Blencowe Resources plc (“Blencowe”) listed on the LSE at 4p per share as a cash shell in April 2019, backed by some well-known movers and shakers in the junior natural resources market. Shortly thereafter Blencowe identified the Orom Cross Jumbo Graphite Project (“Orom Cross” or “the Project”) in Uganda and subsequently completed a Reverse Takeover (RTO) of Orom Cross in April 2020 at 6p per share, alongside an oversubscribed capital raise for £2M at the same level. Orom Cross has all the makings of being a largescale project with scope to produce an impressive quantity of high value jumbo and large graphite flakes.
Potential world class graphite project with 21-year mining licence
Orom Cross provides a highly compelling combination of a large scale, shallow, low-cost mining operation, coupled with a high value product. Risks will be reduced with the publication of a PFS, expected in 1H 2021 following the recent drilling which will allow a JORC-resource to be defined in early Q1 2021.
Fulfilling long term demand for high quality flake graphite
The graphite market is estimated to be in deficit by over 500,000tpa by 2025. This is particularly relevant when considering current global production is circa 1Mtpa. Blencowe is targeting the commencement of production from Orom Cross in early 2024 and the already attractive economics should therefore further improve, especially since few other large-scale projects are expected to come online in the next 5 years. Of these, fewer still have a high proportion of the higher value jumbo/large flakes, which Blencowe is fortunately well endowed with. Orom Cross also benefits from a lower risk location compared to other graphite projects looking to be brought online.
Proven management team that knows how to keep investors in touch
Healthy newsflow looks assured with drill sample assays to come which are planned to result in a maiden JORC resource. Plus, samples sent to Canada for Phase 2 metallurgical testing, all go into the PEA and PFS.
Peer group comparisons suggests significant upside ahead
Analysis of the peer group shows the potential. We update coverage of Blencowe with an increased target price of 19.1p and Conviction Buy stance.
RISK WARNING & DISCLAIMER
Blencowe is a research client of Align Research. Align Research and a director of Align Research hold an interest in the shares of Blencowe Full details of our Company & Personal Account Dealing Policy can be found on our website http://www.alignresearch.co.uk/legal/
For full disclaimer information please refer to the last page of the full document. This investment may not be suitable for your personal circumstances. If you are in any doubt as to its suitability you should seek professional advice. This note does not constitute advice and your capital is at risk. This is a marketing communication and cannot be considered independent research.
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