Blencowe Resources (BRES ) has noted a recent research report on the Company describing its significant role in supplying flake graphite for energy storage - one of the biggest trends of this century.
Dr Michael Green, the Analyst, stated in his research “has taken the valuation of the Orom Cross Jumbo Graphite Project, determined by peer comparisons when the project advances to the DFS stage of £25.5m.
'This works out at a valuation per share of 25.1p based on the number of shares in issue (101,673,132). On a fully diluted basis, we have added in the £2m which would be raised on exercising the current warrants, which gives a total of £27.5m equating to a per share valuation of 19.1p based on the number of shares on a fully diluted basis (144,048,133), which we have adopted as our target price.'
Blencowe successfully executed a JORC Resource diamond drilling program - designed to delineate around 8 to 10 million tonnes to a JORC (2012) Indicated standard - at Orom-Cross back in July 2020, which it said would provide the initial resource for 10 years of mining.
Initial results suggest that Blencowe will achieve its objective of providing an initial resource for 10 years of mining and the group has identified that there is ‘a significant weighting of higher value jumbo, extra-large and large flake sizes within the identified resource.’
As a result, Cameron Pearce, Executive Chairman of Blencowe Resources said the company is ‘well positioned to expand reserves and ultimately production should demand dictate.’
Location of Orom Graphite project licence area.
[Source: Company]
In recent weeks, Blencowe detailed that core samples from Orom-Cross have now been dispatched to an accredited SGS laboratory in Tanzania in order to enable its verification ahead of the maiden JORC Resource at the site which is expected to occur in Q4 2020.
The JORC Resource and the metallurgical test work are seen as integral parts of the next stage of development and Blencowe intends to incorporate these results to present a Pre-Feasibility Study (“PFS”) in 2021, which will deliver first commercial outcomes for the project.
Blencowe remains ‘optimistic’ on its long-term outlook for flake graphite, particularly as a key component of lithium-ion batteries to power electric vehicles and store renewable energy.
Flake graphite demand, specifically for the lithium-ion battery market (anode production), is forecast to expand from 750 Kilo-Tonnes Per Annum to 1.75 million tonnes per annum by 2025, a move which market commentators believe will result in a significant supply deficit.
Analysts cite that the graphite market is estimated to be in deficit by over 500,000 tonnes per annum (tpa) by 2025, while global production now at around circa 1 million tpa, making Blencowe a candidate for fulfilling ‘long-term demand for high quality flake graphite.’
Shares in Blencowe Resources have ticked up around 5% in the past month to open 3.20% higher this morning at 5.65p following the announcement.
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 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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