South Korean steel-making company POSCO has confirmed its $7.5m equity investment in Black Rock Mining to help it advance the development of the Mahenge graphite mine in Tanzania.

In December 2020, POSCO signed an investment term sheet to acquire a 15% stake in the Australia-based graphite developer.

The South Korean company has now secured the final internal approval for the stake acquisition. Both the parties are now working to finalise the remaining preceding conditions for the investment.

The conditions precedent to close the equity investment include the approvals from the Australian Government Foreign Investment Review Board and the Tanzanian Government Fair Competition Commission.

Black Rock Mining and POSCO, as part of their alliance to develop the Mahenge graphite mine, have advanced the offtake and prepayment agreement, subscription agreement to the equity investment, and umbrella and shareholder rights deed.

The Australian firm revealed that it is in talks with POSCO pertaining to the offtake agreement, which includes a prepayment facility of up to $20m.

Located in the Ulanga district, the Mahenge graphite project has a mineral resource estimate of 212m tonnes at 7.8% total graphite content (TGC), and a reserve of 70m tonnes at 8.5% TGC.

Following a definitive feasibility study, Black Rock Mining is looking to carry out construction in four stages to enable the production of up to 340,000 tonnes per year of 98.5% graphite concentrate for 26 years at the Tanzanian graphite mine.

The company had estimated capital expenditure of $116m for phase one of the project.

Posco’s investment enables it to gain the right to take 100% of the graphite fines concentrate, which will be in the range of 20,000 and 40,000 tonnes per annum, from the first module of the Mahenge graphite plant.

The South Korean firm will also have the right to make the first offer for the graphite fines concentrate for modules 2, 3, and 4 of the graphite project.