Blencowe chief executive Michael Ralston said work at its Orom Cross graphite project in Uganda was developing as it continued its 7,000m drilling program, intended to increase the company's resources and reserves.

The company hopes to achieve a substantial increase in both JORC Resources and Reserves, positioning Orom-Cross for higher production levels and a longer mine life within the DFS.

"Hopefully, we'll complete the DFS by the middle of this year," Ralston said. "We understood the concept of what we needed to do, and we just got on and did it," Ralston said.

"If I had more cash in my hand, I reckon we would have finished the DFS by now. But the graphite market has been very tough for the last couple of years, so we're making do with what we've got. And once we finish this drilling and finish the DFS, I think we're going to showcase something very special, and that's a big, big value inflection point for us," he added.

Processing

Ralston explains that the key for Blencowe and Orom Cross is to extract value from the 55% of its ore that is small flake graphite.

Like the majority of flake graphite producers in the world, Orom Cross has a combination of large flake and small flake graphite (around 45% of its ore body is large).

For producers keen to enter the battery market, where graphite is used as an anode in lithium-ion and lead-acid batteries, large flake graphite can fetch around $1,300/t, with an operating cost of around $400-$450/t. Small flake graphite does not have the same returns, however, as it can fetch up to $550/t on the market.

"You're not making much margin on half of your end product. And this is the problem that every single graphite project in the world is facing right now," Ralston said.

"If you're going to go into commercial-scale production, at 50,000t, 55% of 50,000t is a lot to sell. And the only place that you can sell into at the moment for that sort of bulk quantity is China. They do about 95-96% of all of the purification at the moment," Ralston explained.

To this end, Blencowe has partnered with Chinese SPG producer Qingdao TaiDa Carbon to develop a spherical graphite product, or rather, five niche micronised products (45/25/15/10/5 microns). These products sell for between 2-10* normal concentrate prices. 

It has also partnered with Triessence - a leading Asian SPG and anode material producer company - to add downstream beneficiation, which will upgrade 96% concentrate to battery-grade 99.95% coated SPG.

"Our view is that you've got to go and find a way to value add on that half of the small flake in order to get more out of it," Ralston said. "For us, the combination of microlisation and beneficiation will substantially lift our weighted average selling price. Plus, it also actually lowers our operating costs," he added.

Net zero

Ralston pointed to the location of its project - with access to hydro energy and said the company was hoping to create a final 'net zero' graphite product.

"One of the things we are aiming for is a net zero mine site target, which means that we're looking at everything. We are starting with hydroelectric power, which obviously helps a lot. We're looking at dry tailings. We're looking at electric drying of the graphite. We're looking at mine site vehicle fleets - which are almost all electric trucks - to take product to market all the way down to Mombasa," he said.

"You try and set a blueprint for a more sustainable mining practice because, frankly, at the end of the day, the miners should be doing a lot more than they are," he added.

Making the supply net zero will mean that OEMs can have a clear audit stream when they look at Blencowe, Ralston highlighted. It also fulfils some of the obligations set out by the Development Finance Corp (DFC), with whom the company has applied for funding.

The company has been fully accredited by the Mineral Security Partnership.

Market

Ralston spoke about the graphite market, which has seen prices hit recently, falling to lows due to an oversupply of material coming from China.

"Market conditions have been terrible in recent times. It has been volatile. We saw some pricing strength in 2022, but from mid-2023, there has been a fairly significant decline in graphite prices. Most natural graphite is used in China, so pricing depends on China's FOB pricing."

"The inducement price for new projects outside China is way above the current FOB China price," Viren Hira, GM business development & investor relations, told Mining Journal in November. Suffice it to say that market conditions have not improved since then.

Pricing for fine graphite, which is used in lithium-ion batteries (-100 mesh), has been more impacted than that for coarse graphite, which is used in industrial products like refractories and lubricants. Coarse graphite enjoys better prices than fine graphite even though the fine is a higher-specification production.

Fines pricing has declined significantly because it is anchored to China pricing.

"Nobody wants to invest in early-stage mining projects anymore. Everybody wants the end result, you know, nobody wants to buy flour and sugar. They all want to eat the cake, basically," Ralston said.

"So that's the challenge for us in this industry now. And once upon a time, you could run around London on a road show and raise money. No, it doesn't work like that anymore. The market has shrunk. It's far more challenging than ever was before."

"I know from 20-plus years of doing this that it can ground to a halt pretty quickly if you don't get your delivery and keep going. So you're only as good as your last week," he added.

On Wednesday, shares in Blencowe were at 4p/share, up 7% from the start of the year.