Blencowe Resources - Initiation of Coverage

Set to potentially play a big role in supplying flake graphite for energy storage – one of the biggest trends of the 21st century

Blencowe Resources plc (“Blencowe”) listed on the LSE in April 2019 at 4p per share seeking a Reverse Takeover (RTO). The board behind this ultra-clean shell company includes some well-known movers and shakers behind resources stocks that have masterminded the acquisition of a 100% interest in the Orom Cross Jumbo Graphite Project in Uganda (“Orom Cross”). Orom has all the makings of being a large-scale project with scope to produce an impressive amount of the high value jumbo and large graphite flakes that currently sell for more than US$1,400 per tonne.

  • Potential world class graphite project with 21-year mining licence

    Orom Cross provides a highly compelling combination of a potentially large scale, shallow low-cost mining operation coupled with a high value product. Risks will be reduced with the publication of a PFS, expected by the year-end following drilling to define a JORC-resource.

  • Fulfilling long term demand for high quality flake graphite

    The graphite market is estimated to be 500,000t in deficit by 2025 just as Orom Cross gets into full production. Few large-scale projects are expected to come online in the next 5 years with a high proportion of jumbo/large flakes. So these projects are rare, especially in a lower risk location.

  • Proven management team that knows to keep share structure tight

    Post-RTO Blencowe retained its tight share structure. All board and management shares are escrowed and £2m worth of shares paid to Orom Cross vendors (33m shares/34% total shares) are escrowed for 12 months.

  • Peer group comparisons suggests upside of 159%

    Analysis of the peer group shows the potential. We initiate coverage of Blencowe with a target price of 18.1p and Conviction Buy stance.

  • RISK WARNING & DISCLAIMER

    Blencowe Resources is a research client of Align Research. Align Research and a director of Align Research own shares in Blencowe Resources. 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.

Table: financial overview
Year to Sept 2018A 2019A 2020E 2021E
Revenue (£'000) - - - -
Pre-tax (£'000) (164) (243) (1,495) (1,630)
EPS (p) (1.28) (0.93) (2.05) (1.58)
Source: Company accounts & Align Research

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