Cavendish has this week released a multi-page research note on Blencowe Resources (BRES ), the company developing the Orom-Cross graphite mine in Uganda.
Blencowe has put out a string of updates in the past few weeks, including recent news about the potential use of Orom-Cross graphite by NASA.
In that context, and based on the considerable resources in the ground and existing definitive feasibility study, Cavendish reckons Blencowe is worth nearly 48p per share.
That represents upside of around 700% on the current price of 5.9p.
“Over the last fortnight, Blencowe Resources has released several encouraging updates on the 100%-owned Orom-Cross graphite project in Uganda,” said Cavendish.
“On 20 October, the company announced receipt of the final US$250,000 tranche of technical assistance funding from the US International Development Finance Corporation (DFC), bringing the total received to US$5 million. The funding is non-dilutive, and we view its completion as a further indication of the DFC’s continued backing of the company and project. On 26 October, Blencowe reported that follow-up surface mapping had identified outcropping graphite mineralisation across around 25 kilometres of strike. The results provide initial support for the company's view that Orom-Cross could host 2-3 billion tonnes of graphite mineralisation, reinforcing our contention that the project has multi-generational potential. Selected grab samples from three target areas returned grades exceeding 20% TGC, indicating scope to identify additional high-grade zones. Strategically, all three areas sit within 10 kilometres of the proposed plant site.”
The broker then went on to talk about the most recent news, “exceptional supercapacitor results with existing offtake partner YUNASKO.”
The results pave the way for independent NASA testing, potentially opening up further higher-value aerospace and defence applications.
“Overall, the latest results add to the growing body of testwork involving Orom-Cross graphite across advanced batteries, hypersonic aerospace applications and anti-radar coatings,” said Cavendish.
“We believe the breadth of this work adds an increasingly interesting dimension to the investment case, demonstrating that the company's graphite may have applications well beyond conventional battery anodes and industrial markets. If successfully translated into commercial relationships, these specialist applications could help Blencowe develop a more valuable and diversified sales portfolio as Orom-Cross advances towards production.”
View from Vox
Orom-Cross has so much going for it already, bringing in NASA almost looks like too much of a good thing. There’s DFC money involved, the potential to go to 2-3 billion tonnes of ore, lots of successful testwork to date, several off-take partners in place, and a definitive feasibility study that outlines just how profitable a mine could be. The next big news will be on development funding, and once that’s in place it will be much clear how the company plans to deliver on the value that Cavendish is pointing to.