Blencowe Resources (“Blencowe” or the “Company”) (LSE: BRES) is pleased to announce results of the Pre-Feasibility Study it has been conducting at its flagship Orom-Cross Graphite Project in Uganda. These results highlight an exceptional long-life project that delivers considerable returns over an initial life of mine period of fourteen years. In addition, the PFS indicates an initial capital requirement that has been lowered by 23% since the Preliminary Economic Assessment (“PEA”) announced in 2021.
The PFS has been delivered in conjunction with leading graphite technical expert Battery Limits Pty Ltd (“Battery Limits”) who have managed several other leading graphite project feasibility studies worldwide.
Executive Chairman of Blencowe, Cameron Pearce commented:
“This PFS represents a major milestone for the Orom-Cross Project and the results are outstanding. We have considerably outperformed the 2021 Preliminary Economic Assessment in all key areas, whilst also reducing the initial capital requirement by 23% to just US$62M.”
“The Orom-Cross NPV (Net Present Value) of US$482M is excellent, especially in relation to this lower capex, and proves that this is a standout graphite project. The 14-year long mine life can be extended at any time with additional drilling at Orom-Cross, whilst the concentrate is of high quality with specific element content that is unique and which will elevate market demand for all of the end-products we sell. Selling graphite is one of the key challenges for a successful operation so this is critical.
As a result of 50% of these end-products being larger flake size categories Orom-Cross has a substantial weighted average selling price for its basket of end-products, yet it also has one of the lowest total operating costs of any graphite project worldwide. This ensures considerable operating margins over life of mine, which in turn will deliver over US$1 billion free cash to Blencowe as return on investment.
We have adopted a more conservative production profile for both start-up and the ramp-up thereafter to maintain the integrity and viability of delivering new graphite product into the market. We could have chosen to boost the NPV further by expanding production and sales of graphite but we don’t see that as a credible base case. Also, this modest production profile helps delivers a lower initial capital requirement for Blencowe to commission the mine which is another big advantage.
These are tremendous results for our Project and once again highlight the disconnect between the value of Orom-Cross and our current public market valuation. With a current market cap of circa £4M, excluding our nickel project and existing cash, we are trading at approximately 1% of our NPV and at 5% of our expected average annual EBITDA figure. With the PFS now finalised we would expect interest to grow and the inherent value in the Company to be recognised.”
