Dec. 21, 2020 - Tanzanian graphite developer Black Rock Mining Limited (ASX:BKT) (Black Rock or the Company) is pleased to announce that, subject to a final internal POSCO Group of Korea (“POSCO”) approval process, it has agreed an Investment Term Sheet with POSCO for the placement of USD$7.5m worth of shares in Black Rock to acquire an equity interest of 15%. Black Rock is to issue a total of 126,020,001 shares at an issue price of AUD$0.082 per share. This represents a 23% premium to the 30-day VWAP and a 15% premium to the 15-day VWAP, prior to the agreed share price standstill date of 20 November 2020 (refer ASX announcement on 23 November 2020). Subject to POSCO maintaining a minimum of 10% equity interest in Black Rock, POSCO has the right to nominate a director to the board of Black Rock. 

Following the signing of the Strategic Alliance & Development MOU in June 2020 and then the completion of POSCO’s due diligence in November 2020, as announced on 23 November 2020, both Black Rock and POSCO rapidly moved onto the next phase of its Strategic Alliance which was to execute an Investment Term Sheet (“Term Sheet”). 

Commenting on the Term Sheet with POSCO, Black Rock Managing Director and CEO, John de Vries said: 

“Developing a Strategic Alliance Partnership with a global major multi-national such as POSCO for a junior exploration company like Black Rock is a significant milestone for our Company. This is not an overnight success story, we’ve been thorough and diligent to ensure we executed our strategy to develop a collaborative strategic alliance with a Global Major in the Lithium-Ion Battery Anode supply chain. It takes patience, quality and perseverance to secure a global major strategic alliance, from our initial meeting with POSCO in 2017, through to POSCO’s site visit to our Mahenge Graphite Project in 2018 and then our ongoing testing of our Graphite Concentrate & Spheronised Purified Graphite through to the 2019-2020 due diligence and clearance of POSCO’s internal gates on meeting their primary, secondary and tertiary specifications for downstream processing. 

We know and understand that Mahenge Graphite has been verified as the best-in-class globally and we have conducted the largest global pilot testworks. This coupled with a potentially long mine life, an exceptional definitive feasibility study and a low cost of production are the reasons why POSCO has chosen Black Rock as its preferred Graphite Anode supplier.” 

Commenting on the Strategic Alliance with Black Rock, POSCO’s Project Manager said: 

“As part of our process to secure a long term, low cost & high-quality Graphite Anode supplier, POSCO undertook an extensive global process to ensure we aligned ourselves with the best and highest quality undeveloped Graphite Project. In Black Rock’s Mahenge Graphite Project, we have secured access to a high-quality project and a capable team that will allow our LiB Materials Business to execute its strategy to ensure it has a diversified anode supply chain. We look forward to further developing our Strategic Alliance with Black Rock including finalising the longform offtake & prepayment agreement.”

Following the execution of the Term Sheet, the agreement is to be tabled and presented to a final internal approval-gate process within POSCO, with that approval expected to occur on or before 15 January 2021. Once this final process of approval has been completed the terms of the Term Sheet will be binding on both parties and a Subscription Deed and Shareholder Rights Umbrella Deed are to be executed as an addendum to the Term Sheet. 

In addition, the Term Sheet is subject to the satisfaction of the following Conditions Precedent:

1. Any necessary third party and regulatory approvals having been obtained for the transaction including the Australian Foreign Investment Review Board approval; 

2. Any necessary internal approvals by either party including POSCO’s Final Investment Decision, 

with the conditions precedent to be satisfied within 90 days of when the Subscription Deed and Shareholder Rights Umbrella Deed being signed. 

Long-Form Offtake & Prepayment Agreement 

The parties intend to negotiate an offtake and prepayment agreement pursuant to which POSCO will acquire between 20,000 to 40,000 tonnes per annum of minus 195 flake graphite for the life of mine production from Module 1 of the plant to be constructed at Mahenge. The terms of purchase are to be negotiated as part of the long-form offtake & prepayment agreement. In addition, POSCO has indicated a preparedness to provide between USD$10 million to USD$20 million as a prepayment facility, with the facility to be used as development funding for the Mahenge Graphite Project. 

The parties have agreed to use their reasonable endeavours to execute a formal long-form offtake & prepayment agreement by 31 March 2021 to give effect to the above intention.