5 things you need to know about BKT’s latest acquisition

Published at Oct 14, 2015, in Mining

After much shareholder speculation, ASX-listed junior graphite player Black Rock Mining (ASX:BKT) has unveiled its plan to pick up more graphite tenements in Tanzania.

The seven contiguous tenements themselves, referred to collectively as the “Bagamoyo Project” are focused on coarse graphite flakes, with initial exploration firming up a “significant” coarse flake graphite zone of about 1km by 200m of outcrop.

They also cover a broad area of 1116sq.km, with four additional outcrops identified over a 7km area.

BKT has taken an option to acquire the tenements should early exploration work provide promising leads within a four month exploration window.

So what is BKT getting itself into?

Coarse graphite is good graphite

The defining characteristic of the new tenements is that it hosts coarse flake graphite, with flakes measuring 2mm to 7mm observed on average.

However, flakes of more than more than 10mm have also been observed.

In fact, this monster below has also been found in the area.

Mineralisation found at Bagamoyo

The rock above contains a 40mm graphite flake aggregate, which is the largest observed in Tanzania by BKT.

Based on its early exploration work, the graphite has a grade of about 7%, which is lower than its project at Mahenge, but BKT says it has the potential to be a premium product because of the very coarse flake size.

More exploration and analysis will be needed to prove up the hypothesis.

It’s close to infrastructure

While the rocks may be good in Africa, there’s always the threat of a lack of infrastructure to make projects unviable on the continent.

It’s an issue many companies have had to wrestle with before, especially juniors which don’t necessarily have the resources to build a lot of their own.

Luckily for BKT, the tenement area has excellent access to water and power.

The location of the Bagamoyo Project

It’s just 125km north west of the Dar es Salaam Port, which gives BKT excellent access to market in the case of ultimate commercialisation.

The region itself has been producing graphite aggregates for a while now, so all the supply chains area already in place.

It will keep the exploration team busy

BKT’s other graphite project in the country centres around the Ulanzi prospect, which Finfeed has written about before on the back of promising exploration results.

It recently got back assays from 9 out of 17 holes it drilled into the prospect, including hits of:

  • 92m @ 8.5% total graphitic carbon (TGC) including 12m @ 14% TGC
  • 52m @ 10.4% TGC including 8m @ 13.81% TGC
  • 32m @ 9.25% TGC including 10m @ 16.32% TGC

The assay results meant 1000m of the strike drill tested so far is consistently grading at about 10% TGC.

The results were enough to spur BKT onto a 30 hole infill drilling program.

However, with infill drilling taking place BKT has an exploration team sitting idle.

New exploration work means BKT will be getting more bang for its buck out of the exploration team.

It’s getting it for a song

One of the great things about the deal is that it’s back-loaded with most of the cash BKT putting forward to kick in once it gets close to commercialisation.

As part of a multi-step funding deal, BKT is putting in:

  • $100,000 in exploration in the next four months
  • $50,000 in a non-refundable deposit, plus 1 million shares
  • $200,000 plus 4 million shares upon exercise of the option to acquire

Further payments kick in upon the declaration of a JORC resource and a net smelter royalty of 3%, but in terms of upfront costs BKT has managed to keep it low.

BKT will also be required to put $500,000 of exploration funds into the permit per year, meaning BKT will have plenty of exploration news to keep up with.

It positions BKT as a major graphite player in Tanzania

With this acquisition, BKT moves beyond being a one-project wonder and has added more to its plate.

It’s taken an early-stage position in another project, signalling a step-change from the company.

At the very least BKT’s managing director, Steve Tambanis, is excited by the potential.

“The acquisition of the Bagamoyo Graphite Project represents a significant strategic milestone and establishes the company as a major graphite explorer and developer in Tanzania,” Tambanis told shareholders this morning.

“Given the exciting nature of the mineralisation and the favourable location, the company has taken the opportunity to secure an extensive tenure position in the region.”

View Our Investment Portfolios

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

Publishers Notice

The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

Australian ASX Small Cap stocks | Why Finfeed.com is Australia’s leading small cap publication

Founded seven years ago, Finfeed.com is Australia’s leading and longest standing website for investor and finance news, education and expert opinion.

Published by StocksDigital, Finfeed was created to report daily on the comings and goings of ASX listed stocks in the small cap market.

As the first digital publication dedicated specifically to this space, Finfeed soon became the most trusted publication in the market, quickly garnering over two million page views – a number that continues to rise.

Finfeed.com provides its readers with informative articles that tackle the latest in market moving #ASX small cap news, plus exclusive content you won’t find anywhere else. It is aimed at those with an interest in investing, market education, company performance, start-ups and much more.

Finfeed.com is the only media organisation operating under the strength of a Financial Services License and is backed by leading journalists and analysts all with brands of their own.

The website aims to inform, educate and entertain with content that drills down into the heart of financial matters.

Finfeed is a leading source of investor and market information, with everything investors need to know about how to invest written in a way that anyone can understand. 

Over the years, the website has expanded beyond exclusively reporting on small caps, to profile Australia’s leading ASX listed small, mid and large caps as well as some of the country’s most successful CEOs and business leaders to find out what makes them tick.

Every day you will find fresh content covering:

Fast Facts

Over 4,000 articles published

Over 2.3 Million Page Views and counting

Over 10,000 followers on social media

Subscriber list growing by 2% monthly

Thanks for subscribing!