1) With the rise of silicone only anodes in batteries, should we be concerned with the future of graphite and our economic model / do you see falling graphite demand due to changing battery technology and/or the increase in synthetic graphite production?
Lithium-ion batteries are constantly evolving, and we cannot accurately forecast what will happen in the longer term. However, right now, all batteries contain substantial graphite and even silicon batteries will still contain a high quantity of graphite.
We believe graphite will be used in most variations of these batteries in the medium/longer term. Synthetic will always have a role to play, and we see some facilities that are set up only for synthetic, so they will always favour that product, but other facilities favour natural flake. In either case, there is room for both.
We are not concerned about falling demand, we see it as the opposite (rising), and a shortage of new [graphite] mines coming online, which tightens supply. This strengthens our position as a key player in the sector.
2) Has drilling now started in Uganda? Will you announce results in batches as they come in, or wait until the entire drilling program is finished?
Drilling commences early in the New Year. We have only just received the proceeds from the recent capital raise, and we are currently planning and mobilising all rigs and geologists to be there asap.
I do not yet know how we will announce results, but likely in batches rather than as a one-off at the end of drilling and will try to keep investors up to date on progress as much as possible.
3) Is there any news expected before DFS completion that could increase the value of the company?
There is plenty of news flow between now and DFS completion – the drilling program, offtake negotiation and agreements, DFS infrastructure, SPG JV and advancement of that strategy, funding parties/participation, further DFC grant funding, etc.
4) How soon after DFS completion would you expect full project funding to be announced?
Post-DFS project funding will take time, but we aim to move faster than peers like Black Rock. We are in the hands of some major organisations that will be funding us, and we can only push them so hard. More important is that they back us and provide a strong, valuable funding solution that provides the platform for a successful operation.
5) Are you now in active negotiations with OEMs for offtake MOUs? If so, with how many?
Yes. Whilst we cannot disclose specifics of any ongoing negotiation, what we can say we have been actively working with several tier-one OEMs for offtake agreements for some time, and to date all discussions are positive. We will update the market with more as and when we hit any material or price sensitive milestones.
6) Please explain how you envision BRES in a potential JV partnership? Is this going to be a 50:50 or minority partnership? How much leverage does BRES hold in these discussions?
Blencowe will be a 50% JV partner in the downstream SPG facility. Our exclusive long-term supply role and strong in-country relationships provides significant leverage in our SPG JV negotiations.
We are seeking a JV that is a win/win for all parties involved, as that generally works best, to ensure we build and operate the first meaningful graphite purification facility outside of China asap.
This is a game-changing event for us and for the entire industry and it will be very hard for any peers to try and replicate elsewhere.
7) You've already stated the project will be funded with a combination of debt and equity. Will the equity be at project level, i.e. giving away a slice of Orom Cross, or at company level?
Yes, we are seeking as much debt as the model will carry and the debt providers will allow, with all parties working to offer long-term repayment terms at very attractive rates.
However, we will have to incorporate some equity as well, as no one 100% funds mining projects on debt alone. We intend to raise equity at the project level, aligning with strategic investors who are most interested in retaining 100% ownership, and securing higher valuations.
We therefore do not foresee a significant dilutionary event for current shareholders within Blencowe for project equity ahead.
8) There appears to be little broker coverage of Blencowe. Now you've rolled out these three fantastic initiatives, are you going to push for more broker coverage and broker notes, to increase institutional investment and interest?
Good point and we probably do need more broker coverage, it is another marketing angle to try and galvanise a very slow market. We think institutional investment will come once DFS is completed, so our focus has to be on completing that first and presenting the market with an exceptional – and different (to our peers who only want to produce concentrate) – graphite operation. The shareholder value is clearly in the numbers and the differentiation.
Graphite WILL have its day in the sun, we have seen cycles come and go and the renewable energy transition has not gone away, it will still be front and centre as the world tries to meet targets. We believe we will have one of the only new graphite projects to go into production with low costs, with differentiated value-adding strategies and key relationships to deliver success.
9) The share price will hugely benefit from the debt financing being sorted. Would the DFC enter an MOU to more formally confirm and quantify their commitment to funding the project?
DFC have already entered an MOU – we signed an LOI and announced that earlier this year. The next level of commitment comes when we deliver them a completed DFS and they can take that to their internal committees and procedures. We cannot and will not ask them to cut corners.
We have several other tier one funding solution providers in the mix also and we intend to bring their interest to the market as we progress. Ultimately it is very positive sign that so many of these tier-1 institutions wish to be involved with us and we will work out a funding solution that brings us the best debt / equity mix ahead.
Blencowe Resources (BRES)
