Black Rock Mining Limited · ASX:BKT
Black Rock Mining — Graphite Masterclass Sydney 2019
40 slides from Black Rock Mining's conference presentation, Mar 15, 2019
Slide 1: Graphite Masterclass
Graphite Masterclass Sydney 15 March 2019 1
Slide 2: Anna Rabin, Dragoman
Anna Rabin Dragoman 2
Slide 3: Tanzanian Mining Sector Recent Developments & Trajectory
Dragoman Tanzanian Mining Sector Recent Developments & Trajectory Level 41, 55 Collins St, Melbourne, Victoria, Australia 3000 | Phone +61 3 8678 2888 © Dragoman www.dragomanglobal.com 3
Slide 4: Snapshot of Tanzania
Dragoman Snapshot of Tanzania v Recent history v Safety, security & strategic location v Ease of doing business © Dragoman 4
Slide 5: The Administration
Dragoman The Administration v The rise of John Pombe Magufuli v Anti-corruption drive v Attitude towards the private sector © Dragoman 5
Slide 6: The Mining Sector
Dragoman The Mining Sector v Revised mining regulations v Investment climate © Dragoman 6
Slide 7: Mining Sector Outlook
Dragoman Mining Sector Outlook v Recent developments v Opportunities & risks © Dragoman 7
Slide 8: The Future
The Future v Sector trajectory v New forms of engagement v President Magufuli’s next steps © Dragoman 8
Slide 9: Simon Francis, Orior Capital
Simon Francis Orior Capital 9
Slide 10: Black Rock Mining, BKT.AX
Black Rock Mining, BKT.AX The most compelling graphite project Orior Capital [email protected] March 2019 10
Slide 11: Great project, great price
Great project, great price Ø Black Rock differentiated Ø Graphite market; huge potential, not well understood Ø Valuations 11
Slide 12: A differentiated asset
A differentiated asset ØSignificant advantages, both geological and… § The 2nd largest graphite reserve, and the 4th largest JORC- compliant resource § Bias to large flake sizes, low strip ratios, minimal impurities § Ability to produce highest quality products without chemical interference § Use of
Slide 13: Ports of Dar es Salaam, Mtwara
Ports of Dar es Salaam, Mtwara Ø The TAZARA railway feeds directly into the Port of Dar es Salaam, which serves seven countries and handles 95% of Tanzania’s trade cargoes Port of Dar es Salaam Port of Mtwara 13
Slide 14: A differentiated approach
A differentiated approach ØRecognising the need for risk mitigation § Imerys’ Okanjande, Namibia placed on care and maintenance in 2018 § Syrah’s Balama project, built after PFS, has had teething problems ØA key focus of the DFS § Large-scale pilot plant, improvements in the plant design over 15 ite
Slide 15: Strong outlook for graphite
Strong outlook for graphite ØGraphite looks like iron ore did in the mid-2000s; increasing Chinese imports will drive higher prices ØDemand growth driven by new, embryonic industries – EVs, energy storage – and pent-up demand for expandable graphite ØChinese supply is under pressure; China already i
Slide 16: Not all graphite is created equal
Not all graphite is created equal ØLarge flake; 80 mesh and larger § Massive pent-up demand § Supply constrained § Prices up ~25% over the past one year § There is a step change in pricing above 98% purity and 80 mesh ØBattery grade; 150 to 80 mesh § Demand constrained – at least for now § Prices fl
Slide 17: The thing about batteries
The thing about batteries Global smartphone sales ØThe battery market will be huge, one day ØEV penetration outside of China is still low ØCompanies still have to fund themselves while the market develops ØSmartphone sales growth was essentially linear Ø Everybody agrees that battery technology will
Slide 18: Early adopters, not mass market
Early adopters, not mass market Wall Street, 1987, 20th Century Fox 18
Slide 19: Demand growth will outperform
Demand growth will outperform ØFlake graphite demand to increase from 630,000 tonnes in 2017 to ~1.4m tonnes by 2027 § Batteries 20% pa, industrial 6% pa, refractory 0% § Implies industrial demand growing at just 10,000 tpa ØDemand increase in 2017-2027 equates to two “Balamas or three “Mahenges” ØB
Slide 20: Graphite supply challenged
Graphite supply challenged ØChinese supply being hampered by dwindling grades in large flake, and stricter environmental controls ØShandong: larger flakes, reserves depleting ØHeilongjiang: +200 mesh range, ~45% China production, oversupply ØSeveral African projects are looking to ramp up; financing
Slide 21: Valuations
Valuations Ø <4% of NPV is cheap Ø Projects a year from cash flow can trade at 30%-50% of NPV Ø Black Rock valued at A$0.16 to A$0.40 21
Slide 22: Valuations
Valuations ØStrategic investors pay more § Benefit of synergies, more capital, no ‘add-ons’ to boost returns § Buying a 25% stake in Mahenge for US$56m (25% of NPV) would value the other 75% at US$168m (A$0.40/shr) ØLonger-term, the project will be valued on earnings § Industrial minerals peers are
Slide 23: Looks like a lay-up
Looks like a lay-up ØMahenge is the most thoroughly executed project ØGraphite looks like iron ore in the mid-2000s ØBlack Rock and Syrah to emerge as dominant players Ø<4% of NPV is unjustifiably cheap. On a debt and equity financing this is worth, A$0.16 to A$0.40 ØShare price performance in 2019
Slide 24: Important disclaimer
Important disclaimer This document is a marketing communication. It is not investment advice. It is for information and educational purposes only. The document does not and could not take into account your financial situation, objectives, needs, risk appetite, and other factors pertaining to your ci
Slide 25: John de Vries, Black Rock Mining
John de Vries Black Rock Mining 25
Slide 26: Disclaimer
Disclaimer The release, publication or distribution of this presentation in certain COMPETENT PERSONS jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this presentation is released, published or distributed The information in this report that relates to E
Slide 27: Who is Black Rock Mining?
Who is Black Rock Mining? Black Rock Mining Limited is an Australian based company listed on the Australian Securities Exchange (ASX:BKT). The Company has a 100% interest in the Mahenge Graphite Project located in Tanzania. The Project has a JORC compliant Mineral Resource Estimate of 212m tonnes at
Slide 28: Management
Management Black Rock Mining Corporate ASX Ticker BKT Share Price (as at 11 March 2019) A$0.068 Shares on Issue 538.5m Options 47m Fully Diluted Market Capitalisation A$33.4m Top 20 Shareholders c.42% JOHN DE VRIES RAYMOND HEKIMA RICHARD CROOKES CEO, Vice President – Corporate Non-Executive Executiv
Slide 29: Why Graphite?
Why Graphite? • Demand for energy storage and expanded applications is likely to Growing demand double volumes over next decade • In the expandable market, Energy efficiency urbanization and building renovation are driving demand for large flake and EV & Batteries purity products Flake Size opportun
Slide 30: Why Black Rock Mining?
Why Black Rock Mining ? • The best undeveloped graphite project globally driven by geology and Geology geography • Highest grade concentrate and flake size Geography distribution with a scalable deposit as demand grows Grade & Size • Lowest peak capital expenditure driven by good logistics – close t
Slide 31: Exceptional DFS
Exceptional DFS Item Metric Post-tax, unlevered NPV10 US$895m Post-tax, unlevered IRR 42.80% Capex for Phase One (83k tonnes pa) US$115m (incl 10% cont) Capex for Phase Two (83k tonnes pa) US$69.5m (incl 15% cont) Capex for Phase Three (83k tonnes pa) US$84.2m (incl 15% cont) Life of Mine C1 Costs,
Slide 32: Product Validation
Product Validation • Black Rock conducted a 90 tonne Pilot Plant producing 8 tonnes of concentrate into the hands of 24 customers who can work with the product and validate the quality • The Pilot Plant defined the DFS and the success of the marketing strategy • The Pilot Plant became a strategic pa
Slide 33: A team that can deliver
A team that can deliver 2016 March Scoping study delivered April Metallurgical testing June 99.1% World first TGC Purity From achieved in lab by flotation Scoping study to DFS 2017 April PFS delivered in 2 years 2018 May Pilot Plant, World first 99%+ Purity delivered by pilot plant Oct 1st Offtake a
Slide 34: Tanzanian engagement
Tanzanian engagement Tanzanian community and Government are supportive of Black Rock. We have properly secured our social licence to operate. • Environmental approval received • Mining licence awarded 34
Slide 35: Why invest in Black Rock?
Why invest in Black Rock ? There are two world class graphite opportunities, they are, however, very different assets Name Plate 250kt per annum 350kt per annum Market Capitalisation March 19 $34M $440M Mine Life 32 years 50+ years Initial Investment Capex US$115M US$215M Product Profile 98.5% to 99
Slide 36: Strategic Approach to Financing
Strategic Approach to Financing “Heavy” Remove Doubt - Chinese Pilot Segmentation & Educate Multiple Finance Definitive Validate Plant (PP 2.0)- Channel Investors Streams & Feasibility Study Metallurgical Demonstrate Development Options – Performance Product and with Chinese EPC Validate Price Partn
Slide 37: Upcoming Catalysts
Upcoming Catalysts ✓ Mining Licence Award DFS Optimisation / Chinese Procurement Additional Offtakes 4th Module Financing Progression 37
Slide 38: Summary
Summary GROWING BKT WELL EXCEPTIONAL MARKET POSITIONED ECONOMICS • The graphite market is • Competent and • Construction transforming from a experienced underwritten by binding mature sector to one management team in off take agreements with rapid growth place • The only project with a prospects wel
Slide 39: Contact details
The D FS Stud Definit y iv maj (DFS) d e Feasi or g e emo bility PILO geo logi ograph nstrate T PL cal a ic dva al and s The pil AN T n ta g o es pla n t p la n t va t des de-r i spe lidates ign and sks cific MA ati cust om Gro RKE app on & p er r od w for in g d e T lica tion s uct h hig igh f m an
Slide 40: Q&A
BLACK ROCK MINING LIMITED Q&A