Tanzanian graphite developer Black Rock Mining (ASX:BKT) has shortlisted prospective debt providers regarding funding development of its Mahenge Graphite Project.
The potential debt providers are now in the process of providing term sheets to their internal credit committees.
Black Rock has received notification of an initial stage credit committee approval from a wholly owned subsidiary of the Government of South Africa.
Several potential lenders, including Development Finance Institutions and Tanzanian commercial banks, have progressed through the substantive part of the due diligence process, including site visits. They are also progressing indicative term sheets.
The company notes that while it does not consider notification of an initial stage credit committee approval material in and of itself, the debt financing process is continuing on track, and initial stage credit committee approval is a pre-condition to receiving final approval.
Black Rock expects lender board approvals from several lenders to be notified to the company during Q4 2023. Once those approvals are received, Black Rock will then seek to negotiate and execute full form facility agreements with successful lenders, and confirm the structuring of the project financing package.
Ultimately, funding for the project to reach production will require a combined debt and equity project finance package and Black Rock is targeting up to 50% debt via traditional project finance.
South Korean steelmaking company POSCO has entered into a MoU for a potential cornerstone equity position of up to US$40 million and the debt component is anticipated to require a combination of lenders. The debt funding is intended to fund Module 1 and other infrastructure, including a 220kV powerline and associated switchyards at Mahenge townsite.
In June 2020, Black Rock announced a strategic alliance with POSCO for the development of Mahenge. This included an equity investment of US$7.5 million, followed by an offtake agreement for the fines for Module 1 (32% of volume) plus a US$10 million prepayment facility.
POSCO has also signed an MoU for 6,000tpa of large flake graphite (7% of volume) increasing POSCO’s offtake interest to almost 40% of Module 1. In September 2023, Black Rock signed an MoU with POSCO for the fines for Module 2 for an equity investment in Black Rock of up to US$40 million or 19.9% (whichever is lower).
Black Rock Mining is an Australia-based company with ab 84% interest in the ‘world-class’ Mahenge Graphite Project located in Tanzania. In October 2018, the company released a Definitive Feasibility Study (DFS) for Mahenge. This was enhanced (eDFS) in July 2019.
Write to Adam Orlando at Mining.com.au
Images: Black Rock Mining
