Blencowe Resources (BRES ) is acquiring a nickel discovery with a historic spend of US$15 million for just $1.5m, a project near the company’s Orom-Cross Project in Northern Uganda.
Blencowe is already committed to developing one significant battery metals project in Uganda, being the group’s Orom-Cross graphite project in the north-east of Uganda.
Blencowe told investors today that it has now acquired a highly prospective nickel sulphide and copper project - Akelikongo - to complement this existing high-grade graphite project.
Nickel is a critical input within the lithium-ion (“Li-ion”) battery, being an essential metal within the cathode. The most common Li-ion batteries are a Nickel Cobalt Aluminium (NCA) which uses around 80% nickel, and the Nickel Manganese Cobalt which uses around 33% nickel.
Newer formulations of the NMC are now using up to around 80% nickel, while a single Tesla battery uses approximately 30kgs of battery grade nickel in addition to 50kgs of graphite.
Since graphite and nickel are expected to be in significant demand for EVs, the opportunity for Blencowe to develop two such projects in tandem is “very appealing,” the group told investors, with several synergies at the operational level based on the projects being near to each other.
The Company said the project underlines Blencowe’s ambition to become ‘a diversified producer of high-quality source materials for the battery metals industry into the future, mining these within a safe jurisdiction from which to successfully develop long term resource assets.’
Akelikongo was previously jointly owned by Rio Tinto and ASX-listed Sipa Resources within a joint venture project until May 2020. A total of US$15 million was previously spent by the JV partners on nickel and copper exploration at the site - Blenocwe has acquired it for $1.5m.
19,000m of diamond, reverse circulation and rotary air blast drilling has been completed, and continuous mineralisation over 800m strike within massive sulphides already established.
Blencowe highlighted that further airborne electromagnetic (EM) and downhole EM work has been planned to further test the identified anomalies as well as proximal targets at the project.
The company said it believes that Akelikongo, which is located around 100kms from the existing Orom-Cross graphite project, has potential for “significant” operational synergies.
Cameron Pearce, Blencowe’s Executive Chairman said: “Akelikongo represents a very exciting and low cost entry for Blencowe to add a highly prospective nickel sulphide project to our existing advanced graphite project at Orom Cross. Nickel is one of the most sought after metals at the moment and demand is set to soar even higher over the next decade.”
He said: “The structure of the transaction means we are acquiring a nickel discovery with historic spend of US$15 million for just $1.5 million in deferred share consideration, instead ensuring our cash is deployed in advancing the asset and unlocking incremental value.”
He commented: “The EV market is continuing its rapid expansion and we are seeing huge investments being made by substantial companies at various different levels within the full EV product cycle as they move to gain lost ground on the market leaders. We have seen significant prices rise in all battery metals in 2021 and this is forecast to continue ahead.”
He added, “We are also seeing a philosophical trend towards less reliance on China as the dominant source of most EV components, and a paradigm shift where manufacturers are prepared to offer incentives to move further up the supply chain to secure critical offtake.”
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