as soon as possible and move thereafter to decision to mine.

A combination of debt and equity will fund Orom-Cross project implementation,
with majority as debt.  It is envisaged that once the DFS is completed the
DFC will cornerstone a funding solution via debt and one or more other
financial institutions will combine to deliver the remaining debt and
equity.  Discussions are already underway on this with several interested
parties to deliver this strategy.

The unique factors within the Orom-Cross project as noted in this Q&A,
together with the differentiated strategy and the tier one relationships, will
all contribute towards delivering this funding solution.

 

 

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)

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.

In 3Q 2024 Blencowe introduced a Joint Venture concept with experienced
downstream graphite processing partners to ultimately produce upgraded 99.95%
SPG in Uganda.  This strategy has several key advantages plus substantial
cost savings which will assist deliver a world class project once DFS is
completed.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  MSCGPGMAGUPCUMB