Black Rock Mining (ASX:BKT) and POSCO sign investment agreements

• Graphite developer Black Rock Mining (BKT) and Korean steelmaker POSCO have signed a subscription agreement and umbrella deed 
• This forms part of an agreement in which POSCO will invest roughly A$9.7 million to acquire 15 per cent interest in Black Rock
• Black Rock will use the proceeds from the POSCO transaction to fund development activities at its Mahenge Graphite Project
• The companies are continuing to negotiate an offtake agreement, which includes a prepayment facility of up to around A$25.8 million
• Black Rock Mining is down 5.88 per cent and trading at 16 cents per share

Graphite developer Black Rock Mining (BKT) and Korean steelmaker POSCO have signed a subscription agreement and umbrella deed.

In December 2020, POSCO announced its intention to invest US$7.5 million (approximately A$9.68 million) to acquire a 15 per cent equity interest in Black Rock Mining. The proposed equity placement would allow the two companies to advance the development of Black Rock’s Mahenge Graphite Mine.

At the time, Black Rock and POSCO signed an investment term sheet which outlined the agreement. In January 2021, POSCO completed its final internal approval sign-off, bringing them one step closer to finalising the agreement.

The subscription agreement and shareholder rights umbrella deed were executed as an addendum to the term sheet signed in December.

In the next 90 days, the term sheet’s precedent conditions must be satisfied. In this case, those conditions include obtaining approval from the Foreign Investment Review Board and the Tanzanian Fair Competition Commission. 

In the coming weeks, Black Rock will convene a general meeting to seek shareholder approval for the POSCO transaction. If shareholders approve, the company will issue just over 126 million shares to POSCO, at an issue price of 8.2 cents per share.

Black Rock will use the proceeds from the POSCO transaction to fund development activities at its Mahenge Graphite Project. These will include conducting a commercial-scale test for ore processing to produce commercial scale customer samples, site works and early-stage construction.

Meanwhile, Black Rock and POSCO are continuing to negotiate an offtake agreement, which could include a prepayment facility of up to US$20 million (roughly A$25.8 million). Both companies have agreed to work towards executing an agreement by March 31, 2021.

Black Rock Mining is down 5.88 per cent, trading at 16 cents per share at 3:53 pm AEDT.