Graphite | UK-based Blencowe Forms Joint Venture for Graphite Processing Plant in Uganda

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Graphite | UK-based Blencowe Forms Joint Venture for Graphite Processing Plant in Uganda

Date：2024-09-06

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The UK-based mining company Blencowe Resources (LSE: BRES.L) announced on September 5th that it has entered into a Memorandum of Understanding (MoU) with Singaporean graphite sales and marketing company Triessence Limited and a leading Asian Spherical Purified Graphite (SPG) and anode material producer, to establish a joint venture for a graphite beneficiation plant in Uganda. The plant will process 96% graphite concentrate to produce battery-grade SPG with a purity of 99.95%.

This joint venture with Asian graphite companies extends Blencowe's business from focusing solely on the production of graphite concentrate to the downstream production of graphite anode materials, potentially securing a stable customer base for its Orom-Cross graphite project.

Blencowe and Triessence will each hold a 50% stake in the joint venture beneficiation plant, with the cooperating graphite company providing operational expertise. Blencowe retains 100% ownership of the Orom-Cross graphite mine.

The company stated that Triessence's 50% equity in the joint venture beneficiation plant will bring funding to the project. The cooperation with Asian graphite companies will effectively reduce operational risks, and the high-value added SPG products will ultimately be sold to automotive manufacturers outside China through Triessence, bringing additional revenue to the company.

The company believes that the sale of battery-grade uncoated SPG with a purity of 99.95% at a price of approximately $2,000 per ton will yield higher returns than selling 96% flake graphite concentrate at a price of $500 per ton. Moreover, supplying graphite products to markets outside China addresses a significant market gap, especially if China restricts the export of purified graphite.

However, Blencowe's strategy of extending production downstream to spherical graphite is limited to processing the lower-value small flake graphite, which accounts for about half of the Orom-Cross project's total output. The higher-value large flake graphite concentrate will continue to be sold in the traditional graphite market as concentrate.

In June of this year, Blencowe Resources announced its first non-binding offtake agreement with Jilin New Technology Graphite Co., Ltd., to supply 15,000 tons of large flake graphite per annum, representing 66% of the initial large flake graphite production and approximately 50% of total revenue from the Orom-Cross project, with a supply period of up to three years.

The U.S. International Development Finance Corporation has provided financing for the Orom-Cross project, which is also supported by the Ugandan government. Blencowe acquired 100% ownership of the Orom-Cross graphite project in April 2020, with a 21-year mining license. The mining rights cover an area of approximately 520,000 hectares, and the project is planned to commence production in 2025.

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