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Blackstone Minerals Limited, adds scale to the downstream business

Team Veye | 25 Jan 2021 ASX - BSX
Blackstone Minerals Limited, adds scale to the downstream business

Blackstone Minerals Limited (ASX: BSX)

Trafigura Signs Non-Binding LOI with Blackstone for the Potential Supply of Nickel and Cobalt Products

Blackstone Minerals Limited (ASX: BSX) on 22 January 2021 announced that Trafigura Pte Ltd (“Trafigura”) had signed a Non-Binding Letter of Interest (“LOI”) with Blackstone. The arrangement was a part of the company’s strategy to upscale its downstream refining business and achieve its vision to become a significant global supplier of downstream nickel products for the Lithium-ion battery industry:

(Chart source: TradingView)

Highlights

  • Trafigura is one of the largest physical commodities trading groups in the world and is one of the leading physical commodities traders involved in copper, zinc, lead, nickel & cobalt trading;
  • Under this LOI, Trafigura will supply certain quantities of nickel and cobalt products to Blackstone, in respect of the production by Blackstone of downstream products for the Lithium-ion battery industry at the Ta Khoa Nickel Project in Vietnam;
  • Blackstone’s Scoping Study information provided on 14 October 2020 contemplates construction of a downstream refinery with the ability to process up to 200ktpa of concentrate, sourced entirely from mining operations at the Company’s Ta Khoa Project.
  • The Company will continue to engage with parties interested in Blackstone’s downstream products, including ongoing discussions with multiple potential joint venture partners regarding various offtake financing and or other funding options.
  • Commencement of studies and permitting for the downstream business will start soon.
  • A pilot and demonstration plant will be commissioned in parallel with the completion of a Definitive Feasibility Study (“DFS”).
  • The pilot and demonstration plant will be used to advance downstream process flowsheets focussed on producing NCM precursor products.

On 15 January 2021 the company made an announcement to spin out certain non-core gold assets into a new Initial Public Offering (“IPO”), Codrus Minerals Limited (“Codrus”). The Company currently plans to spin out its Record Mine Project, Silver Swan South Project, Red Gate Project, and Middle Creek Project (together, “the Projects”), via its wholly owned Australian subsidiary, Codrus (the “Proposed Transaction”).

Highlights of the Proposed Transaction

  • Blackstone to retain approximately 50% of the equity in Codrus upon successful completion of the IPO
  • Blackstone shareholders will be offered a priority allocation in the Codrus IPO pursuant to the forthcoming prospectus (Data Source – Company Reports)

 

Veye’s Take

Blackstone is taking remarkable steps to become a significant global, green nickel product supplier catering to the battery market. The purchase of third-party nickel & cobalt materials not only adds scale to the downstream business, it also adds diversification and reduces risk across the Company’s portfolio of assets in Vietnam. Codrus spin out will provide an excellent platform and catalyst for both growth and monetisation of Blackstone’s non-core assets.  This will drive Blackstone to focus on the development of the Ta Khoa Project. The stock had retraced to 50% fib from all time high and then moved above 38.2% fib. Further, the formation of the “Doji” candle at the support zone with an opening above the previous candle closing indicated trend reversal. The stock rallied upside well supported by RSI. MACD crossover is starting. The formation of “Bullish engulfing on the price charts supported by the indicators signifies its upside potential. It can have the potential of growing strength in the short to medium term. Latest “Buy” was given to “Blackstone Minerals Limited” at the price of $0.18 0n 24 June 2020. It has already returned a fabulous 152% in just seven months. Veye maintains a "Hold" on “Blackstone Minerals Limited” at the current price of $0.455

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