In its half-year report Blencowe Resources (BRES ) said it has achieved a number of key milestones that continue to add value to the Orom-Cross Graphite Project in Uganda.
For the six months to 31 March 2021, Blencowe highlighted its efforts at Orom-Cross which culminated in its maiden JORC Resource estimate for over 16 million tonnes of graphite.
Blencowe has only explored a small fraction of what is available here, and so believes this is only ‘a starting point’. To date, it has identified two ‘excellent’ deposits, one of particular high grade, which it drilled out in a substantial programme which was completed in 2H20.
Following this, samples were sent to South Africa for assaying, and others to Canada where Blencower’s metallurgical partner is currently ‘well underway.’ The company told investors that the work conducted so far is turning out to be ‘a successful test program’ to deliver a quality concentrate that will be in high demand as Blencowe moves into production.
Blencowe said it continues to build on its successes by initiating a second substantial drilling program in the field at Orom-Cross to further delineate these two deposits and prepare them for mining planning and pit designs that will be required within the feasibility study.
The group plans to build this project towards a decision to mine whilst utilising all of its experience to ensure that all key requirements are suitably covered to de-risk the process.
In the six-month period to 31 Mar 2021, Blencowe reported a loss before tax of £0.023m compared to a loss of £0.481m in the six months ended 31 Mar 2020. Cash and cash equivalents at the end of the 1H21 period amounted to £0.61m (1H20: £0.088m).
Looking ahead, Blencowe told investors that it remains ‘a firm believer’ that the push for renewable energy will continue gathering huge momentum moving forward, and that the transition from fossil fuel engines to electric vehicles (EVs) will play a central role in this.
‘Currently the lithium-ion battery is the accepted technology that will power these EVs and graphite remains a core component within the anode inside the battery,’ the group wrote.
‘It is therefore logical to assume demand for graphite will remain highly leveraged to growth in demand for lithium ion batteries, and over the next few years Blencowe intends to bring into production one of the lower cost, high grade graphite projects in the world, located in a safe long term jurisdiction for development of such a project,’ said CEO, Mike Ralston.
Benchmark Minerals Intelligence, an information provider for the lithium ion battery to EV supply chain, recently noted that over two hundred lithium-ion battery Megafactories are now in the pipeline worldwide, a significant growth from seventy factories three years ago.
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Last month, Blencowe Resources initiated the second stage of its diamond drilling program at the Orom-Cross Graphite Project which it said would involve drilling 2,200m, or 74 holes.
The program, which has already commenced at the project in Uganda and is fully funded through the Company’s existing cash resources, is designed to in-fill the recently announced JORC Resource and upgrade substantial tonnes into the Indicated and Measured categories.
This next phase of development will bring the drill spacing closer together to ensure continuity of both product and grade, as required for mine planning within the PFS that will follow.
The Company said it remains “firm believers'' that the battery metals market is only just beginning its massive growth cycle over the next decade. It said it believes this “once-in-a-generation transformation will continue to expand exponentially into the future.”
Last month, analysts at independent broking firm First Equity Limited said they continue to rate Blencowe as a ‘Buy’, with an initial 6-month price target of 21p. Shares in Blencowe have gained 4% in value over the past month and moved 1.92% higher this morning at 6.625p.
Reasons to BRES
Blencowe is a mineral resources company focused on fast-tracking its 100% owned Orom Cross Jumbo Graphite Project in Uganda to production. Orom Cross is an advanced exploration stage project which was awarded a 21-year mining licence in October 2019.
The development company which is currently focused on bringing the Orom-Cross graphite project into production, completed its 69-hole (1,950m) diamond drill programme into the Eastern Limb Lode and the High-Grade Camp Lode in September 2020.
The size and scale from exploration work that has already been completed in the licence area has clearly demonstrated that Orom Cross has the potential ‘to become one of the largest graphite projects in the world based on both size and the quality of the end product.’
Blencowe is fast tracking the project through to defining a maiden JORC-compliant resource, completing further metallurgical test work with a plan to deliver a Preliminary Economic Assessment (PEA) in Q1 2021 followed shortly after by a Pre- Feasibility Study (PFS).
Align Research describes Graphite as ‘an important battery metal’ since it represents around 50% of Li-ion batteries by mass, which uses the smaller sized flakes. In recent years there have been some racy growth rates suggested for graphite demand for lithium ion batteries.
Meanwhile, the group said demand for electric vehicles (EV) is rising on the back of green legislation being adopted by the UK, India, Germany, France, Norway and China, which is expected to lead to an increasing demand for Li-ion batteries and in turn for graphite.
Another integral factor is that Uganda’s economy is believed to hold ‘great potential’ with this whole region of East Africa viewed as a key African growth platform by the World Bank, hosting significant natural resources including copper, cobalt, gold, nickel and platinum.
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