POSCO Signs US$40M Binding Agreement for Investment in Black Rock

Black Rock Mining Limited. ASX.BKT

HIGHLIGHTS

POSCO has signed a binding agreement for a US$40m equity investment in Black Rock, which is expected to take place via two tranches:
- Tranche 1: A$9.0m investment in 155.3m shares at a price of A5.8c, a 10% premium to the 10 day volume weighted average price, increasing POSCO’s stake in Black Rock from 10.1% to 19.99%; and
- Tranche 2: The balance of POSCO’s US$40m investment will be at the same price as other investors in the final equity raising to build Module 1 on the Final Investment Decision (FID), capped at a maximum stake in Black Rock of 19.99%.
POSCO’s investment to secure long-term fines offtake for Mahenge Module 2, with the proceeds to be used to fund the development of Module 1
POSCO’s US$40m equity investment remains subject to regulatory approvals as well as confirmation all necessary funding to build Mahenge Module 1 is in place

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Tanzanian graphite developer Black Rock Mining Limited (ASX: BKT) (Black Rock, BKT or the Company) is pleased to announce that is has signed several binding agreements (Agreements) with its Strategic Alliance Partner, POSCO International Corporation (POSCO), in relation to POSCO investing US$40m in Black Rock. In exchange, Faru Graphite Corporation Limited (Faru) (the 84% subsidiary of Black Rock and owner of the Mahenge Graphite Project (Mahenge or the Project)) will grant POSCO the long-term fines offtake of graphite concentrate from Module 2.

Subscription Agreement for US$40m Investment

Under the Agreements POSCO will invest US$40m in Black Rock with the proceeds to be used to fund the development of Mahenge Module 1, from which POSCO has already secured the offtake contract for all the fines graphite produced. In return for the investment, Faru will grant POSCO the future offtake rights for the fines graphite production of Mahenge Module 2, when built.

The binding subscription agreement for POSCO’s US$40m equity investment (Subscription Agreement) remains subject to conditions precedent including FIRB approval, approval from the Fair Competition Commission of Tanzania and shareholder approvals as well as confirmation all necessary funding to build Mahenge Module 1 is in place. Annexure A summarises the material conditions precedent to the Subscription Agreement.

The Agreements build on the strategic partnership between Black Rock and POSCO which is working towards developing the Mahenge Graphite Project to provide a significant new source of natural graphite into a highly dependent global market driven by clean energy demand. Importantly, the Agreements also signals further de-risking of the Company’s funding strategy to develop Mahenge.

Photos: The POSCO Signing Ceremony in Perth on 3 September 2024. Attendees from left to right include Senior Executive Vice President of POSCO Holdings Mr Jun Hyung Kim, Chairman Black Rock Mining Mr Richard Crookes, the Australian Minister for Resources Ms Madeline King, Korean Minister for Trade Mr In-Kyo Cheong, CEO of POSCO International Mr Kye-In Lee and Chairman of POSCO Group Mr In-Hwa Chang.

Commenting on the Agreements with POSCO, Black Rock CEO, John de Vries, said:

“We are extremely pleased to be further deepening our relationship with POSCO and we believe today’s announcement represents a strong endorsement of the promising future of the Mahenge Graphite Project.

POSCO’s binding offtake agreement for the fines for Mahenge Module 2 also represents a major de-risking milestone for the Company, providing increased confidence for all of our stakeholders as well as improved visibility on funding and our pathway to production."

Offtake Agreement for Module 2 Fines

Faru has agreed terms and will execute a second offtake agreement shortly with its strategic alliance partner, POSCO, to supply high purity graphite for 100% of planned fines (-#100) production from Mahenge Module 2 (Offtake Agreement). The deal converts the MOU announced on 4 September 2023 to a full form binding agreement and supports a clear path to a qualified commercial market for Black Rock’s high quality graphite concentrate.

Key terms of the Offtake Agreement include:

The term of the POSCO’s fines offtake for Module 1 has also been amended to reflect the same terms as Module 2 stated above.

Marketing Agreement

Faru has also agreed terms and will execute a marketing agreement with POSCO pursuant to which POSCO has the non-exclusive right to market large flake graphite which is to be produced by Faru to purchasers located outside of China. POSCO will be paid a commission for sales arranged by it. POSCO may also acquire small flake graphite on commercial terms where it wishes to trade that product. This agreement is terminable by either party in the event the voting power of the POSCO Group in Black Rock falls below 10%.

Umbrella Agreement

Black Rock, POSCO and POSCO Holdings Inc. are parties to an Umbrella Agreement, which document was entered into on 10 February 2021. The agreement regulates the rights and obligations of the parties, given the nature of their strategic alliance. Pursuant to this agreement, the POSCO group has:

the right to appoint a director to the Company;
the right to participate in Black Rock sub-committee meetings;
the right to be given the opportunity to participate in future fundraisings; and
the right to enter into offtake agreements for small flake product produced by Faru.

Various rights of the POSCO Group under this agreement may be terminated where their voting power in the Company falls below 10%.

Full details can be found in the Company's ASX release here: https://bit.ly/4dMxlZ7

Media and Investor inquiries:

Steuart McIntyre
GM Corporate Development
Black Rock Mining
+61 413 555 609
sm@blackrockmining.com.au

Elvis Jurcevic
Investor Relations
IRX Advisors
+61 408 268 271
ej@blackrockmining.com.au