The latest resource company to list on LSE – Blencowe Resources (LON: BRES) – has enjoyed a strong few weeks of trading since relisting on April 28th, moving up nearly 50% from 6p towards 9p in a weak market where many of its peers are heading in the opposite direction. What makes Blencowe and its Orom-Cross Graphite Project in Uganda stand out as special?
Graphite is not particularly high profile as a mining commodity, but it is a naturally occurring form of crystalline carbon. It has many uses today, but key to its importance is that graphite makes up approximately half the weight of a lithium-ion battery, used extensively for powering electric vehicles (EV) and storing renewable energy around the globe.
Every EV currently contains between 30-50kgs of graphite within its lithium-ion battery, and like all batteries, from time to time they need replacing. Most auto manufacturers around the world have thrown down markers and timelines to replace current diesel and petrol vehicles with electric versions, and although the pace of change around the EV revolution hasn’t swept all before it as dramatically as was initially predicted, the burgeoning levels of investment into battery production and EV production suggests that demand for the core minerals is set to extrapolate over the next decade and beyond.
Enter Blencowe Resources and its Orom-Cross Project, which is one of the largest graphite deposits in the world, estimated to contain over three billion tonnes. Furthermore, most of its graphite is near to surface, which means it can be mined easily and at very low cost.
Add to this the high quality of the graphite, its ability to upgrade to a highly sought-after concentrate and a recently awarded 21- year mining license and it is clear that Blencowe has all the attributes to develop into a world class graphite play. Another important factor is the project’s location in Uganda. The English-speaking nation is universally viewed as one of the most stable African countries, with all the requisite qualities in which to develop a world class resource project.
With over 50% of the world’s graphite currently forecast to come out of much higher risk Southern African countries such as Mozambique, Madagascar and Tanzania, lithium-ion battery producers and auto manufacturers are rightly concerned that one of their key source products may be at risk of a supply bottleneck, all of which makes the case for Blencowe’s Orom-Cross project even more compelling.
And at a paltry £8m market cap, Blencowe may be one junior resource company worth following closely over the next few years as it develops this extraordinary asset into production. Covid-19 restrictions notwithstanding, Blencowe has plenty lined up in 2020, with a maiden JORC resource number and strategic partnerships announcements expected. One thing is already clear – the Orom graphite project will be right on time for the anticipated explosion in demand for EV’s and battery technology.