13 minute read
Electric Mine Consortium
through the mill on any given day is vital.
“There’s also extensions of the epithermal vein systems below and laterally, which we’ve just started drilling. Our drilling is a little hit and miss right now, because geologically there’s a lot of stuff that we do not know about El Pingüico yet, despite these stockpiles.”
Advertisement
A promising PEA
Although preliminary in its nature, Anderson describes the resource estimate in the independent PEA for the combined project as numbers generated ‘on the back of a 214-page envelope’. Published in January this year, Behre put the total indicated resources at 718,655 tonnes for 7.2 million ounces (Moz) Ag eq and total inferred resources at 1.45 million tonnes for 20.3 Moz Ag eq.
While the findings of the study certainly indicate a large resource base at the combined project, the figures - particularly the current
seven-year mine life - don’t actually do justice to the sheer size of the mine at El Cubo/ El Pingüico and its long-term potential.
Many would consider the current mine life for the project as short, but it is based on real life, PEA-level data and a direct result of the style of mineralisation at El Pingüico. “It’s very difficult with these narrow vein structures to be able to drill enough to ever see more than five to seven years of mine life in front of you,” Anderson explains. “They’ve been mining these structures for 480 years. The Spanish Conquistadors figured out that there’s high grade gold and silver here within 60 years of Columbus sailing. To me, that’s remarkable and speaks to the longevity of these mines.
“We have a big mine here that has been operating for 200 years on-off and there will be people mining here for another 100 years,” he declares. Guanajuato Silver plans to mine at a rate of 750 tonnes per day, in order to draw the material out of El Cubo and El Pingüico at a sustainable rate. “That’s going to be the formula, the magic, the alchemy that allows us to be profitable from an early point here.”
Gearing up for production
Guanajuato Silver’s chairman and CEO has always been a big believer in the precious metals investment thematic, with the current state of affairs in the international central banking space only strengthening his stance as a gold and silver bull. “If every central bank and every major Western nation’s treasury wants to bastardise their currency, they can do it. They have the technology to do that; it’s called the printing press. I’m quoting Ben Bernanke here, but they can do it.
“In that context, what are the best acting currencies in the world? They are gold and silver. Gold especially is a currency, it has very few other utilities. Silver on the other hand has great utility in manufacturing and electronics. So I think that with our business, we have a huge bull market as a tailwind for what we are doing.”
The recent arrival of former COO of First Majestic Silver Ramón Dávila to Guanajuato Silver’s board of directors has added further credence to the company’s ambitions for El Cubo and El Pingüico in Guanajuato. Dávila has the best CV in Mexican mining according to Anderson, after taking First Majestic from two employees to 4,000 and from zero production to 12 Moz Ag eq per annum.
“This guy can put a project into production and can put a company into the limelight,” Anderson proclaims. With two excellent assets, including a working mill and ready-toprocess stockpiles, Guanajuato Silver is all set to become Mexico’s next significant silver and gold producer before the end of the year.
Bushveld Minerals’ vision is to grow into a significant, low cost and vertically integrated company comprising of primary vanadium production, electrolyte manufacturing, development and deployment of Vanadium Redox Flow Batteries in the energy markets. Our value proposition includes:
• Compelling commodity market anchored to steel with burgeoning demand from energy storage market • Largest primary vanadium resource base of ~550Mt with a grade 1.58-2.02% V₂O₅ in magnetite • Bushveld Minerals owns 2 of the 4 operating primary vanadium production processing facilities, with capacity to scale up production significantly • Bushveld Minerals will offer a diversfied product offering for the steel, chemical industry and energy storage market • Bushveld Minerals vertical integration strategy into energy storage provides a natural hedge to vanadium price volatility as well as a diversified revenue stream
5 Harries Road, Illovo Edge Office Park 2nd Floor, Johannesburg, Gauteng 2196 | info@bushveldminerals.com | www.bushveldminerals.com
BLACK ROCK MINING
The countdown to first production begins at one of the highest quality graphite mines in the world
Of the multitude of metals and minerals set to play a role in the global clean energy transition, graphite continues to be one of the most overlooked by generalist investors across capital markets. Many market observers see graphite’s traditional uses in steel, cement or glass manufacturing, but less are aware of its role as a preferred anode material for the growing battery technology industry. In fact, graphite is the only anode material used in lithium-ion (Li-ion) batteries, which have emerged as the dominant technology powering the electric vehicle (EV) revolution. At this stage, it’s important to differentiate the two types of graphite that are available to the market: Synthetic (produced from coal tar or petroleum) and natural flake graphite (geologically formed and mineable in economic quantities). It is therefore widely accepted that as the global decarbonisation thematic deepens, there will be a significant swing from synthetic blends to natural flake graphite production. This will come at a significant advantage to those in control of large and scalable natural graphite deposits, such as Black Rock Mining and its multi-generational Mahenge Project in Tanzania.
Mahenge is one of the largest JORC-compliant flake graphite resources globally with 212 million tonnes (Mt) at 7.8% total graphitic carbon (TGC), and a reserve of 70 Mt at 8.5% TGC; making it the 4th largest graphite reserve in the world, according to Black Rock.
An enhanced definitive feasibility study in mid-2019 estimated a total post-tax NPV of US$1.2 billion for the 26-year life-of-mine project, with a four-phase production module ramping up incrementally to 350,000 tonnes per annum (tpa) in the final phase under the firm’s ‘crawl, walk, run, sprint’ strategy.
Over the last four years, Black Rock has spent time qualifying the resource at Mahenge, fine-tuning the end product via a succession of pilot plant tests and securing vital offtake agreements, alongside other key project development milestones. Taking a step back, Black Rock’s managing director and CEO John de Vries tells RGN that making a natural flake graphite discovery isn’t the difficult part of the process. “It conducts and responds incredibly well to several geophysical methods,” he says.
Finding the sweet spot
“What we’ve found is it’s diabolically difficult to commercialise. That’s because what you’re trying to do is create a specific set of circumstances to create an economic deposit.”
Flake size is one of those requirements, de Vries explains. The most valuable form of graphite is large flake, which is used in various applications from flame retardants to refractories and aviation. Meanwhile, small flake (fines) are typically utilised in Li-ion batteries, paint, lubricants and pencils. “You need enough flake size to add value to your basket, but the problem with large flake is it’s used in a number of different manufacturing processes. These tend to be smaller manufacturing enterprises, so you can’t get a balance sheet that will co-fund you.
“Conversely, the fine material goes into steel mills or EVs, where there are big balance sheets that can co-fund you. So, you’re trying to trade off a fines to flake ratio where there’s enough fines to attract someone to sponsor you and enough flake to make it economic. That becomes quite a challenge.” The next challenge for graphite developers is to match the project’s production rate to the current market size without distorting the
BLACK ROCK MINING
AT A GLANCE
STOCK TICKER:
ASX:BKT
MARKET CAPITALISATION:
US$88.9 million (as of July 01, 2021)
a j pricing status quo. Once again, there is a balance to be struck between being big enough to be investable, but small enough to not unbalance the market.
“We’re really lucky with Mahenge,” de Vries proclaims. “At the grades we’ve got, we can produce 80-85,000 tpy. It’s got a beautiful flakes to fines ratio [around 60:40], the material is strongly differentiated chemically,
“We can produce 80-85,000 tonnes per year of graphite from Mahenge in the first phase. It’s got a beautiful flakes to fines ratio [around 60:40], the material is strongly differentiated chemically and that is evidenced by POSCO coming on board as a cornerstone offtaker and investor” John de Vries, Black Rock Mining managing director and CEO
and that is evidenced by POSCO coming on board as a cornerstone offtaker and investor.”
Partnering with POSCO
A strategic alliance with Korean steel-making giant POSCO was first announced in June 2020, before Black Rock sealed a US$7.5 million equity investment in January 2021, giving POSCO a 15% stake in the company. This investment is being used to support the frontend development of the Mahenge project as Black Rock prepares to commence the construction phase before the end of the year. In addition, POSCO has agreed to provide a pre-payment facility for project financing and will purchase 100% of the graphite fines concentrate from the first phase in an offtake arrangement. The fines from Mahenge’s first phase of production will support POSCO’s recently stated ambition to become a global leader in the battery materials sector within a decade, with a particular focus on graphite-based anode production.
“We are actually the only graphite developer with a Western anode producer on board as a cornerstone investor, and we’re still preconstruction. I think that talks
JOHN DE VRIES, BLACK ROCK MINING CEO AND MANAGING DIRECTOR
a lot about the quality of the chemistry we have at Mahenge and the amount of work we’ve put in through our pilot plants and studies.”
While the graphite produced from Mahenge has a diversified product mix with a perfect blend of flake and fine material, the project’s green credentials provide an additional layer of attraction, particularly to the modern-day ESG investor.
Greener graphite
Mahenge’s green credentials come back to its unique geological circumstances, according to de Vries. Usually, graphite ore contains fluid migration which creates intercalations and the subsequent need to refine the material for battery materials production.
“[Refining the product] creates a porous and weak flake. Mahenge’s got a solid flake and effectively all we need to do is remove the intercalation off the top of the massive flake. So that’s got value in terms of being chemically pure. We have a very low footprint from a refining point of view.”
Black Rock also has access to hydroelectric grid power and a railway line will transfer its product to market; both of which provide low-carbon alternatives to traditional fossil fuel-based power and transport options. Staying within the ESG thematic, Black Rock had its Resettlement Action Plan (RAP) – relating to four villages in close proximity to the Mahenge project - completed and approved in September last year. This was a crucial milestone not just for the smooth development of the project, but also from a social licence to operate point of view. “We’ve got a long mine life and we really do want to be there for a long time, and on a personal level I’d like to be leaving a positive legacy. That means you’ve got to work with your community and they must feel they are gaining some benefit from you being there.” By the same token, any mine developer should fully mitigate any adverse impacts on the local population and its access to natural resources such as water, which is regularly a
bone of contention in other mining jurisdictions globally.
In the case of Mahenge, Black Rock has been able to design a dry stack operation as opposed to a wet tailings dam, which means the company won’t be competing with local subsistence farmers for precious water resources.
“Getting those [social aspects] right has been a major milestone and certainly our people in Tanzania have done a fantastic job of being able to do that while we’ve not been able to be on the ground there to supervise it,” says de Vries.
Staying on track
Black Rock’s chief reflects on a tumultuous period in-country since the Tanzanian mining code was revised in 2017. This upheaval in the sector was then exacerbated by the emergence of the COVID-19 pandemic and the unexpected death of Tanzania’s President John Magufuli earlier this year. However, de Vries is confident that the mining industry is now back on track in the country just as Black Rock is entering the final stages of the project development timeline at Mahenge. “We’re certainly seeing some good will coming out of the people we’re working with in the Tanzanian government to want to make this happen.
“Starting to front-end load our development programme and push through our RAP says to our community, our shareholders and the graphite industry in general that we’re in a position of gaining confidence that we’ll soon be doing what we planned to do, which is operating a mine on the hill.”
The next big milestone for the project would be a confirmation of the longstanding free carried interest agreement with the Government of Tanzania. Once this is completed, de Vries believes Black Rock can quickly step into a finance process with a view to commissioning the first phase of the project towards the end of the 2022.
With first graphite production from the Mahenge project potentially just over a year from now, Black Rock is planning a sensible entry to the market under the aforementioned crawl, walk, run, sprint strategy. Mahenge’s first phase production rate of 83,000 tpa will come in at around 7.5% of the total graphite market of about 1.3 million tpa. By Black Rock’s estimations, this entrance will not induce a price-based response from existing producers, meaning the firm’s price gets validated.
“But at the projected growth rates we’re seeing in the market, we’re able to effectively drop another 85,000 tpy module on the ground year-after-year and pick up a decent portion of that market growth.
“Now we’ve qualified Mahenge, all we need to do is put in additional modules. We don’t need that extensive ramp-up period of qualification. The strategy is simply; produce more of the same material into the market that already knows what we are capable of producing.”
