Blencowe Resources initiates second stage of drilling at Orom-Cross
(BRES ) said it has initiated the second stage of its diamond drilling program at the Orom-Cross Graphite Project which involves drilling 2,200m, or 74 holes.
The program, which has commenced at the project in Uganda and is fully funded through the Company’s existing cash resources, is designed to in-fill the recently announced JORC Resource and upgrade substantial tonnes into the Indicated and Measured categories.
Blencowe announced its maiden JORC Resource estimate for Orom-Cross last month, less than one year after acquiring the Project. The Company’s commencement of Stage Two, so soon after the highly successful maiden drilling programme, underlines its focus ‘to add significant value efficiently and cost-effectively within this development phase’, it noted.
Blencowe told investors that this additional program at Orom-Cross will progress the graphite project along its development path towards first production and will be executed using Blencowe’s in-country technical partners, ADT Drilling and Minrom Consulting.
It said additional resources will also be targeted in the current programme, with drilling also focusing on proven high-grade areas, as yet not included in the maiden JORC Resource. The drilling program will take around 2-3 months to complete, with a similar amount of time thereafter to prepare samples, complete all assaying and provide a JORC Resource update.
To date, the Company’s maiden JORC Resource has delineated a 16.3Mt TGC resource at Orom-Cross, almost twice the size as the originally targeted. The Stage One drilling program also located higher grade graphite in the Camp Lode, which was only partially explored.
Stage Two will target parts of the Camp Lode to bring it into the overall JORC Resource for the first time, which is likely to have a material positive impact on both grade and tonnes, the Company told investors.
This next phase of development will bring the drill spacing closer together to ensure continuity of both product and grade, as required for mine planning within the PFS that will follow.
The Company said the diamond drilling campaign will progress in parallel with the ongoing metallurgical testwork which is being conducted by leading graphite expert, SGS Lakeside, in Toronto, Canada. Blencowe highlighted that these results are expected later this quarter.
"I am delighted to announce the commencement of our fully funded Stage 2 drilling program, which we expect will add further material value to the Orom-Cross graphite project in Uganda.
We are moving quickly towards the feasibility studies phase and this current drill program is designed not only to expand the resource's size, grade and classification, but also ensure that all necessary geological and mining information required for those studies is subsequently available,” said Cameron Pearce, Executive Chairman of Blencowe.
The Group said it remains “firm believers'' that the battery metals market is only just beginning its massive growth cycle over the next decade. It said it believes this “once-in-a-generation transformation will continue to expand exponentially into the future.”
Benchmark Minerals Intelligence, an information provider for the lithium ion battery to EV supply chain, recently noted that over two hundred lithium-ion battery Megafactories are now in the pipeline worldwide, a significant growth from seventy factories three years ago.
“These represent millions of tonnes of future graphite demand in the years ahead and support the positive outlook for the graphite market,” the Company noted in response.
“Accordingly, we are resolute in our position that Orom-Cross offers significant value and the ability to play a substantial role in helping to ease the significant forecast deficit of graphite in the future. We have already been issued a 21-year mining license at Orom-Cross, which not only considerably de-risks our work ahead, but also should help the Company advance the asset into production in an expeditious manner,” added Pearce.
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In a morning research note, analysts at independent broking firm, First Equity Limited, highlighted that results from Blencowe’s metallurgical test work should tell us if Orom-Cross is suitable for producing spherical graphite which are used in electric vehicle batteries.
Today’s news comes three weeks after Blencowe announced its maiden JORC resource at Orom-Cross, which was around double the management’s expectation of 8 to 10m tonnes.
“By moving up the development curve and nearer the ultimate target of mine production, Blencowe will then be able to supply a graphite market where severe shortages are anticipated in the coming years as the world moves to embrace electric powered vehicles.
Both drilling news in the coming months from this Stage Two programme, along with metallurgical test work results by the end of next month could provide the catalysts for the market to reprice the shares,” analysts highlighted to investors in this morning’s note.
Analysts at First Equity said they continue to rate Blencowe Resources as a ‘Buy’, with an initial 6-month price target of 21p, with the belief that the current share price anomaly will soon be corrected.
Shares in Blencowe Resources have lost nearly 20% since the beginning of the year. The stock was trading 5.16% higher this morning at 6.25p following the announcement.
Blencowe is a mineral resources company focused on fast-tracking its 100% owned Orom Cross Jumbo Graphite Project in Uganda to production. Orom Cross is an advanced exploration stage project which was awarded a 21-year mining licence in October 2019.
The development company which is currently focused on bringing the Orom-Cross graphite project into production, completed its 69-hole (1,950m) diamond drill programme into the Eastern Limb Lode and the High-Grade Camp Lode in September 2020.
The size and scale from exploration work that has already been completed in the licence area has clearly demonstrated that Orom Cross has the potential ‘to become one of the largest graphite projects in the world based on both size and the quality of the end product.’
Blencowe is fast tracking the project through to defining a maiden JORC-compliant resource, completing further metallurgical test work with a plan to deliver a Preliminary Economic Assessment (PEA) in Q1 2021 followed shortly after by a Pre- Feasibility Study (PFS).
Align Research describes Graphite as ‘an important battery metal’ since it represents around 50% of Li-ion batteries by mass, which uses the smaller sized flakes. In recent years there have been some racy growth rates suggested for graphite demand for lithium ion batteries.
Meanwhile, the group said demand for electric vehicles (EV) is rising on the back of green legislation being adopted by the UK, India, Germany, France, Norway and China, which is expected to lead to an increasing demand for Li-ion batteries and in turn for graphite.
Another integral factor is that Uganda’s economy is believed to hold ‘great potential’ with this whole region of East Africa viewed as a key African growth platform by the World Bank, hosting significant natural resources including copper, cobalt, gold, nickel and platinum.
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