BLACK ROCK MINING LIMITED - Capital/Financing Update 2017

ASX ANNOUNCEMENT 8 AUGUST 2017

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BLACK ROCK MINING DELIVERS EXCEPTIONAL OPTMISED PFS FOR THE MAHENGE GRAPHITE MINE

HIGHLIGHTS

Three stage construction to deliver a maximum of 250k tonnes per annum of 98.5% graphite concentrate for 31 years. Stages two and three to be funded from free cash flow.
Pre-production capex remains US$90.1m
Steady state opex reduced to US$378 per tonne
Realistic basket price assumption of US$1,241 per tonne delivering an operating margin of US$863 per tonne
Ore Reserves increased to 69.6m tonnes at 8.5% Total Graphite Contained (TGC) contributing to 80% of planned mill feed
Revised financial metrics with pre-July 2017 legislation include:
Post-tax unlevered project NPV10 of US$1.11bn (increasing from April 2017 PFS of US$624m)
Post-tax, unlevered IRR of 50.1% (increasing from April 2017 of 48.2%)
EBITDA in first full year of production US$220 million (EBITDA margin of 66%) (increasing from April 2017 PFS of US$135 million)
Revised financial metrics incorporating a 16% Government free carry and increased royalty rate include:
Post-tax unlevered project NPV10 of US$905m
Post-tax, unlevered IRR of 45.1%
Financing process on track supported by two existing MoUs with end users of graphite concentrate

Tanzanian graphite developer Black Rock Mining Limited (BKT: ASX) (“Black Rock” or “the Company”) is pleased to announce the successful completion of the Optimisation Study of its previously released Preliminary Feasibility Study (“PFS”) (ASX Release 24 April 2017) for its 100%-owned Mahenge Graphite Project (“the Project”).

The Optimisation Study adds a third staged module to take production to 250k tonnes per annum of 98.5% graphite concentrate for 31 years. The second and third modules are expected to be funded from cash flow, enabling the Company to deliver the entire operation for peak capital of only US$90.1m. This equates to industry leading peak capital of only US$360 per tonne per annum. This exceptional result is driven by relative high grade, low strip ratios and industry leading product quality and attributes.

Black Rock’s Interim CEO and Executive Director, John de Vries commented:

“The Optimisation Study successfully builds out our crawl, walk, run strategy, ultimately delivering a world-class mine based on any metrics. At a maximum run rate of 250k tonnes per annum, of the highest purity graphite concentrate on the market, with exceptionally low opex, and capex, this study places us in a strong competitive strategic position. As the market progressively starts to benefit from increased demand driven by the transition from petrol to electric vehicles, and demand for fire proofed panels for high rise buildings grows, demand for Mahenge’s premium product will grow.

“We continue to be highly confident we have the most compelling development stage graphite project globally and intend to quickly move into our DFS phase to ensure construction risks are minimised.”

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Graphite Pricing Assumptions

A point of consternation in the market appears to be the appropriate basket price assumption to model to deliver realistic financial metrics for development stage graphite projects.

In the absence of an exchange traded market, the Company has used independently sourced three year trailing Chinese prices. These prices are for 94% to 95% concentrates. The Company has added US$100 per tonne per increased percent of grade. It has then deducted US$30 per tonne to represent the additional freight costs of shipping its product from Africa to China to ensure the prices are presented on a like-for-like basis. This has resulted in an average basket price of US$1,241.

Other developers have used significantly higher basket price assumptions on the basis an increase in purity is likely to deliver a greater benefit to graphite users than US$100 per tonne per percent of grade increase. Ultimately, the Company believes it has the highest purity product proven by appropriate test works of any global developer. It also believes it has one of the strongest flake size distributions skewed towards larger higher priced flakes. As a result, it believes its average basket price assumption may be bettered in production.

The sensitivity table below presents the increase and decrease in post tax, project level NPV10 and IRR resulting from an increase in average basket price by US$200 and US$400 per tonne and a decrease in average basket price by US$200 and US$400 per tonne. A Free Carry Interest and increase in the royalty rate has also been modelled.

	NO FREE CARRY	NO FREE CARRY	16% FREE CARRY + INSPECTION FEE	16% FREE CARRY + INSPECTION FEE
Basket Price Assumption (US$ per tonne)	NPV10 (nominal) $USD m	IRR %	NPV10 (nominal) $USD m	IRR %
+400 +200 BASE -200 -400	1,735 1,425 1,114 804 494	69.1 59.7 49.4 40.1 29.5	1,421 1,163 905 648 390	62.8 54.0 45.1 36.0 26.6

Tanzanian Mining Legislation and State Agreements

On 12 July 2017 the Company released to the ASX a “Tanzania Update” that discussed proposed legislation changes to mining in Tanzania that included a 16% Free Carried Interest and an increase in the royalty rate from 3.3% to 4.3%.

The Company now understands there is an ability to negotiate a State Agreement for the Mahenge Graphite Mine that can override certain elements of the new legislation. The Company has commenced a process to negotiate a State Agreement that is likely to consider the Free Carried Interest, royalty rate and fiscal stimulus options with a view to providing the market, off take and funding partners with sufficient certainty to ensure the project’s success.

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The Company has run sensitivity analyses on the Project that considers different levels of Free Carried Interest and breakeven sales prices to derive a zero NPV10. The table is presented below and demonstrates how compelling the Mine is under any potential scenario.

Free Carried	NPV10 (nominal) $USD m	IRR	Breakeven Price (10% IRR) $/t
16% 12% 8% 4%	905 952 1000 1047	45.1% 46.2% 47.3% 48.4%	$ 548.78 $ 545.69 $ 542.83 $ 540.18
0%	1094	49.4%	$ 536.81

(* inclusive of 1% inspection fee)

Given the above, the Company’s focus is on negotiating a State Agreement as quickly as possible to provide the necessary legislative certainty to ensure the project’s success.

For more information:

John de Vries Simon Hinsley Charlie Bendon Interim CEO Investor Relations Executive Director NWR Communications Tamesis Partners LLP (UK) +61 438 356 590 +61 401 809 653 + 44 7968 167 030 [email protected] [email protected] [email protected]

JORC Compliance Statement

Resource

The information in this report that relates to Mineral Resources is based on and fairly represents information compiled by Mr Lauritz Barnes, (Consultant with Trepanier Pty Ltd), Mr Aidan Platel (Consultant with Platel Consulting Pty Ltd) and Mr Steven Tambanis (Managing Director of Black Rock Mining Limited). Mr Barnes, Mr Platel and Mr Tambanis are members of the Australian Institute of Mining and Metallurgy and have sufficient experience of relevance to the styles of mineralisation and types of deposits under consideration, and to the activities undertaken to qualify as Competent Persons as defined in the 2012 Edition of the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Specifically, Mr Tambanis is the Competent Person for the database and geological model, Mr Barnes is the Competent Person for the resource. Both Mr Platel (independent of Black Rock Mining) and Mr Tambanis completed the site inspections. Mr Barnes, Mr Platel and Mr Tambanis consent to the inclusion in this report of the matters based on their information in the form and context in which they appear. Mr Tambanis holds performance rights in the company as part of his total remuneration package.

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The information in this report that relates to the Ore Reserve Statement, has been compiled in accordance with the guidelines of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code – 2012 Edition).

Reserve

The Ore Reserves have been compiled by Black Rock Mining referencing work conducted by Oreology for the April Ore Reserve release. All work has been conducted under the direction of Mr John de Vries, who is a Member and Chartered Professional of the Australasian Institute of Mining and Metallurgy. Mr de Vries is a full-time employee of Black Rock Mining and holds performance rights in the company as part of his total remuneration package. Mr de Vries has sufficient experience in Ore Reserve estimation relevant to the style of mineralisation and type of deposit under consideration to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Mineral Resources and Ore Reserves”.

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ASX ANNOUNCEMENT 8 AUGUST 2017

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Black Rock Mining Limited (ASX:BKT) is an ASX-listed graphite exploration and development company. Black Rock is focused on developing the 100%-owned Mahenge Graphite Project, which is located within 324km[2] of exploration tenements in the Ulanga district of Tanzania. The Mahenge Project is the fourth largest (JORC compliant), contained graphite resource in the World.

The Company has completed a Pre-Feasibility Study (PFS) on the Mahenge project, and is moving towards commencing a Definitive Feasibility Study (DFS). With a successful DFS and associated financing, construction could commence in 2018 with first production in 2019.

Figure 1: Location of Black Rock’s Mahenge Graphite Project within Tanzania

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The Optimised PFS has built on the Scoping Study completed in March 2016 and the PFS completed in April 2017, and has further extended the technical viability of the project and its ability to deliver robust financial returns under various financial and operating scenarios.

The Scoping Study and both PFS’s have been completed by BatteryLimits Ltd, a leading independent Australian, project development and consulting engineering group with significant experience in the graphite sector.

Black Rock will commence a pilot plant and variability test work at SGS Lakefield Laboratories in Canada, and intends to appoint a DFS Engineer shortly.

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Table 1: Mahenge key investment parameters

PARAMETER	UNITS	STAGE 1	STAGE 2	STAGE 3	TOTAL
Commence operation	Y	1	3	5
Nominal Mine Life	Y	31	29	27	32
Process Throughput	Kt/y	1,000	1,000	1,000	2,000
Nominal Ore Treated per stage	Mt	31	29	26	86
Average Feed Grade	TGC%	8.1	8.1	8.5	8.3
Nominal strip ratio	Waste : Ore	0.4	0.4	1.1	0.7
Recovery	%	93	93	93	93
Nominal Design Basis Concentrate Grade	TGC %	98 - 99	98 - 99	98-99	98 - 99
Nominal Design Basis Graphite Production	kt/y	83	83	83	250

Optimised PFS Financial Highlights

Pre-production capex is estimated at USD$90.1m with total capex estimated at US$244m including a 15% contingency. This investment delivers an initial production of 83kt per annum rising to 167kt for stage two, and 250kt for stage three. Product is 98%-99% natural flake graphite mineral concentrate. Opex (cash costs to port) in full production, is estimated at US$378 per tonne. This includes all transport to the port of Dar es Salaam where product is sold on an FOB basis.

Table 2: Mahenge key project financial parameters

KEY FINANCIAL PARAMETERS		Single Module	Two Modules	Three Modules LOM	Three Modules LOM
Commencement	(Year)	1 & 2	3+	5
Capital Cost	(US$ M, real)	90.7	72.2	81.7	243.7
IRR - after tax	(%, nominal)	35.3%	48.7%	50.1%	48.7%
NPV @ 10% - after tax	(US$ M, nominal)	361	864	1,114	1114
NPV @ 10% - after tax 16% free carried, 1% inspection fee	(US$ M, nominal)	291	592	905	905
Total Concentrate Sales	(‘000 t)	3,265	5,142	6,738	6,738
Cash Costs	(US$/t, real)	513	382	378	378

The key financial metrics are:

A post-tax, unlevered, internal rate of return (“IRR”) for the Project of 48.7%; and a nominal net present value (NPV) using a discount rate of 10% (NPV10) of US$1.11 bn. Financial analysis has been performed by Modus Capital, an independent analysis company under direction of BatteryLimits.

The project financial parameter calculations have been repeated using several alternative sources for pricing information. The base case valuation is based Benchmark Minerals historical FOB China price, with a USD$40/tonne

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freight normalisation penalty applied to replicate FOB Dar es Salaam. A USD$100 premium per percentage above 95%.

TGC Chinese FOB grade, has been used to normalise the grade premium for Mahenge’s 98% to 99% nominal grade product. This price protocol compares conservatively, using publicly reported price protocols from a peer group of East African graphite developers. The Ore Reserve Protocol reflects the base case valuation; however, the grade premium is suppressed for finer fractions. All price protocols support a robust project.

Mining will be by conventional open-cut mining techniques. Waste will primarily be used for tailings dam wall construction, or will be stacked in waste dumps to form integrated landforms.

Processing will be by well-proven crushing, grinding and flotation methods, with the plant development in two stages, comprising:

Stage One - processing plant and infrastructure at a nominal design basis rate of 1 Mt/y to produce up to 83 kt/y graphite concentrate in the first two years of production. Plant is based at Ulanzi pit.
Stage Two - a second 1Mt/y plant and associated additional infrastructure doubling throughput to 2Mt/y and graphite concentrate production to 167kt/y from Year 3 of operation. Plant is based at Ulanzi pit.
Stage Three - a third 1Mt/y plant and associated additional infrastructure increasing throughput to 3Mt/y and graphite concentrate production of up to 250 kt/y from Year 3 of operation. Plant is based at Cascades pit and includes dedicated tailings management system.

Table 3 : Mahenge Concentrate Pricing Assumptions

FOB CHINA 3 YEAR TRAILING PRICE INVESTMENT CASE	FOB CHINA 3 YEAR TRAILING PRICE INVESTMENT CASE	FOB CHINA 3 YEAR AMENDED FINES RESERVE CASE EAST AFRICAN PEER AVERAGE	FOB CHINA 3 YEAR AMENDED FINES RESERVE CASE EAST AFRICAN PEER AVERAGE	HIGHEST PEER*
PRICING USD $/T FOB DAR		USD $/T FOB DAR USD $/T FOB DAR		USD $/T FOB DAR
500_um_	2,235	2,235	3,527	3,948
300_um_	1,676	1,676	2,237	2,664
180_um_	1,287	1,287	1,522	1,894
150_um_	1,144	1,144	1,020	1,701
75_um_	998	898	821	1,220
-75_um_	892	568	568	1,027

Basket Price LoM	1,241	1,174	1,346	1,777
Basket Price Ulanzi	1,201	1,123	1,261	1,694
Basket Price Cascade	1,281	1,226	1,435	1,862

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Table 4: Magenge Investment Performance as Function of Pricing

	NO FREE CARRY	NO FREE CARRY	16% FREE CARRY + INSPECTION FEE	16% FREE CARRY + INSPECTION FEE
Basket Price Assumption (US$ per tonne)	NPV10 (nominal) $USD m	IRR	NPV10 (nominal) $USD m	IRR
+400	1,735	69.1	1,421	62.8
+200	1,425	59.7	1,163	54.0
BASE	1,114	49.4	905	45.1
-200	804	40.1	648	36.0
-400	494	29.5	390	26.6

Proven and Probable Ore Reserve

The Ore Reserve used in the PFS for mine design is based upon the updated Mineral Resource estimate (“MRE”), calculated by Trepanier Pty Ltd and released to the ASX in Ju ly 2017.

The total mineral resource is 212Mt @ 7.8% TGC, including a high grade proportion of 46.6Mt @ 10.6% TGC. The Ulanzi mineral resource is estimated to be 111Mt @ 8.2% TGC. The Cascades mineral resource is estimated to be 46.6 @ 10.6% TGC.

In summary, total Resource includes 16.6Mt of contained graphite, with 12% of resource tonnes in the Measured and 42% in the Indicated categories.

On the basis of these results, the Mahenge Project is the fourth largest JORC-compliant graphite mineral resource in the world. (Refer ASX Announcement 6 October 2016)

Table 5: Mahenge Global Resource summary reporting table

CATEGORY	TONNES (MILLIONS)	TGC (%)	CONTAINED TGC (MILLIONS TONNES)
Measured	25.5	8.6	2.2
Indicated	88.1	7.9	6.9
Inferred	98.3	7.6	7.4
TOTAL	211.9	7.8	16.6

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Table 6: Resource breakdown by prospect

PROSPECT CATEGORY	TONNES (MILLIONS)	TGC (%)	CONTAINED TGC (MILLIONS TONNES)
Ulanzi Measured	13.3	8.9	1.2
Indicated	49.7	8.2	4.1
Inferred	50.2	8.1	4.1
Sub-total	113.3	8.2	9.3

Epanko Measured	12.1	8.3	1.0
Indicated	20.8	8.3	1.7
Inferred	27.3	7.9	2.2
Sub-total	60.2	8.1	4.9

Cascades Measured
Indicated	17.6	6.4	1.1
Inferred	20.8	5.9	1.2
Sub-total	38.4	6.1	2.4

COMBINED MEASURED	25.5	8.6	2.2
INDICATED	88.1	7.9	6.9
INFERRED	98.3	7.6	7.4
TOTAL	211.9	7.8	16.6

The PFS contemplates an initial mine life of 31 years, based on Probable Ore Reserves and an assumed conversion of Inferred Resource to ore.

The Ore Reserve is based on a processing cut-off which varies by deposit (based on the different financial parameters for each). The processing cut-off grades are 7.0% TGC for Ulanzi and 3.8% TGC for Cascade. Cut off grades have been determined from an analysis determining that 8.9% total feed grade delivering the maximum NPV for the project. Economic cut off grades are significantly lower, and lower than the cut-off grades used in reporting the Mineral Resource.

The Ore Reserve estimate is based on the conversion of the total resource inventory contained within the pit as either Measured or Indicated converting to Probable Ore Reserve, subject to the application of modifying factors. Pit shells used in Reserve estimation, have all Inferred material reclassified as waste. Irrespective of the geological confidence expressed in the Resource estimate, the Ore Reserve estimate will continue to be classified as Probable, until mining and export licences are granted, and firm sales contracts are in place.

The Ore Reserve estimate, is based upon a basket price of US$1,174 per tonne of graphite concentrate averaged over graphite products as in Table 7. The basket price selected for Ore Reserve determination has referenced the basket price selected for project evaluation, that being the three-year trailing price FOB China with a freight normalisation of $40/tonne applied. A conservative price modification has been applied to the fines fraction as a provision should the purity price premium not fully translate to the fines fraction. This is considered conventional practice, where an Ore Reserve estimate references a lower price protocol relative to the business valuation.

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Table 7: Reserve concentrate price construction

ITEM UNITS	ITEM UNITS	MAHENGE	MAHENGE
		% IN CON	PRICE USD/T
super jumbo	>500	1	2,235
jumbo	300- 500	20	1,676
coarse	180-300	30	1,287
medium	150-180	15	1,144
small	75-150	20	898
fine	<75	14	568
Average Price			1,174

Business model

The business model of a three staged expansion to 250kt per annum and is based on a whole of business optimisation. This optimisation identified that a targeted feed grade of 8.3% TGC over the life of mine, delivered the best overall financial outcome for the three module scenario. Module sizing indicated that at 83kt per annum, economies of scale of scale flatlined, and the planned module was close to the maximum size that could modularised or “flat packed”.

The planned approach of modularising where possible, is designed to reduce project implementation risk by simplifying site activities, reducing build exposure to the wet season and to minimise potential for scope and cost creep by defining clear completion tests and cost points at factory delivery.

Planned identical specification and design of each module gives rise to important spare parts redundancy and provides for simplified training processes, and significant growth opportunities for our employees. This approach further de-risks the overall development approach.

Self-funding or “bootstrapping” of the second and third modules achieves significant investment scale, while restricting total investment contribution to that required to establish the first module. The subsequent modules are nominally considered to start two years after the first module. The flexible approach to timing of startup of the trailing module provides Black Rock with significant flexibility to respond to market and investment opportunities as they emerge.

Mining

Mining will be by owner-operator using conventional open-cut mining techniques. The Mining strategy is to mine out the lower strip ratio Ulanzi deposit first. Two milling modules are established at Ulanzi, one starts up at year 1 the second starts up at year 3 Mining of Cascades deposit commencing in year 4 and provides for a dedicated milling module located at Cascades commencing at year 5. The mining strategy is to initially develop the oxide ore, which can be cost-effectively mined at lower strip ratios, and to then develop the transition and fresh ore pits. Where required to material is trucked between pits and modules to stabilse overall fleet and annual strip ratio.

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Figure 2: Ore feed and waste mining by pit and by year

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7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
Y1 Y6 Y11 Y16 Y21 Y26 Y31
Ore Ulanzi Ore Cascades Waste Cascades Waste Ulanzi
Material Movement (Mt)
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Figure 3: Annual ore processing by weathering type

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4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Oxide Transition Fresh
Crusher Feed (Mt)
Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 Y13 Y14 Y15 Y16 Y17 Y18 Y19 Y20 Y21 Y22 Y23 Y24 Y25 Y26 Y27 Y28 Y29 Y30 Y31
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Figure 4: Annual processing by Resource Confidence

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The contribution of inferred material to business plan is 7% for the first 10 years, overall reserve contribution to the business model is 80%. The contribution of unclassified material is considered negligible and does not materially contribute to the risk profile of the business during the investment payback period.

Waste will primarily be used for tailings dam wall construction and will be stacked in waste dumps to form integrated landforms. This approach reduces haul distances, and permits smaller tailings dam establishment, allowing for land to returned to alternative land uses progressively through the project life. This avoids large reclamation expenses at the end of mine life.

The adoption of a whole of ore envelope mining strategy, simplifies grade control, reduces dilution and significantly lowers the strip ratio. Life of mine, Ulanzi has an average strip ratio of 0.4, with Cascade having an average strip ratio of 1.1. The life of mine strip ratio is 0.7.

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Figure 5: LoM strip ratio graph

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2.0
1.5
1.0
0.5
Strip Ratio LoM average
0.0
Strip Ratio
Y1 Y3 Y5 Y7 Y9 Y11 Y13 Y15 Y17 Y19 Y21 Y23 Y25 Y27 Y29 Y31
----- End of picture text -----

Mining volumes are low, and will utilise 40-tonne articulated trucks during oxide mining where trafficability conditions could impact a conventional fleet. Fresh ore will be mined with 65-tonne rigid body trucks, further reducing operating costs in the later part of the mine life.

Geotechnical conditions are expected to be good once fresh material is encountered. The wall slope parameter guidance for the Pre-Feasibility open pit optimization process was provided by independent geotechnical consultants Peter O’Bryan & Associates. Specific geotechnical information for the Cascade was updated based drilling conducted in late 2016 and incorporated in this analysis. Based on the analysis and for simplicity common slope design parameters have been adopted for both Cascades and Ulanzi.

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Figure 6: Production Profile – Mining

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In comparison, the inter-ramp slope angle (49˚) in transition material is much steeper than for Ulanzi (35˚) but this was deemed acceptable due to the thin nature of the Cascade transition zone. This steeper slope angle assumption avoided excessive flat overall slope angles without affecting the stability. The final pit design was checked and approved by Peter O’Bryan & Associates.

Table 8: Inter-ramp slope angles

INTER-RAMP SLOPE ANGLE
DOMAIN	UNIT	OXIDE	TRANSITION	FRESH
East Wall	degrees	32.4	49	54.5
West Wall	degrees	32.4	49	50.8
North & South Walls	degrees	32.4	49	58.3

Table 9: Berm / batter configurations

BERM / BATTER CONFIGURATION
UNIT	UNIT	OXIDE	TRANSITION	FRESH
Batter height	m	5	10	20
Batter angle	degrees	60	75	variable
Berm width	m	5	6	7.0

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Figure 7: Mine pit design and site layout

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Tailings Storage Facility (TSF) Design

ATC Williams (Perth) conducted the TSF assessment process, and has recommended conventional wet dams as the tailings management strategy.

A geochemical evaluation of mine tailings was conducted by Graeme Campbell & Associates to evaluate oxide and primary ore tailings, generated from the BV flotation test work program. The TSF will utilise the abundant marble mineralisation within and adjacent to the mining pits for long-term management primary tailings.

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Metallurgy

In addition to providing overall project management and engineering design, the processing flow sheet has been developed by BatteryLimits, a Perth-based processing engineering consulting company.

The flowsheet adopted is for a conventional graphite plant. Reagents include diesel, kerosene and MIBC for flotation, and fluctuant for thickening. The flowsheet consists of three stage crushing, coarse rod milling, flotation and regrind facility. Graphite concentrate is then dried and bagged. The overall facility is developed in two stages:

Stage One - plant processing at a nominal design basis 1Mt/y to produce a up to a nominal 83kt/y of high-grade graphite concentrate sited at Ulanzi
Stage Two - a second 1Mt/y module to produce a combined nominal 167kt/y of graphite concentrate, sited at Ulanzi.
Stage Three – A third 1Mt/y module increasing site capacity to 250kt/y of graphite concentrate. This module is located at Cascades.

Common facilities to all modules are:

Tailings storage facility (Ulanzi first two modules, Cascades has separate TSF)
Bores and water supply
Office and workshop facilities
Communications infrastructure
Generators for process plant and ancillary power (module 1 only, module 2 & 3 are assumed to start up on 22o kv interconnector)
Access roads within the plant and the Project site
Camp facilities.

A 6MW generator plant using diesel will supply power to the plant for Stage One, followed by grid power connection in Year 3, for site power.

Water supply will comprise borefield and river intake water. Water will also be recovered for reuse from plant thickeners, pit seepage and inflow, and from the tailings storage facility.

There will be three warehouse facilities for bagged product: two smaller dispatch and storage centres on site (Ulanzi and Cascades) and a larger warehouse facility near Dar es Salaam. The product will be loaded into 1t “bulka” bags at the Project site, and transported by truck to a warehouse adjacent to the Dar es Salaam port where they will be stuffed in 20-foot shipping containers and stored in preparation for export.

A bulk sample of Ulanzi and Cascade ores has been shipped to SGS Lakefield for flow sheet optimisation, and pilot plant operation. This work will commence from late 2017. Tests will confirm variability of ore types and will be used for final basis of design for the Definitive Feasibility Study. Concentrate generated during the pilot plant will be made available for customer acceptance testing.

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Figure 8: Mahenge PFS Level Flowsheet

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Figure 9: Mahenge Production Profile – Processing Schedule

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Environmental Impact Assessment

A Draft EIS has been completed by independent environmental consultants Harmonic Biosphere Tanzania, and will be updated with the outcome of this Pre-Feasibility Study. The associated permitting process for the Mining Licence, and the environmental/community context in which the Mahenge Graphite Project is being developed, and will be available during the Definitive Feasibility Study.

The scope of the EIS is based on initial Environmental Impact Assessment (EIA) conducted from December 2016 to January 2017. The study is based on Terms of Reference approved by National Environmental Monitoring Committee (NEMC) as per reference letter no. NEMC/HC/EIA/02/02227/VOL.I/4 of 29 November 2016, for Mahenge Resources Limited Graphite mines at Epanko north, Kisewe (Cascades) and Mdindo (Ulanzi) villages. The scope entails the following:

Complete Environmental and Social Impact Assessment within defined spatial, temporal and institutional boundaries of the proposed project area
Identification and classification of impacts, and development of appropriate mitigation measures
Identification and analysis of alternatives where the likelihood of an impact to environmental and social conditions exceeds tolerable levels
Propose mitigation measures with implementation strategies including monitoring programs for environmental and social parameters
Mitigation measures identified, and where appropriate implanted as part of the project implementation plan.

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ESIA Process

Tanzania has a relatively mature mining industry resulting is a transparent and well understood permitting process. The steps in the EIA process for the project are as shown below:

Submission of project registration form and project brief
Baseline information, scoping, meeting with key stakeholders and formulation of terms of reference (ToR) and public notification of the EIA process
Submission of Scoping report and draft ToR to NEMC with continued consultation with stakeholders
Complete EIA and preparation of the draft report
Submission of 15 copies of draft EIA report and 15 copies of non-technical executive summary to NEMC
Notification of Site verification and Technical Advisory Committee (TAC) meeting
Site visit and TAC meeting
Integration of comments from TAC meeting and Submission of final EIS report to NEMC and Acquire Environmental Certificate.

Regional Demographic Context

The Mahenge prospecting licence intersects three village areas, Epanko, Kisewe and Mdindo villages. Initial mine development, and the first 15 years of project life, is on the Ulanzi orebody, with the remaining life being at the Cascades orebody. The PFS identified that Epanko North should not considered in the project development sequence. This then excludes any impact upon Epanko and Kisewe village areas.

The proposed project site is within land classified as village land at Mdindo. Land use is dominated by subsistence agriculture and forestry, traditional housing and artisanal gem mining. Land use is a combination of open grazing land in steeper areas, with flatter areas, farmed with annual crops. The area does not have cashew plantations, however food trees such as mango and bananas are distributed on flatter areas of the project area.

A forested area adjacent to the Epanko area is of cultural significance, and while within the exploration licence is well outside of any planned mining activity.

Provision for land resumption, resettlement and compensation for the entire site area has been made within the capital estimate, with costs timed with site establishment.

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Figure 10: Mahenge Project demographics and farming areas – Ulanzi and Cascades

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Mine Closure

The mine life exceeds the nominal 20-year horizon considered in the economic analysis of the investment parameters of the mining licence. No provision has been made for reclamation within the economic time frame as it assumed operations will continue beyond the nominal time horizon, and the NPV impact at year 32, is within the error range of the estimate. However, operations have been designed and scheduled to allow for progressive rehabilitation of land throughout the project life, and for land to be returned to traditional uses as quickly as possible post mining.

A feature of the project is the low life of mine strip ratio, of 0.8:1; producing relatively small waste volumes compared to tailings generation. Almost all mine waste will be used for tailings dam wall construction, with minimal non tailings impounding, waste dump formation. This minimizes costs associated with dump closure, and forces dump closure planning and costs to be concurrent with normal operating activities.

Tailings dams will be developed using a valley infill strategy, integrating developed landforms composed of mine waste and tailings into the rolling terrain. Relatively small tailings dams, allow for progressive reclamation throughout the project life. This provides an opportunity to return affected areas to alternative land uses early, and minimises reclamation costs and the end of mine life. At closure, all buildings, plant and equipment will be removed or repurposed.

Logistics

Black Rock Mining has invested substantial resources into proving the capabilities and condition of local infrastructure in from the Mahenge site to the port at Dar es Salaam.

For the purposes of the PFS, the Company has elected to truck product by road to Dar es Salaam port, where products will be stuffed into containers for shipping to customers. Costs used in the PFS are based on costs provided to Black Rock for loading, hauling, container stuffing and ship loading by reputable Tanzanian based logistics companies.

The port of Dar es Salaam is a significant deep water port in East Africa, and is a major export terminal for mineral products from Tanzania, Zambia, and the DRC. A significant volume of container traffic to ports in key markets, permits relatively small but high frequency cargos and a minimal requirement for charters.

Product Verification Testing

Black Rock Mining have engaged several independent specialist consultants, in key marketing regions in the USA, Japan and Europe to develop and supervise the completion of a series of detailed metallurgical test work programs to independently verify our product quality.

The objectives of this testwork in the key markets is to confirm the purity of the Mahenge graphite product, and more importantly to determine the amenability of Mahenge graphite to satisfy customers’ requirements and tailor specifications where necessary. This work is ongoing as part of product development program.

A Memorandum of Understanding has been signed with Meiwa corporation of Japan, a large chemical processing and trading organization, with an important position in the graphite value chain. Meiwa’s input will support further refining our product development strategy.

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Ulanzi bulk sample testwork

This testwork program was completed in June 2016 and delivered significant incremental improvements to graphite purity. 99.2% TGC purity was achieved for 180μm and 300μm size fraction, which represents 53.1% of concentrate volume. Furthermore, flake distribution is biased towards coarser jumbo (premium) flake. The entire +75μ size fraction returned a weighted average of 99.1% TGC for 86% of the entire sample. This test work confirms Mahenge flake graphite as a premium product across the size range.

Importantly these results were achieved using a conventional flotation circuit. Potential improvement will be explored during the pilot plant run, for inclusion in the DFS. At this level of purity, it is possible to minimise acid purification for refining of natural graphite to battery grade product or avoid the acid process by utilising thermal purification. Lower impurities should result in lower temperature thermal purification temperatures. This has major cost, environmental and productivity advantages for the battery supply chain.

Table 10: Ulanzi bulk sample assay results by size fraction and %TGC. TGC assays are by double LOI method.

SCREEN SIZE MICRONS	TGC ASSAY %	DISTRIBUTION %	CUMULATIVE DISTRIBUTION %	WEIGHTED AV. GRADE %
+500μm	98.3	1.1	1.1	98.3
+300μm	99.2	17.9	19.0	99.1
+180μm	99.2	35.2	54.3	99.2
+150 μm	98.9	9.5	63.8	99.1
+106μm	99.0	12.9	76.6	99.1
+75μm	98.9	9.3	86.0	99.1
+25μm	97.5	8.8	94.8	98.9
-25 μm	81.5	5.2	100.0	98.0

Testing completed in July 2016 improved on the June 2016 testing, yielding better results for Ulanzi and Enpanko North primary mineralisation achieving results of more than 99% TGC as per figure 6 below. Once again this has excellent implications for further processing and potentially allows for the manufacture of spherical graphite used in lithiumion battery anode production, free of chemical purification.

The entire +75 to +500 micron portion of flake graphite is now achieving 99.1% TGC purity and this represents 86% of the sample by weight. Over the next test phase, there is scope to further improve the concentrate purities with additional cleaner work.

The key outcome from this test is that exceptionally high purities in the 98-99% range can be achieved in a straightforward processing circuit whilst preserving flake size. Graphite at this high purity level will be sought after for battery graphite and other applications and is expected to attract a price premium.

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Table 11: Epanko North primary mineralisation composite drill core. Assay results by size fraction and %TGC. TGC assays are by

double LOI method.

SCREEN SIZE MICRONS	TGC ASSAY %	DISTRIBUTION %	CUMULATIVE DISTRIBUTION %	WEIGHTED AV. GRADE %
+300μm	99.0	12.5	12.5	99.0
+180 μm	99.1	34.7	47.2	99.1
+150μm	99.0	10.8	58.0	99.1
+106μm	99.1	14.2	72.2	99.1
+75μm	98.8	10.0	82.2	99.0
+25μm	98.2	9.4	91.6	98.9
-25μm	87.5	8.3	99.9	98.0

In November 2016, Black Rock Mining engaged the services of a US-based independent test facility to further evaluate the purification options for the high purity Mahenge flake graphite concentrates. Using a 99.2% TGC flake graphite concentrate, both acid and thermal purification methods were assessed and the key findings were:

Thermal purification of concentrate achieved up to 99.99994% purity from first pass testing
Acid purification of spherical graphite achieved 99.98% TGC, exceeding battery grade specifications.

The tests confirm the amenability of Mahenge graphite to produce concentrates and spherical graphite that surpass the highest standards of end users such as battery cell manufacturers. Thermally purified Mahenge graphite has potential to enter specialised markets where ultra-high purity graphite is required.

These results can only be achieved by starting with an exceptionally high purity precursor concentrate – a unique feature of our Mahenge graphite. The advantages of this high purity product are manifest in the battery cell testing that followed in early 2017.

In summary, the purification testwork and product development programme to date has been extremely successful in fully evaluating all characteristics of high purity Mahenge graphite concentrates.

To date the programme has confirmed:

Excellent expandable graphite characteristics of up to 580 times for coarse flake, superior to expandable graphite currently in the marketplace.
The ability to manufacture spherical graphite with high spheronising yields
Confirmation that Mahenge graphite flakes are thick with the high tap densities for concentrates – a highly sought after product attribute.

Testwork Summary

Thermal purification tests have returned exceptionally high purity graphite results up to 99.99994% TGC from a straightforward process. The US battery testing facility quoted: “ These are the highest purity samples handled by our test facility, and arguably the highest purity natural crystalline flake graphite ever produced from African flake.”

This, in turn, results in easy separation of foreign particulates from graphite. Correspondingly, the resultant purity level of the Mahenge flake has set the record high purity level in the natural crystalline flake graphite industry sector.

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The Company has now confirmed that both acid and thermal purification routes are viable options to achieve ultra pure end products of the highest standards

Thermal purification can be adjusted to achieve desired purities for specific end products
Acid purification of Mahenge Graphite is expected to require much lower reagent volumes (and lower cost) than competitor graphite concentrates to achieve desired spherical graphite purities
Battery cell testing of ultra high purity spherical graphite conducted in the USA has proven that Mahenge graphite converted to spherical graphite is highly amenable to lithium-ion battery production with superior charging cycle testwork indicating that the speroids maintain their integrity much longer than other graphite, potentially extending battery cycle life.

Markets

Black Rock Mining has identified four target markets for its product:

I. Europe;
II. The United States of America;
III. North-east Asia including Japan and South Korea; and
IV. China.

A prudent marketing approach involves producing product amenable to the high-growth sectors while keeping channels open to mature market sectors where specifications are not as stringent, thus ensuring maximum product sell-through.

The charts below are a snapshot of the relative volumes between sectors and their respective growth potential forecast for 2025.

Recarburisers/refractories, foundries and lithium-ion batteries are the three most prominent and are addressed below.

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Recarburiser/Refractories

Recarburiser applications involve using carbon materials to adjust carbon content in steel before casting, while still in molten form. Natural graphite is highly suitable for use as a recarburiser due to comprising of pure carbon, soluble in molten metal and lower impurities than other carbon sources. The competing substitutes are synthetic graphite, amorphous graphite and coke. Customers are particularly price sensitive and likely to shift to a substitute in volatile price environment.

The World Steel Association data suggests that global recarburiser demand for the top 18 steel producers is as high as 955,000tpa for total graphite content (TGC) in 2016. Therefore, recarburisers represent a significant volume graphite marketing opportunity, due to market size and potential to displace synthetic graphite.

Foundries

In the foundry sector graphite is used in the forming of mould castings. Historically this is the most traditional application of graphite, originally used to produce graphite crucibles. Furthermore natural graphite is the main component of blast furnace bricks. Prior to the emergence of the lithium ion battery sector foundries were the key consumer of natural graphite where pricing is generally low and the product is sold on an undifferentiated basis, meaning that no premium is given for higher graphite purity.

Lithium-Ion Batteries

While natural graphite is consumed across several battery technologies, lithium Ion batteries (LIB) use the most per unit amount of spherical graphite than any other battery technology. Developments in the sector indicate that LIB has become the most widely adopted battery technology across end uses such as Electric vehicles, hybrid electric vehicles, stationary power and portable electronic equipment.

In LIB applications graphite is the main material in the manufacturing of the battery anode component.

Wide adoption of LIB technology continues to drive demand for anodes produced from natural spherical graphite and demand forecasts indicate strong growth in demand for natural flake graphite as per the chart below.

Figure 11: Natural flake graphite market – market share by end us application (2015-2025e)

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From ongoing discussions with potential offtakers, it is clear the LIB sector represents the best opportunity for Black Rock Mining in terms of demand for natural graphite product offtake. The global trend in clean energy storage reinforces the demand for product in the form of energy storage applications where natural graphite is a key input in the manufacture of the battery anode. Recent power supply reliability issues in South Australia is a local example of the growing need for energy reliability, preferably from a clean source.

Market research substantiates Black Rock Mining’s strategy in focussing on the high-growth sectors and the sector(s) with least likely occurrence of market disruption.

The PFS assumes all product be sold in a mineral concentrate form. It should be noted that within the natural graphite market there are distinct markets and applications for each size fraction (and purity) with specific price points. While market information indicates a price premium for the coarser flake product, in the interests of testing the resilience of the Mahenge Project a conservative position with no annual escalation or CAGR was applied.

Human Resources

Under the prospecting licences granted for the Mahenge Project, there will be a training program that ensures onthe-job training and employment opportunities for Tanzanian citizens. Where an expatriate is employed, a localisation program will be developed to ensure a smooth transition to local employment where possible. BKT will also encourage the development of local businesses to support a long-term mining operation to provide addional long term employment opportunities.

Implementation Schedule

BKT has adopted a seamless approach to its study stages that accommodates change through the Prefeasibility Study (PFS) and into the Definitive Feasibility Study (DFS) stages of work.

On completion of the DFS, the Project implementation plan will be developed to provide certainty of strategy and design while aiming to ensure that the Project is delivered to schedule and the ramp up capacity to full production is achieved in an efficient and productive timeframe. A high-level project schedule has been developed as shown in Figure 12.

Figure 12: Mahenge Project implementation schedule

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The projected timeline from the completion of the PFS (March 2017) to completion of construction (June 2019) is 27 months. To meet the proposed schedule, the implementation strategy will be structured into three stages:

Pre-Construction, including final permitting, basic design of the treatment plant and infrastructure, and pioneer construction activities
Construction including earthworks, civils, architectural, structural, mechanical / piping installation, electrical, instrumentation and other disciplines
Plant commissioning and handover.

The most likely contracting strategy will involve BKT engaging an experienced engineering firm (Engineer) to provide Engineering, Procurement and Construction Management (EPCM) services associated with the development of the process plant and infrastructure. Specialist consultants will be engaged to address specific elements of the Project not within the core competency of the Engineer.

Responsibility for the execution and delivery of the various Project scope elements will be divided between the Engineer and Black Rock. The implementation approach requires close integration with and collaboration between Black Rock and the Engineer to ensure all aspects of the Project development are delivered efficiently.

Capital and Operating Cost Estimate Breakdown

The capital costs have been prepared to an accuracy of ±15%. Operating cost estimates are to ±15%. The capital cost estimate summary for the entire project is development is US$231.8M and is shown in Table 12.

The operating cost estimate is US$378/t concentrate, averaged on an FOB basis excluding royalties for the life of mine (LOM) and is shown in Table 12.

Figure 13: Capex summary for Stages 1 & 2 of Project development

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Figure 14: Opex summary for Stages 1 & 2 of Project development

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Table 12: Capital cost estimate summary

AREA	PFS STAGE 1	PFS STAGE 2	PFS STAGE 3	TOTAL
	(US$'000)	(US$'000)	(US$'000)	(US$'000)
Process Plant
Area 101 - Crushing	4,393	4,393	4,393	13,179
Area 102 - Milling and Classification	4,570	4,570	4,570	13,710
Area 103/4/5 - Rougher & Cleaner Flotation	11,578	11,578	11,578	34,734
Area 106 - Tailings and Decant Return	1,816	1,960	1,816	5,592
Area 107 - Concentrate Dewatering and drying	3,754	3,754	3,754	11,262
Area 107 - Concentrate Screening and Packaging	4,056	4,056	4,056	12,168
Area 108/9 - Reagents	1,457	1,457	1,457	4,371
Area 110/111 - Services	3,646	3,646	3,646	10,938
Process water dam	152	152	163	467
Process plant bldgs (Offices/amenities/MCCs/Ctrl Rooms)	1,565	1,565	1,565	4,695
Process plant buildings (Warehouse & Maint Workshop)	605	605	605	1,815
Plant bulk earthworks	1,496	1,496	1,496	4,488
Total Process Plant	39,088	39,232	39,099	117,419
Site Infrastructure
TSF (Starter embankment only)	3,064	1,610	1,654	6,328

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Borefield	1,328	1,328	1,328	3,984
Roads	2,870		1,015	3,885
Power	3,048	5,000	5,000	13,048
Camp	4,527	665	665	5,857
Mine establishment works	1,625	0	788	2,413
Total Infrastructure	16,461	8,603	10,450	26,911
Indirect costs
Process plant vehicles, mobile equipment	1,319	455	624	2,398
Mining fleet, ancillary equipment	7,551	2,723	3,876	14,150
Spares	1,097	815	873	2,785
Plant EPCM (15%)	5,863	5,885	5,865	17,613
Infrastructure EPCM (12.5%)	2,058	1,075	1,306	4,439
Contingency (15%)	9,663	7,652	8,089	25,404
Project and Freight Insurance	892	681	721	2,294
Customs and Border Levies	613	560	559	1,732
Owner's costs (excl vehicles)	5,508	1,075	1,459	8,042
Total EPCM & Contingency	34,563	20,921	23,069	78,553
TOTAL	90,112	68,756	72,922	231,790

Table 12: Operating cost FOB estimate summary Update

ANNUAL OPERATING COSTS	AV. TOTAL (US$ K/Y)	TOTAL COST (%)	FEED (US$/T)	PRODUCT (US$/T)
Mining	19,610	23.7%	7.01	89.5
Reagents, Consumables & Water	13,549	16.3%	4.84	61.8
Fuel	328	0.4%	0.12	1.5
Power	8,376	10.1%	2.99	38.2
Product Logistics	25,643	30.9%	9.16	117.0
Total General & Administration	3,884	4.7%	1.39	17.7
Maintenance	2,446	3.0%	0.87	11.2
Employees	8,237	9.9%	2.94	37.6
Other Expenditure	824	1.0%	0.29	3.8
Total	82,897	100.0%	29.63	378.3

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Financial Analysis

The financial analysis indicates a net present value (NPV) @ 10% (nom, after tax) of US$1.1B for the base case production profile and price assumption. This provides for an internal rate of return (IRR) of 50.1% after tax.

The Project life is 31 years from first ore.

The financial performance of the Project is summarised in Table 13.

Table 13: Key financial metrics

KEY FINANCIAL PARAMETERS	UNIT	LOM
IRR - after tax	(%, nom)	50.1%
NPV @ 10.0% - after tax	(US$ M, nom)	1,115
Pre Production Capital	(US$ M, real)	90.1
Steady State Cash Costs	(US$/t, real)	378

Based on this analysis, it can be concluded that the Project should continue through to the next stage of study and development.

Project Sensitivities

A sensitivity analysis has been conducted as part of the financial analysis. Given the low capital cost, the project is relatively insensitive to capex, however remains sensitive to basket price assumptions as illustrated below.

	NO FREE CARRY	NO FREE CARRY	16% FREE CARRY + INSPECTION FEE	16% FREE CARRY + INSPECTION FEE
Basket Price Assumption (US$ per tonne)	NPV10 (nominal) $USD m	IRR %	NPV10 (nominal) $USD m	IRR %
+400 +200 BASE -200 -400	1,735 1,425 1,114 804 494	69.1 59.7 49.4 40.1 29.5	1,421 1,163 905 648 390	62.8 54.0 45.1 36.0 26.6

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Funding

Black Rock has focussed on minimising the pre-production capital expenditure, whilst maximising phase one production to reduce operational expenditure given economies of scale. The Company believes it has found the optimum position with industry leading pre-production capex at scale and industry leading opex relative to concentrate grade.

Given these two key metrics, the Company believes it is well placed to secure necessary funding for the project. Options being actively pursued are:

Project finance
Partner financing
Offtake related financing
Equipment financing
Contract mining to reduce capex
Equity capital markets support.

The Company is confident the project is imminently fundable. The NPV10 to pre-production capex ratio of 6.5 times based on a low end price deck, suggests it has exceptional financial metrics, and its likely lowest quartile cash cost to port is a further positive indicative on the project’s likely success.

Moving forward, the Company’s intention is to continue to pursue all funding alternatives whilst demonstrating to the financial markets a commitment to building out an appropriately qualified management team to ensure the Company has the necessary capability to design, construct and operate a graphite mine.

Project Risks

A risk assessment workshop for the Project was conducted that identified fifty-four risks, of which four were rated for “priority action” and 26 listed for “management action”. These risks reflect the current stage of development of the Company and the Project, as well as specific risks associated with characteristics of the Project itself and the graphite market more generally.

The four priority action risks identified were:

Changes in the legislative framework of Tanzania render the project unfinanceable or unprofitable
Delays that extend beyond the anticipated window of opportunity in the marketplace
Funding sources may not be forthcoming following a FS for FID (Finance Investment Decision)
The market does not attach adequate value to graphite or the Company’s product.

In addition to the stage of development of BKT and the Project, the ranking of risks identified reflects the company’s strategic position in the graphite market, its capital funding requirements, and issues and challenges inherent in the graphite market.

The individual issues also interact with each other in number of key respects, particularly in that market and funding risks have the greatest uncontrolled potential to delay development of the Project. Therefore, a combination of gaining access to additional capital funding and the securing of binding marketing agreements would effectively mitigate the key Priority Action risks facing the company.

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Priority Action Risks

Priority Action risks are summarised in Table 14.

Table 14: Priority Action risk summary

	AREA	DESCRIPTION	TREATMENT STRATEGY
1	Corporate	Changes in the legislative framework of Tanzania render the project unfinanceable or unprofitable	Develop a legislative framework that stabilises investment regime mine is developed in Structure inbound investment to leverage Bilateral Investment Treaties
2	Corporate	The risk is that development is delayed beyond the anticipated window of opportunity in current marketplace	Focus on development strategy & project management Establish a realistic development schedule Develop the project team Produce samples for end user evaluation Conduct detailed testing of concentrates for all end uses Understand the long term growth potential of the LIB market
3	Corporate	The risk is that funding sources are not forthcoming following a FS for FID (Finance Investment Decision)	Fast track project to be a market forerunner Seek a corner-stone investor/offtake Differentiate the Project from others coming on-stream Market the differentiation – low capex, high product quality, multi generational minelife potential Develop niche markets Understand what financiers require Look at alternative financing arrangements - e.g. Export Credit Facilities (export development banks), equity
4	Corporate	The risk is that the market does not value graphite or Black Rock's product	Demonstrate product qualities of Mahenge graphite Focus on development of marketing strategy expand commercial/technical/marketing capabilities Produce bulk samples for marketing availability Develop niche marketing strategy for product Develop on competitive advantage & differentiation in marketing Develop strategy to fast track project in conjunction with FS

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Advisors

In preparation of this study, the Company has relied on a number of external advisors and consultants for input, advice, support and assessment of study outcomes. The Company extends its thanks to each party for their support in preparing this study.

Who	Role
BatteryLimits	Study manager, independent engineer and metallurgical consultant
Bureau Veritas	Metallurgical testwork
Metifex	Owner's representative and metallurgical and project development peer reviewer
ATC Williams	Tailings management and storage facilitydesign
Graeme Campbell & Associates	Tailings chemistry
OrologyPtyLtd	Mine design, schedule and optimisation
Peter O'Bryan and Associates	Pitgeotechnicalparameters and design limits
Harmonic Biospehere	Environmental impact assessment and study
Alistair Group	In countrylogistics
Ernst & Young	Tanzania tax advice
Modus Capital	Financial modelling
Trepanier PtyLtd	Resource modellingand Resource CP
Westoriagroup	Drillprogram management

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JORC
TABLE 1,
SECTION 4
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SUMMARY OF RESOURCE ESTIMATE AND REPORTING CRITERIA

As per ASX Listing Rule 5.8 and the 2012 JORC reporting guidelines, a summary of the material information used to estimate the Mineral Resource is detailed below (for more detail please refer to Table 1, Sections 1 to 3 included below.

Geology and geological interpretation

The Mahenge Mineral Resource is hosted within the rocks of the Proterozoic Mozambique Orogenic Belt that extends along the eastern border of Africa from Ethiopia, Kenya and Tanzania. It consists of high-grade mid-crustal rocks with a Neoproterozoic metamorphic overprint. The Mozambique Belt is divided into the Western Granulite and Eastern Granulite where Mahenge is situated. The Granulites are separated by flat-lying thrust zones and younger sedimentary basins of the Karoo.

The belt has undergone granulite phase metamorphism that has been subsequently retrograded to upper amphibolite facies. Structurally the Mahenge region has undergone intense deformation forming a tight poly-phase sequence of marble, mafic and felsic gneiss and graphitic schists as part of the kilometre scale Mahenge synform. The Mineral Resources are located on the western flank of the synform where the bedding and foliation dips towards the east between 60 and 80˚. The units typically strike to the north and rotate to the northeast as they wrap around the fold nose.

The geological interpretation used in this Resource estimate has been based on mapping of surface outcrop, multiple pits and trenches in conjunction with two phases of RC and DD drilling. The 3D geological wireframes were created using well defined footwall and hanging wall boundaries based primarily on changes from graphite dominated gneiss to mica or garnet gneissic units, which as expected also reflected a decrease in graphite grade. The geological wireframes were extended along strike and between areas of drilling approximately half the distance between drill sections.

Drilling techniques and hole spacing

The Mahenge estimation has been based on a combination of reverse circulation (RC) and diamond core (DD) drilling with the majority of the sample and geological data from two campaigns of RC (6inch) and DD drilling (PQ and HQ). The Company has used 100m x 100m, 100m x 50m and 50m x 50m grid drill spacing, which has been sufficient to show geological and grade continuity. The drilling has been oriented perpendicular to the mineralisation or as close to perpendicular as possible subject to drill access. The drill collars have been surveyed using a high accuracy differential global position (DGPS) measurements for the X, Y and Z coordinates and the Z component has been checked by draping the collar position over a high quality digital terrain model and photographic imagery flown for the Company. There is a high degree of confidence in the locations of the collars and trenches based on DGPS pick-ups and the high definition topographic and photographic survey.

Sampling and sub-sampling techniques

The trenches were sampled using 2m composites with samples taken from in-situ oxide, transition or fresh rock as a continuous chip channel sample across the trench wall. Pit samples were taken as individual point samples at the base of the pit. The surface samples weighed between 2.5 and 3.5kg. A high degree of care was taken to ensure no transported material was sampled from the trenches or pits. There was no sub-sampling from the pits or trenches.

At the drill rig the RC samples were split using a 3-tier riffle splitter to 1m intervals then composited as two x 1m samples with a combined weight of approximately 3.0kg. Samples in excess of 3kg were riffle split to reduce the weight to approximately 3kg. The calico samples bags were uniquely numbered and recorded prior to bagging in polyweave bags.

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After geological and geotechnical logging the HQ diamond core was half cored and then quarter cored; the PQ diamond core was slivered. The quarter core or sliver was composited to 2m intervals which were placed into uniquely numbered calico bags and then bagged into polyweaves. All of the polyweave bags were secured with a numbered plastic security tag prior to submission to the laboratory. There were no sub-sampling techniques past the sample dispatch from Mahenge.

Sample analysis method

The trench, RC and diamond core samples were sent to Mwanza in Tanzania for preparation and the pulps were then sent to Brisbane for carbon analysis using Total Graphitic Carbon (TGC) C-IR18 LECO Total Carbon. Graphitic C is determined by digesting sample in 50% HCl to evolve carbonate as CO2. Residue is filtered, washed, dried and then roasted at 425C. The roasted residue is analysed for carbon by high temperature Leco furnace with infrared detection. Method precision is ± 15% with a reporting limit of 0.02 to 100%.

All TGC analysis has been carried out by a certified laboratory – ALS Global. TGC is the most appropriate method to analyse for graphitic carbon and it is a total analysis. ALSC Global inserted its own standards and blanks and completed its own QAQC for each batch of samples. No failures were reported. Black Rock Mining has employed its own QA/QC strategy that involved field duplicates, blanks, insertion of certified reference material and check analysis using a secondary laboratory. The Company is satisfied that TGC results are accurate and precise and no systematic bias has been introduced.

Deleterious element analysis was also conducted using a multi-element ICP method.

Cut-off grades

Grade envelopes have been wireframed to an approximate 4 to 5% TGC cut-off allowing for continuity of the mineralised zones. Based on visual and statistical analysis of the drilling results and geological logging of the graphite rich zones, this cut-off tends to be a natural geological change and coincides with the contact between the graphite rich gneiss and the other adjacent country rocks (i.e. garnet gneisses and occasional marbles). Distinctly higher grade internal veins at Cascade were modelled at approximately a 9 to 10% allowing for continuity.

Estimation Methodology

Drilling, surface test pit, trench sampling and geological mapping data was utilised to control the interpretation of the mineralised zones. Three broader domains with three higher grade internal veins in a main domain were wireframed using Leapfrog™ software’s vein modelling tools with contacts determined by coincident geology (graphitic gneiss) and a significant increase in TGC grade (> 4-5% TGC or > 9-10% TGC for the internal higher grade veins).

Grade estimation was by Ordinary Kriging (“OK”) for Total Graphitic Carbon (TGC %) using GEOVIA Surpac™ software into the domains. The estimate was resolved into 10m (E) x 25m (N) x 10m (RL) parent cells that had been sub-celled at the domain boundaries for accurate domain volume representation. Estimation parameters were based on the variogram models, data geometry and kriging estimation statistics. Potential top-cuts were evaluated by completing an outlier analysis using a combination of methods including grade histograms, log probability plots and other statistical tools. Based on this statistical analysis of the data population, no top-cuts were required.

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Classification criteria

The Mineral Resource has been classified on the basis of confidence in the geological model, continuity of mineralised zones, drilling density, available mapping, pit sampling and trenching data, confidence in the underlying database and the available bulk density information. The Mahenge Mineral Resource in part has been classified as Measured and Indicated with the remainder as Inferred according to JORC 2012.

Minimum drill spacing for Measured Resources is 50m (northing) by 50m (easting), for Indicated Resources is 100m (northing) by 50-75m (easting) with larger drill spacing zones categorized as Inferred Resources.

Mining and metallurgical methods and parameters

Initial indications are that the Mineral Resources at Mahenge will be amendable to conventional open pit mining with low strip ratios and conventional crush, grind and flotation processing to produce a potential saleable graphite concentrate.

Metallurgical sample composites were prepared at Bureau Veritas Minerals laboratory in Perth from half cut diamond drill core from the DD drilling programmes. The representative composite samples comprise: Epanko North fresh, Epanko oxide, Ulanzi fresh and Ulanzi oxide materials. The ore composites were generated to assess the ore's amenability to beneficiation by froth flotation and also to identify the nature, flake size and occurrence of the graphite in a selection of drill core samples and flotation products. Cascades oxide and primary mineralisation has been tested with similar results to that of Ulanzi mineralisation.

Preliminary metallurgical test work on the oxide and primary mineralisation at Ulanzi and Epanko north has consistently returned up to 99% TGC concentrates.

High purity and coarse flake concentrate made from a straightforward four-stage flotation process
Independent expandable graphite testing indicates that Mahenge concentrates are highly suitable for this application with superior expansion ratios to current Chinese expandable graphite on the market
Independent spherical graphite test work indicates that Mahenge concentrates can meet/exceed battery grade graphite specifications with conventional processing and purification methods. Acid purification of spherical graphite has returned up to 99.98% TGC and thermal purification has returned > 99.999% assays.

Composite oxide samples from Cascades have been tested, confirming similar metallurgical results to Ulanzi. Core samples from cascades are being tested to confirm concentrate grades from primary mineralised zones. Results to date indicate that Cascades mineralisation performs remarkably similar to that of Ulanzi and Epanko North. A 120t bulk sample of Ulanzi and Cascades oxide and primary mineralisation is being delivered to a metallurgical testing facility for bulk flotation and pilot scale processing. This programme will be completed in Q1 2017 and will deliver an optimised processing flowsheet for equipment selection.

The Company believes that the combination of large tonnage, high graphite grades, potential low cost mining and conventional processing, the Mahenge Project could produce a saleable graphite concentrate and shows good potential for economic development.

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Appendix 1. JORC Code, 2012 Edition Table 1.

JORC Code, 2012 Edition

Section 1 Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections.)

Criteria	JORC Code explanation	JORC Code explanation	Commentary	Commentary
*Sampling* *techniques*	•	Nature and quality of sampling (eg cut channels, random	•	The Company has taken all care to ensure no material containing additional carbon has contaminated the samples.
		chips, or specific specialised	•	The trenches were sampled using 2m composites with
		industry standard		samples taken from in situ oxide, transition or fresh rock
		measurement tools		as a continuous chip channel across the trench walls or
		appropriate to the minerals		along a clean exposed trench floor
		under investigation, such as	•	The pit samples were taken as individual point samples at
		down hole gamma sondes, or		the base of the pit.
		handheld XRF instruments,	•	All samples are individually labelled and logged.
		etc). These examples should	•	Diamond drill sampling consisted of quarter core
		not be taken as limiting the		sampling of HQ diamond core or a sliver (~1/5th) of PQ
		broad meaning of sampling.		diamond core, on a 2m sample interval.
	•	Include reference to measures	•	RC samples were riffle split on an individual 1m interval
		taken to ensure sample		then composited as two x 1m samples which were
		representivity and the		submitted to the laboratory.
		appropriate calibration of any
		measurement tools or systems
		used.
	•	Aspects of the determination of
		mineralisation that are
		Material to the Public Report.
	•	In cases where ‘industry
		standard’ work has been done
		this would be relatively simple
		(eg ‘reverse circulation drilling
		was used to obtain 1 m
		samples from which 3 kg was
		pulverised to produce a 30 g
		charge for fire assay’). In other
		cases more explanation may
		be required, such as where
		there is coarse gold that has
		inherent sampling problems.
		Unusual commodities or
		mineralisation types (eg
		submarine nodules) may
		warrant disclosure of detailed
		information.

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			•	Both diamond core (HQ and PQ single tube) and reverse
*Drilling techniques*	•	Drill type (eg core, reverse		circulation (6” face sampling) drilling methods have been
		circulation, open-hole		used. All core is oriented using a spear or ACT back-end
		hammer, rotary air blast,		orientation device.
		auger, Bangka, sonic, etc) and
		details (eg core diameter, triple
		or standard tube, depth of
		diamond tails, face-sampling
		bit or other type, whether core
		is oriented and if so, by what
		_method, etc). _
			•	Diamond drill sample recoveries have been measured for
*Drill sample*	•	Method of recording and		all holes and found to be acceptable. Method was linear
*recovery*		assessing core and chip sample recoveries and results	•	metre core recovery for every meter drilled. RC recoveries were estimated by measuring the weight of
		assessed.		every 1m interval. Grade /recovery correlation was found
	•	Measures taken to maximise		to be acceptable.
		sample recovery and ensure	•	Twin hole comparison of RC vs Diamond indicates that no
		representative nature of the		sample bias has occurred for graphite.
		samples.
	•	Whether a relationship exists
		between sample recovery and
		grade and whether sample
		bias may have occurred due to
		preferential loss/gain of
		fine/coarse material.
			•	Pits and trenches were logged for geology and structures,
*Logging*	•	Whether core and chip		and photographs were also recorded for the trench
		samples have been geologically		samples.
		and geotechnically logged to a	•	All drill holes have been comprehensively logged for
		level of detail to support		lithology, mineralisation, recoveries, orientation, structure
		appropriate Mineral Resource		and RQD (core). All drill holes have been photographed.
		estimation, mining studies and		Sawn diamond core has been retained for a record in
		metallurgical studies.		core trays. RC chips stored in both chip trays and 1-3kg
	•	Whether logging is qualitative		individual metre samples as a record.
		or quantitative in nature. Core
		(or costean, channel, etc)
		photography.
	•	The total length and
		percentage of the relevant
		intersections logged.

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Sub-sampling
techniques and
sample preparation
•
If core, whether cut or sawn
and whether quarter, half or
all core taken.
•
If non-core, whether riffled,
tube sampled, rotary split, etc
and whether sampled wet or
dry.
•
For all sample types, the
nature, quality and
appropriateness of the sample
preparation technique.
•
Quality control procedures
adopted for all sub-sampling
stages to maximise
representivity of samples.
•
Measures taken to ensure that
the sampling is representative
of the in situ material
collected, including for
instance results for field
duplicate/second-half
sampling.
•
Whether sample sizes are
appropriate to the grain size of
the material being sampled.
•
The pit and trench samples were not sub sampled.
•
HQ diamond core samples were halved with one half then
quartered. A quarter core sample was taken for
laboratory analysis. The remaining quarter core sample is
retained for a record and a half core sample retained for
metallurgical testwork. PQ diamond core was slivered
with a core saw and the sliver (~20%) taken for laboratory
analysis. The remaining core was retained for
metallurgical testwork and for a record.
•
RC samples were collected for every down-hole metre in a
separate RC bag. Each metre sample was split through a
three-tier riffle splitter and a 1.5kg sample taken of each
metre. Two one-metre samples, totalling 3kg in weight
were composited for assay submission. Field duplicates
were taken to test precision up to the compositing and
splitting stage.
•
Sample sizes for all medium (i.e. trenches, pits, DD and RC
drilling) were appropriate for this style of graphite
mineralisation.

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The samples were sent to Mwanza in Tanzania for
Quality of assay • The nature, quality and preparation and pulps were then sent to Brisbane for data and laboratory appropriateness of the carbon analysis: Total Graphitic Carbon (TGC) C-IR18 assaying and laboratory LECO Total Carbon.
tests procedures used and whether • Graphitic C is determined by digesting sample in 50% HCl the technique is considered to evolve carbonate as CO2. Residue is filtered, washed, partial or total. dried and then roasted at 425°C. The roasted residue is
- Graphitic C is determined by digesting sample in 50% HCl to evolve carbonate as CO2. Residue is filtered, washed, dried and then roasted at 425°C. The roasted residue is analysed for carbon by high temperature Leco furnace with infra red detection. Method Precision: ± 15%. Reporting Limit:0.02 – 100 %.
For geophysical tools, analysed for carbon by high temperature Leco furnace spectrometers, handheld XRF with infra red detection. Method Precision: ± 15%. instruments, etc, the Reporting Limit:0.02 – 100 %. parameters used in • Some of the samples were analysed for Multi-elements determining the analysis using ME-ICP81 sodium peroxide fusion and dissolution including instrument make with elements determined by ICP. and model, reading times, • Some of the samples were analysed for Multi-elements calibrations factors applied using ME-MS61 for 48 elements using a HF-HNO3-HClO4 and their derivation, etc.
- Some of the samples were analysed for Multi-elements using ME-MS61 for 48 elements using a HF-HNO3-HClO4 acid digestion, HCl leach followed by ICP-AES and ICP-MS analysis.
Nature of quality control analysis. procedures adopted (eg • Some of the samples were analysed for Multi-elements standards, blanks, duplicates, using ME-MS81 using lithium borate fusion and ICP-MS external laboratory checks) determination for 38 elements. and whether acceptable levels • All analysis has been carried out by certified laboratory – of accuracy (ie lack of bias) ALS Global. TGC is the most appropriate method to analyse and precision have been for graphitic carbon and it is a total analysis. ALSChemex established. inserted its own standards and blanks and completed its own QAQC for each batch of samples. No failures were noted.
- BKT inserted certified standard material, a blank or a duplicate at a rate of one in twenty samples.
- Approximately 1/40 sample pulps from the 2015 drilling were re-submitted from the primary Laboratory (ALS Global) to a secondary Laboratory (SGS) in Johannesburg, South Africa. No bias or issues with accuracy or precision were observed between the two data sets.

			•	Approximately 1/40 sample pulps from the 2015 drilling were re-submitted from the primary Laboratory (ALS Global) to a secondary Laboratory (SGS) in Johannesburg, South Africa. No bias or issues with accuracy or precision were observed between the two data sets.
			•	Based on the QA/QC strategy employed by BKT for the
				duration of the exploration programs at Mahenge BKT is
				satisfied the TGC results are accurate and precise and no
				systematic bias has been introduced
			•	The data has been manually updated into a master
*Verification of*	•	The verification of significant		spreadsheet and a GIS database, considered to be
*sampling and* *assaying*		intersections by either independent or alternative company personnel.	•	appropriate for this exploration program. Drill intersections have been checked by a consultant geologist as part of the data validation process and errors
	•	The use of twinned holes.		corrected prior to resource estimation.
	•	Documentation of primary	•	Twin holes were used to compare diamond Vs RC drilling.
		data, data entry procedures,		Correlation of results was excellent.
		data verification, data storage	•	There has been no adjustment of assay data.
		(physical and electronic)
		protocols.
	•	Discuss any adjustment to
		assay data.

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*Location of data*	•	Accuracy and quality of	•	A handheld GPS was used to identify the positions of the
*points*		surveys used to locate drill holes (collar and down-hole	•	pits in the field. The handheld GPS has an accuracy of +/- 5m.
		surveys), trenches, mine	•	The datum used is: WGS84, zone 37 south.
		workings and other locations	•	Drill collars have been surveyed with a DGPS for sub-
		used in Mineral Resource		metre accuracy for the X, Y and Z components and the
		estimation.		Ulanzi, Cascade and Epanko North prospects have been
	•	Specification of the grid system		surveyed with a high resolution aerial drone to generate
		used.		an accurate contour map and high resolution photo
	•	Quality and adequacy of		image. The Z component has also been checked by
		topographic control.		draping the collar position over a high quality digital
				terrain model and comparing to the DGPS Z reading.
			•	The locations and RLs of the trenches have been checked
				using the detailed aerial/topo survey and modified
				accordingly for both x/y and z components.
			•	BKT is satisfied the location of trenches, pits and drill
				holes have been located with a high degree of accuracy.
			•	Data spacing and distribution is considered to be
*Data spacing and*	•	Data spacing for reporting of		appropriate for the estimation of a Mineral Resource.
*distribution*		Exploration Results.	•	The company has used 100 x 100m or 100 x 50m or 50 x
	•	Whether the data spacing and		50m grid spacing which has been sufficient to show
		distribution is sufficient to		geological and grade continuity.
		establish the degree of	•	The drill spacing is appropriate for Resource Estimation.
		geological and grade	•	No further sample compositing has been applied post the
		continuity appropriate for the		sub-sampling stage.
		Mineral Resource and Ore
		Reserve estimation
		procedure(s) and
		classifications applied.
	•	Whether sample compositing
		has been applied.
			•	Drilling is oriented perpendicular to mineralisation or as
*Orientation of data*	•	Whether the orientation of		close to perpendicular to mineralisation as possible.
*in relation to*		sampling achieves unbiased	•	The orientation of the drill direction has not introduced a
*geological structure*		sampling of possible structures and the extent to which this is		sample bias.
		known, considering the deposit
		type.
	•	If the relationship between the
		drilling orientation and the
		orientation of key mineralised
		structures is considered to
		have introduced a sampling
		bias, this should be assessed
		and reported if material.

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The samples were taken under the supervision of an
Sample security • The measures taken to ensure experienced geologist employed as a consultant to BKT. sample security. • The samples were transferred under BKT supervision from site to the local town of Mahenge where the samples were then transported from Mahenge to Dar es Salaam and then transported to Mwanza where they were inspected and then delivered directly to the ALS Global process facility.
• Chain of custody protocols were observed to ensure the samples were not tampered with post-sampling and until delivery to the laboratory for preparation and analysis.
• Tamper proof plastic security tags were fastened to the samples bags. No evidence of sample tampering was reported by the receiving laboratory.
• Transport of the pulps from Tanzania to Australia was under the supervision of ALS Global.
• Trenching and drilling information collected by BKT has
Audits or reviews • The results of any audits or been evaluated for sampling techniques, appropriateness reviews of sampling techniques of methods and data accuracy by an external geological and data. consultant.

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Section 2 Reporting of Exploration Results

(Criteria listed in the preceding section also apply to this section.)

Criteria JORC Code explanation Commentary

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			•	The sampling was undertaken on granted license PL
*Mineral*	•	Type, reference name/number, location and		7802/2012.
*tenement and*		ownership including agreements or material	•	_It has an area of 293km2. _
*land tenure*		issues with third parties such as joint ventures, partnerships, overriding royalties,	• •	The license is 100% owned by BKT. Landowners of nearby villages are supportive of the
*status*		native title interests, historical sites,		recently completed sampling and exploration
		wilderness or national park and		program.
		environmental settings.
	•	The security of the tenure held at the time of
		reporting along with any known impediments
		to obtaining a licence to operate in the area.
	•	Acknowledgment and appraisal of	•	Previous explorers completed some limited RC
*Exploration done*		exploration by other parties.		drilling and rockchip sampling but the original data
*by other parties*				has not been located apart from what has been
				announced via ASX releases by Kibaran Resources
				during 2011 and 2013.
			•	The deposit type is described as schist hosted flaky
*Geology*	•	Deposit type, geological setting and style of		graphite.
		mineralisation.	•	The mineralisation is hosted within upper
				amphibolite facies gneiss of the Mozambique Mobile
				Belt.
			•	Over 95% of the exposures within the tenement
				comprise 3 main rock types that include alternating
				sequences of:
			•	Graphitic schist – feldspar and quartz rich varieties.
			•	Marble and,
			•	Biotite and hornblende granulites.
			•	Less common rock types include quartzite.
			•	A summary of all material drill intervals are
*Drill hole*	•	A summary of all information material to the		provided in Appendix 1.
*Information*		understanding of the exploration results including a tabulation of the following
		information for all Material drill holes:
		`o` easting and northing of the drill hole
		collar
		`o` elevation or RL (Reduced Level – elevation
		above sea level in metres) of the drill hole
		collar
		`o` dip and azimuth of the hole
		`o` down hole length and interception depth
		`o` hole length.
	•	If the exclusion of this information is justified
		on the basis that the information is not
		Material and this exclusion does not detract
		from the understanding of the report, the
		Competent Person should clearly explain why
		this is the case.

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			•	Exploration results have been reported as weighted
*Data*	•	In reporting Exploration Results, weighting		averages allowing up to 2m of internal waste and
*aggregation* *methods*		averaging techniques, maximum and/or minimum grade truncations (eg cutting of high grades) and cut-off grades are usually	•	minimum grades at 5% TGC. No maximum or top- cutting was applied during the calculation of drill holes intersects.
		Material and should be stated.	•	Drill intervals are provided in Appendix 1.
	•	Where aggregate intercepts incorporate short
		lengths of high grade results and longer
		lengths of low grade results, the procedure
		used for such aggregation should be stated
		and some typical examples of such
		aggregations should be shown in detail.
	•	The assumptions used for any reporting of
		metal equivalent values should be clearly
		stated.
			•	Drill hole results are reported as down-hole metres.
*Relationship*	•	These relationships are particularly	•	Sufficient drilling, mapping and trenching has been
*between*		important in the reporting of Exploration		completed at the main prospects to understand the
*mineralisation* *widths and*	•	Results. If the geometry of the mineralisation with respect to the drill hole angle is known, its		orientation of mineralised lodes. A range of drill holes angles were used during the exploration program with the majority drilled at -60˚ (refer to
*intercept lengths*		nature should be reported.		Appendix 1).
	•	If it is not known and only the down hole
		lengths are reported, there should be a clear
		statement to this effect (eg ‘down hole length,
		_true width not known’). _
*Diagrams*	•	Appropriate maps and sections (with scales)	•	Figures show plan location of drill holes, appropriately scaled and referenced.
		and tabulations of intercepts should be	•	Refer to images in the main body of the text
		included for any significant discovery being
		reported These should include, but not be
		limited to a plan view of drill hole collar
		locations and appropriate sectional views.

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All drill holes have been reported in their entirety.

			•	All drill holes have been reported in their entirety.
*Balanced*	•	Where comprehensive reporting of all	•	All drilling results have been reported in past
*reporting*		Exploration Results is not practicable, representative reporting of both low and		Exploration announcements.
		high grades and/or widths should be
		practiced to avoid misleading reporting of
		Exploration Results.
			•	1 in 10 samples from the first drill programme were
*Other*	•	Other exploration data, if meaningful and		assayed for deleterious elements using a 40 element
*substantive*		material, should be reported including (but		ICP method. No deleterious elements were observed,
*exploration data*		not limited to): geological observations; geophysical survey results; geochemical		with background (low) levels of uranium and thorium.
		survey results; bulk samples – size and	•	1,078 bulk density measurements using the water
		method of treatment; metallurgical test		displacement method from the oxide (limited)
		results; bulk density, groundwater,		transitional and fresh zones.
		geotechnical and rock characteristics;	•	The samples for the bulk density measurements
		potential deleterious or contaminating		were taken from diamond drill core.
		substances.	•	Every diamond hole drilled used in this Resource
				Estimate has had intervals tested for bulk density
				generating a high quality dataset.
			•	Additional drilling is was conducted in the second
*Further work*	•	The nature and scale of planned further work		half of 2016 to define further extensions of
		(eg tests for lateral extensions or depth		mineralisation at Cascades, with the intention of
		extensions or large-scale step-out drilling).		defining additional high grade, near surface
	•	Diagrams clearly highlighting the areas of		resources
		possible extensions, including the main	•	Ongoing metallurgical testwork – flotation and
		geological interpretations and future drilling		particle size optimization.
		areas, provided this information is not	•	Additional bulk density testwork is planned,
		commercially sensitive.		particularly focused on the oxide and transition
				material.

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Section 3 Estimation and Reporting of Mineral Resources

(Criteria listed in section 1, and where relevant in section 2, also apply to this section.)

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Critera		JORC Code Explanation		Commentary
			•	The drillhole database was compiled by BKT as Excel
*Database*	•	Measures taken to ensure that data		spreadsheets.
*integrity*		has not been corrupted by, for example, transcription or keying	•	Maps, lithology, drill holes, trenches and test pit samples were also supplied for use in GIS format
		errors, between its initial collection		(MapInfo/Discover) and Excel spreadsheets.
		and its use for Mineral Resource	•	The data have then been imported into a relational SQL
		estimation purposes.		Server database using DataShed™ (industry standard
	•	Data validation procedures used.		drillhole database management software).
			•	The data are constantly audited and any discrepancies
				checked by BKT personnel before being updated in the
				database.
			•	Normal data validation checks were completed on import
				to the SQL database and when viewing in Surpac and
				Leapfrog.
			•	Steven Tambanis, Competent Person, has regularly
*Site visits*	•	Comment on any site visits		worked on site from July 2014 to present, covering all
		undertaken by the Competent Person		aspects of work from early exploration through to the
		and the outcome of those visits.		current drilling.
	•	If no site visits have been undertaken	•	Aidan Platel, Competent Person, completed a site visit in
		indicate why this is the case.		August 2016 covering all aspects of site work for the
				current drilling programme.
			•	The confidence in the geological interpretation is
*Geological*	•	Confidence in (or conversely, the		considered robust for the purposes of reporting
*interpretation*		uncertainty of ) the geological interpretation of the mineral deposit.		Measured, Indicated and Inferred Resources. Graphite is hosted within graphitic gneisses of the Mahenge Scarp.
	•	Nature of the data used and of any		These graphite rich zones generally strike N-S and dip to
		assumptions made.		the east at 60-80° and are interpreted to originate from
	•	The effect, if any, of alternative		graphitic sedimentary units of the Mahenge Scarp.
		interpretations on Mineral Resource	•	The geological interpretation is supported by geological
		estimation.		mapping and drill hole logging and mineralogical studies
	•	The use of geology in guiding and		completed on drill programmes.
		controlling Mineral Resource	•	Weathered zones (oxide and transition) were interpreted
		estimation.		based on the geological logs and coded into the block
	•	The factors affecting continuity both		model.
		of grade and geology.	•	No alternative interpretations have been considered at
				this stage.
			•	The graphitic gneiss units are known to be continuous in
				strike length for up to 22km.
			•	The modelled mineralized zone for Ulanzi has dimensions
*Dimensions*	•	The extent and variability of the		of 2,500m (surface trace striking 020°) with four zones
		Mineral Resource expressed as length		averaging in thickness of between 50-60m and ranging
		(along strike or otherwise), plan		between 400m and 760m RL (AMSL).
		width, and depth below surface to	•	The modelled mineralized zone for Epanko has
		the upper and lower limits of the		dimensions of 1,025m (surface trace striking 000°)
		Mineral Resource.		averaging in thickness of between 55-80m and ranging
				between 640m and 1,025m RL (AMSL).
			•	The modelled mineralized zone for Cascade has
				dimensions of 900m (surface trace striking 020°)
				averaging in thickness 70m and ranging between 560m
				and 900m RL (AMSL).

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Grade estimation using Ordinary Kriging (OK) was completed using Geovia Surpac™ software for TGC (%).
Estimation • The nature and appropriateness of the estimation technique(s) applied
and modelling and key assumptions, including
techniques treatment of extreme grade values, domaining, interpolation parameters and maximum distance of extrapolation from data points. If a computer assisted estimation method was chosen include a description of computer software and parameters used.
Drill spacing typically ranges from 50m to 100m.
Drillhole samples were flagged with wireframed domain codes. Sample data was composited for TGC to 2m using a best fit method with a minimum of 50% of the required interval to make a composite. These were combined with 2m spaced trench samples plus individual 50m by 50m spaced base of test pit assays.
Potential influences of extreme sample distribution outliers were investigated to determine whether they needed to be reduced by top-cutting on a domain basis. The investigation used a combination of methods including grade histograms, log probability plots and statistical tools. Based on this, it was determined that some top cuts were required. The four Ulanzi domains were top-cut between 16.0% and 17.6% TGC. No top-cuts were required at Cascade.
The availability of check estimates, previous estimates and/or mine production records and whether the Mineral Resource estimate takes appropriate account of such data.
• The assumptions made regarding recovery of by-products.
Directional variograms were modelled by domain using traditional variograms. Nugget values for TGC are low to moderate (around 15 to 30%) and structure ranges up to 270m.
Estimation of deleterious elements or other non-grade variables of economic significance (e.g. sulphur for acid mine drainage characterisation).
• In the case of block model interpolation, the block size in relation to the average sample spacing and the search employed.
Block model was constructed with parent blocks of 10m (E) by 25m (N) by 10m (RL) and sub-blocked to 5m (E) by 12.5m (N) by 5m (RL). All estimation was completed to the parent cell size. Discretisation was set to 5 by 5 by 2 for all domains.
Three estimation passes were used with differing distances at Epanko vs. Ulanzi and Cascade. This was done due to a tighter drill spacing at Epanko and Cascade. At Ulanzi the first pass had a limit of 150m, the second pass 300m and the third pass searching a large distance to fill the blocks within the wireframed zones. At Epanko and Cascade, the first pass had a limit of 75m, the second pass 150m and the third pass searching a large distance to fill the blocks within the wireframed zones. Each pass used a maximum of 24 samples, a minimum of 8 samples and maximum per hole of 5 samples.
Any assumptions behind modelling of selective mining units.
Any assumptions about correlation between variables.
Description of how the geological interpretation was used to control the resource estimates.
Discussion of basis for using or not using grade cutting or capping.
The process of validation, the minimum of 8 samples and maximum per hole of 5 checking process used, the samples. comparison of model data to drill • Search ellipse sizes were based primarily on a hole data, and use of reconciliation combination of the variography and the trends of the data if available. wireframed mineralized zones. Hard boundaries were applied between all estimation domains.
Validation of the block model included a volumetric comparison of the resource wireframes to the block model volumes. Validation of the grade estimate included comparison of block model grades to the declustered input composite grades plus swath plot comparison by easting, northing and elevation. Visual comparisons of input composite grades vs. block model grades were also completed.

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			•	Tonnes are estimated on a dry basis.
*Moisture*	•	Whether the tonnages are estimated
		on a dry basis or with natural
		moisture, and the method of
		determination of the moisture
		content.
			•	Grade envelopes have been wireframed to an
*Cut-off*	•	The basis of the adopted cut-off		approximate 4 to 5% TGC cut-off allowing for continuity
*parameters*		grade(s) or quality parameters applied.		of the mineralised zones. Based on visual and statistical analysis of the drilling results and geological logging of
				the graphite rich zones, this cut-off tends to be a natural
				geological change and coincides with the contact between
				the graphite rich gneiss and the other adjacent country
				rocks (i.e. garnet gneisses and occasional marbles).
			•	As graphite mineralisation is consistent along strike, has
*Mining factors*	•	Assumptions made regarding		consistent widths and outcrops on steep ridges or ridge
or		possible mining methods, minimum		slopes (indicating low strip ratios), open pit mining
*assumptions*		mining dimensions and internal (or, if applicable, external) mining		methods are assumed.
		dilution. It is always necessary as
		part of the process of determining
		reasonable prospects for eventual
		economic extraction to consider
		potential mining methods, but the
		assumptions made regarding mining
		methods and parameters when
		estimating Mineral Resources may
		not always be rigorous. Where this is
		the case, this should be reported with
		an explanation of the basis of the
		mining assumptions made.
*Metallurgical* *factors* or *assumptions*	•	The basis for assumptions or predictions regarding metallurgical amenability. It is always necessary as	•	BatteryLimits Pty Ltd has managed a comprehensive metallurgical test work programme in Perth, using BV laboratories to conduct the test work. Rock types sampled consist of oxide and primary mineralisation at Epanko
		part of the process of determining		North and Ulanzi plus oxide mineralisation at Cascades.
		reasonable prospects for eventual		Cascades primary mineralisation is being tested. These
		economic extraction to consider		samples (taken as surface outcrop and diamond core) are
		potential metallurgical methods, but		considered to be representative of the mineralised zones.
		the assumptions regarding	•	All rock types tested from both lodes have returned high
		metallurgical treatment processes		quality concentrates with coarse flake sizing and high
		and parameters made when		purities.
		reporting Mineral Resources may not	•	Refer to earlier ASX announcements.
		always be rigorous. Where this is the
		case, this should be reported with an
		explanation of the basis of the
		metallurgical assumptions made.

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			•	Environmental monitoring is underway and detailed
*Environmental*	•	Assumptions made regarding		environmental factors will be assessed as part of the Pre
*factors* or *assumptions*		possible waste and process residue disposal options. It is always necessary as part of the process of		Feasibility study.
		determining reasonable prospects for
		eventual economic extraction to
		consider the potential environmental
		impacts of the mining and processing
		operation. While at this stage the
		determination of potential
		environmental impacts, particularly
		for a greenfields project, may not
		always be well advanced, the status
		of early consideration of these
		potential environmental impacts
		should be reported. Where these
		aspects have not been considered
		this should be reported with an
		explanation of the environmental
		assumptions made.
			•	The Company has completed specific gravity test work on
*Bulk density*	•	Whether assumed or determined. If		1,078 drill core samples across the Mahenge Project using
		assumed, the basis for the		Hydrostatic Weighing (uncoated).
		assumptions. If determined, the	•	Of these 1,078 samples, 587 are from within the modelled
		method used, whether wet or dry, the		mineralised domains, primarily from fresh material (556
		frequency of the measurements, the		samples) and transition (37 samples).
		nature, size and representativeness	•	Statistical analysis of the samples and comparison
		of the samples.		against depth and TGC grade identified a subjective
	•	The bulk density for bulk material		relationship between bulk density (BD) and TGC grade. As
		must have been measured by		such, the BD used for fresh material was the average for
		methods that adequately account for		the deposits (90% confidence interval) at 2.73 g/cm3 and
		void spaces (vugs, porosity, etc),		2.74 g/cm3 at Cascade (with a standard deviation of
		moisture and differences between		0.05).
		rock and alteration zones within the	•	For the modelled oxide/transition zone, there were only
		deposit.		37 samples available. Whilst the analysis of these
	•	Discuss assumptions for bulk density		samples produced the same BD as the fresh material, it
		estimates used in the evaluation		was decided to use a slightly reduced BD of 2.6 g/cm3 at
		process of the different materials.		Ulanzi and 2.5 g/cm3 at Cascade. It is planned to
				increase the number of measurements on transition
				material samples in the next phase of work.
			•	For the modelled oxide zone, there were 2 BD
				measurements completed to date. It is planned to
				complete a representative number of measurements on
				oxide material samples in the next phase of work using
				appropriate measuring techniques for the material type.
				For this resource, an oxide BD of 1.9 g/cm3 has been
				assumed.

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				•	The Mineral Resource has been classified on the basis of
*Classification*		•	The basis for the classification of the		confidence in the geological model, continuity of
			Mineral Resources into varying		mineralised zones, drilling density, confidence in the
			confidence categories.		underlying database and the available bulk density
		•	Whether appropriate account has		information. Maximum drill spacing for Measured
			been taken of all relevant factors (i.e.		Resource classification is 50m (northing) by 50m (easting).
			relative confidence in tonnage/grade		Indicated Resource classification is 100m (northing) by 50-
			estimations, reliability of input data,		75m (easting). Wider drill spacing is categorised into the
			confidence in continuity of geology		Inferred Resources.
			and metal values, quality, quantity	•	All factors considered; the resource estimate has in part
			and distribution of the data).		been assigned to Measured and Indicated with the
		•	Whether the result appropriately		remainder as Inferred Resources.
			reflects the Competent Person’s view	•	The result reflects the Competent Person’s view of the
			of the deposit.		deposit.
				•	Whilst Mr. Barnes (Competent Person) is considered
*Audits*	or	•	The results of any audits or reviews		Independent of the Company, no third party review has
*reviews*			of Mineral Resource estimates.		been conducted.
		•	Where appropriate a statement of	•	The relative accuracy of the Mineral Resource estimate is
			the relative accuracy and confidence		reflected in the reporting of the Mineral Resources as per
			level in the Mineral Resource		the guidelines of the 2012 JORC Code.
			estimate using an approach or	•	The statement relates to global estimates of tonnes and
*Discussion*	of		procedure deemed appropriate by		grade.
*relative*			the Competent Person. For example,
*accuracy/* *confidence*			the application of statistical or geostatistical procedures to quantify the relative accuracy of the resource
			within stated confidence limits, or, if
			such an approach is not deemed
			appropriate, a qualitative discussion
			of the factors that could affect the
			relative accuracy and confidence of
			the estimate.
		•	The statement should specify whether
			it relates to global or local estimates,
			and, if local, state the relevant
			tonnages, which should be relevant
			to technical and economic
			evaluation. Documentation should
			include assumptions made and the
			procedures used.
		•	These statements of relative accuracy
			and confidence of the estimate
			should be compared with production
			data, where available.

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AI assistant

BLACK ROCK MINING LIMITED — Capital/Financing Update 2017

64531_rns_2017-08-07_497b025e-1393-490d-a4db-3fbd433e9516.pdf

BLACK ROCK MINING DELIVERS EXCEPTIONAL OPTMISED PFS FOR THE MAHENGE GRAPHITE MINE

HIGHLIGHTS

Black Rock’s Interim CEO and Executive Director, John de Vries commented:

Graphite Pricing Assumptions

Tanzanian Mining Legislation and State Agreements

For more information:

JORC Compliance Statement

Resource

Reserve

Optimised PFS Financial Highlights

Proven and Probable Ore Reserve

Business model

Mining

Tailings Storage Facility (TSF) Design

Metallurgy

Figure 8: Mahenge PFS Level Flowsheet

Environmental Impact Assessment

ESIA Process

Regional Demographic Context

Mine Closure

Logistics

Product Verification Testing

Ulanzi bulk sample testwork

Testwork Summary

Markets

Recarburiser/Refractories

Foundries

Lithium-Ion Batteries

Human Resources

Implementation Schedule

Capital and Operating Cost Estimate Breakdown

Financial Analysis

Project Sensitivities

Funding

Project Risks

Priority Action Risks

Advisors

SUMMARY OF RESOURCE ESTIMATE AND REPORTING CRITERIA

Geology and geological interpretation

Drilling techniques and hole spacing

Sampling and sub-sampling techniques

Sample analysis method

Cut-off grades

Estimation Methodology

Classification criteria

Mining and metallurgical methods and parameters

Appendix 1. JORC Code, 2012 Edition Table 1.

Section 1 Sampling Techniques and Data

Section 2 Reporting of Exploration Results

Section 3 Estimation and Reporting of Mineral Resources

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BLACK ROCK MINING LIMITED Capital/Financing Update 2017