This article is a sponsored feature from Mining.com.au partner Blackearth Minerals NL. It is not financial advice. Talk to a registered financial expert before making investment decisions.
With graphite supply deficits looming for the end of 2022, BlackEarth Minerals (ASX:BEM) is making waves at its Maniry Graphite Project in Southern Madagascar as it continues to demonstrate success on both exploration and commercial fronts.
The project produces high-quality graphite that meets tier-1 specifications, with a series of key offtake partnerships in place covering the spectrum of graphite output.
And with the recent announcement of a World Bank infrastructure deal that will improve access to a key export port, the project is set to go from strength to strength.
Market conditions ripe for premium pricing
The expected deficit, caused by increased demand from electric vehicle manufacturing along with other industrial applications is forecast to cause graphite prices to increase with a flow-on effect for a range of businesses and consumers.
Graphite, whilst common and relatively inexpensive when compared with other battery materials, is highly dependent on flake quality, especially when used in critical applications such as electric vehicles.
And with China responsible for a majority of global output, questions are being asked about supply security moving forward.
Flagship Maniry Graphite Project presents compelling potential
BlackEarth’s 100%-owned Maniry Graphite Project is located in Southern Madagascar, and includes an existing Total Mineral Resource Estimate of 23.1Mt @ 6.9% Total Graphitic Carbon (TGC), contained within a large Exploration Target of 260-380Mt at 6-8% TGC.
The project’s key Razafy prospect is one of the largest high-purity, large-flake graphite resources in the world, and is well suited for the production of value-added graphite products.
The project has seen a series of positive recent exploration results from diamond drilling at Razafy Northwest, including:
● 15.9m at 14.5% TGC (MNDD110)
● 27.2m at 12.5% TGC (MNDD111)
● 8.6m at 12.8% TGC (MNDD111)
● 6.7m at 10.7% TGC (MNDD112)
These results will form a key part of an upcoming Definitive Feasibility Study, due in several weeks time.
BlackEarth Managing Director Tom Revy notes: “These results are the culmination of a range of exploration activities we’ve undertaken at our Maniry Project over the last year and they further validate the high quality of our expanding graphite resources.
“These results … further validate the high quality of our expanding graphite resources”
We have focused on resource expansion by size and grade over the last year and this has been achieved with even further upgrades to our mineral resource expected in the short term.”
Updated scoping study delivers the goods
The project’s initial Scoping Study was released in 2018, with an updated version in 2021 delivering ‘significantly improved’ outcomes and a longer project mine life, finding that Maniry held potential to be a low-cost, long-life operation with high margins.
Key updated findings included:
- improved overall project economics with an NPV10% of US$184M and an IRR of 86%
- longer project mine life with a 32% increase in Resources;
- higher initial feed grade as a result of the discovery of the high-grade Razafy North West Zone; and
- project payback of less than 2 years
The project includes ‘significant’ exploration upside from a series of key untested regional targets, generated from geochemical survey work. These targets will be the focus of future exploration work, which if fruitful, could lead to the discovery of a large new graphite deposit.
World Bank funding lends support
A planned World Bank-funded road upgrade will provide improved access to the existing export port at Tolagnaro, approximately 250km from Maniry.
The agreement with the Madagascan Government, worth USD$534.9 million, will finance rehabilitation and paving of a 400km stretch of road that connects Maniry to the port, providing opportunity for project capital and operating costs to be reduced.
“BlackEarth is pleased to see such commitments from both the Madagascan Government and World Bank. This proactive approach to supporting both local and foreign investment in the area is certainly a win-win for all current and future stakeholders and reinforces the positive investment climate that exists in Madagascar.
The upgrade of RN10 certainly has the potential to enhance safety on the roads as well as result in significant savings in operating (logistics-related) costs. It will now provide us with the option of using both the ports of Toliara and where we have already been granted export rights, at Tolagnaro”
Diversified output opens market opportunity
Key to note is Maniry’s graphite output, which covers the complete three-part spectrum of flake sizing.
Importantly, this provides the project exposure to a diversified group of offtake partners.
Small flake graphite 30-35% USD $600-750/t
Small flake graphite is most commonly used in the production of lithium-ion batteries. The small flakes of graphite are ideal due to a large surface area, which helps to improve the battery’s performance. In addition, small flake is also used in the production of lubricants and is used in water treatment systems.
Mid-sized flake graphite 15-20% USD $750-1,200/t
Most commonly used in the production of refractory materials, which are resistant to high temperatures and are used in a variety of applications such as lining furnaces and kilns.
In addition, mid-sized flake graphite is also used in the production of brake linings, gaskets, and lubricants. Small flake graphite is also used in refractory applications, but it is not as common as mid-sized flake graphite due to its lower melting point.
Coarse flake graphite 50%+ USD $1,200-2,200/t
Coarse graphite is used in many commercial and industrial applications as a flame retardant. When added to plastics, coarse graphite helps to delay the onset of combustion, allowing time for evacuation or extinguishing. In addition, coarse graphite can be used as a fireproofing agent for building materials.
Existing offtake agreements underpin production
BlackEarth has signed a series of non-binding Memoranda of Understanding with offtake partners for up to 50% of Maniry’s graphite production. These MOUs provide BlackEarth with a strong foundation on which to build long-term partnerships with quality-conscious customers.
Partners include Urbix and LuxCarbon for the sale of fine flake product output, refractory product manufacturer RHI Magnesita for mid-sized graphite, and Grafitbergbau Kaisersberg for expandable graphite, made from coarse flake.
In addition, BlackEarth has entered into a joint venture with Indian company Metachem to build a downstream expandable graphite processing facility in that country, with an expected initial production capacity of 2,000tpa and 2,500tpa. The facility will utilise graphite concentrate feedstock from Maniry.
Heavy ESG focus with community-first approach
The Maniry Graphite Project is expected to bring significant economic benefits to the local community in Madagascar, and in an important development, has received a maiden BB rating from independent ESG ratings company Digbee.
The project is expected to create hundreds of jobs, and it will also generate significant tax revenue for the government. In addition, the project will help to promote sustainable development in the region by providing training and education opportunities for local residents.
As part of the assessment, the company has identified a number of key areas where work needs to be undertaken. It has made a number of commitments including carrying out an Environmental and Social Impact Assessment via an independent specialist (as part of the DFS process), along with flow rate testing on deep hydrogeological bore holes to guard against impact on local village water sources.
“Whole of business traceability is an important part of our commitment to ESG principles”
In May 2022, BlackEarth announced a strategic partnership with Circulor to measure and manage supply chain visibility across the entire process of its Maniry Graphite Mine operations.
“Whole of business traceability is an important part of our commitment to ESG principles and we believe the work we are about to commence with Circulor will set world standards in the establishment and all activity related to graphite mine operations.
Our Partnership with Circulor will help us deliver on our commitment to not only supply chain transparency but also will demonstrate our complete commitment to world best practises in risk and environmental management. It is our intention to also actively monitor and manage our contribution towards achieving a low carbon operation”.
2022 is proving to be a busy year at Maniry, with the project’s upcoming Definitive Feasibility Study set to be followed by a number of key milestones including the commencement of Front End Engineering and Design, conversion of MOU offtake agreements to legally-binding offtake agreements, project financing (on completion of the Maniry DFS), and the finalisation of all necessary pre-construction permits and licences.
“Our robust project economics and early stage mine development plans position us well to further develop our relationships with existing and proposed, new down-stream processing ventures as we push forward with our commitment to become a major contributor of material to the battery power and electric vehicle markets”.
Images: Blackearth Minerals NL