REG - Blencowe Resources - Strategic Party

Blencowe ResourcesAnnouncement

03/10/2022 07:01

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RNS Number : 5047B  Blencowe Resources PLC  03 October 2022

Date: 03 October 2022

   Blencowe Resources Plc

("Blencowe" or the "Company")

 

Approach from Potential Strategic Party in China

 

Highlights

·    Approach received from a strategic party in China with extensive
experience in graphite.

·    Potential to provide offtake contracts and project funding solution
for Orom-Cross.

·    Additional bulk samples to be delivered to China for further off-site
testing.

·    Pilot plant strategy in Uganda suspended, removing material near-term
capital requirement.

·    End-product samples as 96% LOI concentrate to be shipped to Chinese
and European firms for trials to lift to 99.9995% LOI product for batteries.

·    Technical Data Sheets sent to prospective end users to confirm
interest and support for Orom-Cross concentrates.  Feedback, interest and
discussions already underway.

 

Blencowe Resources Plc ("Blencowe Resources" or the "Company") (LSE: BRES) is
pleased to announce it has received an approach from a group in China that has
the potential to ultimately provide an offtake, funding and development
scenario for its 100% owned Orom-Cross graphite project in Uganda.

Based on these discussions, the Company has agreed to send a bulk sample of
~100 tonnes from Orom-Cross to China as soon as possible to enable further
metallurgical test work to be undertaken by the potential strategic party.
This is subject to the Company receiving necessary permits to move this raw
material from Uganda, which are being sought immediately.

Blencowe has already been able to share significant data with the potential
strategic party having previously completed two stages of bench scale
metallurgical testing with SGS in Canada (30kgs) and more recently a further
round of testing via a small pilot plant (130kgs) in Perth, Australia.  This
next-level proposed test in China, using their existing infrastructure and
experience, would be done on a considerably larger scale which will give all
parties more knowledge of the end product that can be produced in an enlarged
scenario from Orom-Cross.  It is hoped that this program will initially lead
to non-binding MOUs for offtake, and ultimately to binding sale agreements for
a substantial portion of the initial 50,000tpa product to be produced from
stage one within Orom-Cross. There may also be potential for EPC and funding
contracts emanating from this relationship, potentially providing a solution
to the CAPEX requirement to production.

Given this interest out of China and the relatively short period to complete
this test work over the next 6-9 months the Company has taken the decision to
postpone its plans to build an on-site pilot plant facility of 2,000tpa at
Orom-Cross. Binding offtake contracts to purchase Orom-Cross graphite would
likely remove the need for a pilot plant, as the principal rationale for its
implementation was to provide product to would-be offtakers to enable them to
assess its viability for their own uses. A direct impact of this decision is
that there is no longer a requirement to raise substantial cash (circa US$10M)
in the near term via the equity markets to fund the on-site pilot plant.

The Company will continue to keep the market informed of progress on these
discussions, as well as further key milestones achieved from the ongoing DFS
(please see RNS of 26 September 2022 for further information).

 

Cameron Pearce, Executive Chairman commented;

"China is currently the most mature graphite market worldwide and entering
into an offtake relationship there would be very valuable to us given the
highly attractive economics at Orom-Cross, which already has an NPV8 of
US$482M based on a 14-year mine life from just 2% of our broader graphite
resource as currently drilled out.

 

We believe this bulk sample trial will prove highly significant and is
potentially a precursor to a full offtake agreement and subsequent project
funding, which in turn would enable us to kick start production with a
critical mass of product sold to drive profitability and cash flow".

 

The graphite market is evolving very quickly and we will see a lot of change
ahead as the world drives towards 100 million expected electric vehicles by
2030. The Chinese market remains the largest by far, and will remain so for
some time. Establishing a strong and commercial relationship with Chinese
partners is therefore decisive and is a natural progression for the Company.
Given this positive development we have elected to postpone any decision on a
pilot plant on-site until these trials and discussions have reached a
conclusion as it is expected a positive result will remove the need for a
pilot plant, with the project instead moving straight into full development.
This decision will not only save us considerable cash outlay right now, but
potentially expedite the development of Orom-Cross."

 

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 Securities        Tel: +44 (0)20 3192 1733

 Jonathan Evans           jonathan.evans@tavirasecurities.com
                          (mailto:jonathan.evans@tavirasecurities.com)

 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 and Blencowe is now
moving into 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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