Firstly, thanks to those who have contributed to this thread! Some amazing info in there which inspired me to dig a little deeper and put together a more extended DD which might be helpful to others.
While formatting doesn't make it clear, I've linked documents to claims/announcements/info, etc.
Keen to hear some feedback.
Summary
Blackstone Minerals (BSX) is focused on building a vertically integrated processing business in Vietnam that produces ‘Green’ Nickel: Cobalt: Manganese (NCM) Precursor products for Asia’s growing Lithium-ion battery industry. Blackstone’s upstream component involves mining Nickel sulphide deposits from a mixture of open pit and underground mines and processing this mined ore to produce a concentrate that, in combination with third party supplied concentrates, can be upgraded and refined into Class 1 Nickel products suitable for use in Lithium-ion Batteries (i.e., NCM811 Precursor) via Blackstone’s downstream refinery component.
Blackstone’s second project is their 100% ownedGold Bridge projectwhich includes a 367 km² tenement in British Columbia, Canada.Initial drilling in Novemberintersected significant Copper, Nickel and Cobalt with assay results expected within thenext 4-5 weeks.
Share Price: 72.5c
SOI: 449m
Director and Employee Performance Options: 8,150,000
Adviser Options: 11,000,000
Market Cap: $325m
Cash on Hand: ~$70m
Management
Scott Williamson(Managing Director)
8.2m shares | 1.3m options
Scott’s been with BSX for over 4 years. He has over 10 years' experience in the mining and finance sectors across a variety of technical and corporate roles including Resolute Mining (before they turned to shit), Rio Tinto, Perseus as well as senior analyst at Hartley's.
2019: Converted $98K worth of options, bought ~$210K on market and $50K in placement.
2020: Purchased $69K (nice) on market.
Hamish Halliday(Non-Exec Charmain)
11.4m Shares | 900k options
Hamish is a Geologist with over 20 years corporate and technical experience and founded Adamus Resources Limited, which went from a $3m MC West African gold explorer to a multi-million ounce gold producer before merging with Endeavour Mining (current MC of $6.9B) in 2011. Hamish is also the co-founder of Venture Minerals (VMS) and currently still sits on the BoD as non-executive director of both Venture Minerals and Comet Resources (CRL) who are an early stage graphite explorer/developer.
2019: Converted $98K worth of options, bought ~$210K on market and $50K in placement.
2020: Purchased $69K (nice) on market.
Alison Gaines(Non-Executive Director)
Alison has over 20 years of experience as a director in Australia and internationally. Alison is the Managing Director of Gaines Advisory P/L, which she started with her sister Jo Gaines (who was Mark McGowans Chief of Staff for the last 10 years). Interestingly, Alison’s third sister (Elizabether Gaines) was Fortescue Metals Group (FMG’s) CEO for 9 years before resigning in December. The Gaines sisters are very well connected.
You can check the rest of the management teamherebut I’d suggest watching the videos in the ‘Media’ section elbow as most of them take part in some great interviews.
Hoirim Jung (Non-Executive Director)
Hoirim has over 10 years of experience in financial management. Previously he worked in KPMG Samjong Accounting Corporation, Atinum Partners and EcoPro. At EcoPro he was involved in securing finance for precursor business and IPO of subsidiary EcoPro BM. He has a Bachelor of Economics from Seoul National University.
Inside Ownership
Top 20 Shareholdershold 66% of shares.
Fidelityis one of thelargest investment banks in the worldwith overUS$4 Trillion under management.
Deutsche Balatonis one of Europe’slargest investment companiesand currently has approx. $350m holdings within ASX listed resource companies. Their current ASX holdings (as of Jan 2022) are summarisedHERE.
EcoProisKorea's largest electric vehicle (EV) battery cathode manufacturer. More info on them below.
None of the substantial shareholders has sold a share in the last 12 months.
Upstream Business Unit (UBU)
Blackstone's UBU consists of its 90% ownedTa Khoa Projectwhich is located within a premier nickel sulphide district 160km West of Hanoi, in the north-west of Vietnam and consists of both massive sulphide vein (MSV) and disseminated sulphide (DSS) targets offering a9+ year resource life, as well as the Ban Phuc Nickel mine. The Ban Phuc Mine, which includes a450ktpa Nickel processing plant built to Australian Standards, operated from 2013 to 2016 before being shut down due to a decline in Nickel price. Blackstone recentlyrecommissioned the concentrator and restarted mining activityto produce two batches of concentrate for use in the Ta Khao Refinery piloting programs.
The Ta Khoa project/district, which consists of approx25 massive sulphide veins and disseminated sulphide deposits within a 5km radius of the Ban Phuc concentrator,was recently announced to has grown by 73%and currently sits at a Combined Mineral Resource of130 Mt at 0.37% Ni for 485kt of nickel(0.44% NiEQ for 571kt Nickel Equivalent).
Drilling is continuing on upwards of 5 additional targets which are expected to again add to the inferred resource. Blackstone isalso working closely with the Vietnamese Governmentto identify new targets, most notably the nearby Chim Van massive sulphide deposit. Historical sampling has shown up to1.13% nickel and 0.37% copperand initial exploration suggests that this deposit could be up to10-12x the size of the existing deposits.
Ore from the above resources are to be used as base load supply for a 8Mtpa concentrator being examined in theUpstream Pre-feasibility Study (PFS) to be completed early in 2022.
Ta Khoa Region and its Associated Deposits
Disseminated Sulphide Deposits. Source: Terra Studio, 2019 (updated with Ban Phuc 2021 Data)
Downstream Business Unit (DBU)
Blackstone's downstream strategy is to develop an integrated processing facility, including a400kt/pa refinery (with the possibility to upgrade to 800kt/pa), to convert nickel concentrate from its Ta Khoa operation (UBU) and third party sources into battery ready precursor material. The refinery will be modular and scalable and will allow Blackstone to blend different feedstocks to optimise operational and cost performances to capture significant premiums on the sale of NCM precursor products as well as deliver different ratios of NCM mixes to suit each manufacturer's requirements.
The Ta Khoa Refinery is a margin-based business with lower leverage to nickel metal prices as compared to a mining operation.
Blackstone hassigned an MoUwithEcoPro,Korea's largest electric vehicle (EV) battery cathode manufacturertowork in partnership to develop the downstream facility. As part of this, EcoPro hasinvested $6.8m for a 15%stake (now 9% due to SPP dilution) in Blackstone. This was at a60% premium of the share price at the time. EcoPro now also has one member on Blackstone’s board. EcoPro recently announced that theysecured a three-year deal worth ($8.5 billion)tosupply key materials for SK Innovation's high-nickel batteries. EcoPro willprovide high-nickel NCM cathode materials to SK Innovation for three years from 2024.
Blackstone hassigned an MoU with Trafigura, who areone of the world’s leading physical commodities tradersfor copper, zinc, lead,nickel & cobalt, to secure additional feed products for its downstream facility. Blackstone has also purchased approx.7% equity of Flying Nickel’s Minago project in Canada. Initial metallurgical test work has demonstrated that Minago is able to produce one-of thehighest nickel concentrate grades in the world(>20%)using conventional technology.
This week, Blackstone has also purchased approx.15% equity of NICO’s Aust based, Central Musgrave project which is considered one of thelargest, undeveloped Nickel projects in the worldand (according to management) has been of keen interest to battery manufacturers such asPOSCO and Samsung.NICO resourced IPO’d on the ASX this week under ticker NC1.
The downstream component will also be able to produce Mixed Hydroxide Precipitation (MHP) (the intermediate product) to be sold to other refineries. Additionally, the downstream facility will also produce copper by-product withinitial resultsfrom downstream processing test work showsexcellent recovery of Palladium, Platinum and Rhodium.
Blackstone's Integrated Business Model
Refinery / Process
Phase 1 of the pilot plant will be located at the Ban Phuc nickel mine and Phase 2 will likely be in Son La or Phu Tho provinces, with both plants following a hydrometallurgical (POX) process flow sheet which can be broadly broken down into two stages:
Production of mixed hydroxide product (MHP) from concentrate; and
The production of NMC cathode precursor material from MHP.
BSX has planned two pilot plant phases for completion prior to full commercial production.
Phase 1 Pilot Plant (PP1) - 20kg/hr Ni Concentrate feed
Phase 2 Pilot Plant (PP2) - 1,000kg/hr Ni Concentrate feed
Scott has mentioned that this strategy has been adopted after ongoing negotiations with major players in the Lithium-ion battery industry and allows for greater flexibility and economics. He has also mentioned these negotiations are ongoing with regards to the DFS for the downstream component.
Interestingly, Scott has also recently returned from atrip to South Koreaand a recent video (which has since been deleted - likely due to potentially breaching NDA’s)showed one of Blackstone’s team mention that Samsunghad been on a site visit.
Blackstone, using Stimulus Engineer’s lab,successfully producedits first batch of>99.7% battery grade Nickel: Cobalt: Manganese (NCM) 811 Precursor sample mid 2021 using it’s own materials and other third party feed sources.
Process Flow Diagram for Downstream Processing
DBU PFS Outcomes
The July 2021pre-feasibility study on Blackstone’s downstream componentshowed some really strong figures, which have only become more attractive given rising Nickel prices.
Base Case:Post-tax NPV8ofUS$2.01bnand internal rate of return(IRR) of 67%
Spot Case:Post-tax NPV8ofUS$3.51bnand internal rate of return(IRR) of 98%
Base Case Economics
Upfront Project Capital ofUS$491mpaid back in1.5 years from first production.
Life-of-Operations revenue ofUS$14.0bnand operating cash flow ofUS$4.5bn
Average annual operating cash flow ofUS$451m
Average annual post-tax cash flow ofUS$365m
Life-of-operations All-in Cost ofUS$11,997/ t NCM811as compared to study weighted average forecast price on sale of NCM811 ofUS$16,397/ t NCM811and current Shanghai Metals Market (SMM) spot price ofUS$19,559/t NCM811
Base Case Physicals
Refinery capacity of400kt/pa (with option to scale to 800kt/pt)
10-year life-of-Operationsaligned with the Ban Phuc Disseminated orebody and availability of known third party concentrate feed (3PF)
Average annual refined nickel output of43.5ktpa
Average annual NCM811 Precursor Production of85.6ktpa
First production currently targeted in2024and ramp up to steady state operations currently forecast to be achieved inCY 2026
3.9Mt of concentrate feed with average Ni in concentrate grade of11.5%,Co in concentrate grade of0.3%and Cu in concentrate grade of1.1%
Average annual copper by-product of4.1ktpa
NCM Precursor Price (US$/ t NCM 811) based on Ni Price
Life of Operation Economics
Nickel Outlook / Demand
With the predicted rise in global EV uptake, the demand for key battery materials is predicted to exponentially increase, generating a supply shortage. Given the average lithium-ion battery for an EV contains around28.9 kilograms of nickel,7.7 kilograms of cobalt, and5.9 kilograms of lithium, both battery and car manufacturers are looking to source raw materials.
Class 1 Nickel Demand
While Tesla are looking to utilise non/low Nickel LFP batteries, Asia (Blackstone’s target market) isfocusing on high nickel cathodes in their batteries:
South Korea's top three electric vehicle battery makers; LG Energy Solution, SK On and Samsung (who supply batteries to BMW and General Motors respectively), has begungearing up for full-scale production of next-generation batteries high in nickel contentin late 2021.
SK On's next-generation battery NCM9, composed of lithium, nickel, cobalt and manganese with90% nickel content,will be used in Ford Motor Co.'s EV pickup set for launch in the spring of 2022.
LG Energy SolutionandSK Onwill this yearbegin the production of high-nickel batteries made of nickel, cobalt, manganese and aluminium (NCMA) and NCM9, respectively.
Demand for higher Nickel content batteries is set to increase drastically with NCM batteries expected to dominate other Nickel rich chemistries including NCA and LMNO by 2030.
Growing Nickel Demand and Adoption of High Nickel Batteries
Nickel Price & Its Effect
While movement in the spot nickel price will drive a higher NCM811 Precursor price as well as a higher nickel concentrate purchase price, given anintegrated business strategy,which involves Blackstone using their own Nickel concentrate, increases in Nickel prices willgreatly benefit Blackstone by allowing them to sell their NCM product at an even higher premiumwhile theirmaterial costs will be minimally affected- driving higher margins.
The PFS refinery design will also enable the production ofmultiple products, including NCM 811 which attracts astrong premium to metal prices.
Nickel Price and BSX's Product Payability vs Metal Spot Price
Strategically Located in Asia’s EV Hub
Blackstone is conveniently located within an already huge, but growing Lithium-ion battery hub within SE Asia. Additionally, Vietnam itself is a rapidly evolving market for EV’s.
Blackstone isvery close to the EV & Lithium battery manufacturing hub in Hai Phongwhich includeshuge Li-ionbattery manufacturing plants byLG, Samsung SDI and Vinfast.
SE Asia's Battery Hub
Vietnam & Foreign Investment
Vietnam’s GPD has seen consistent growth over the last 30 years and the Vietnamese government is focused on initiatives and policy to support foreign investment which has seen foreign investment increase from ~US$13bn in 2014 to~US$20bn in 2019 highlighting confidence in the country's stability and government.
The EV industry is rapidly evolving in Vietnam with its home-grown company, VinFast (Vietnam’s largest conglomerate), pivoting from ICE autos tomanufacturing EV’sandelectric scooters. Vinfast has set up an auto plant in the port city of Hai Phong from which it plans to export up to250k vehicles to the US and Europe per year. Its plans are targeting manufacturing500k EVs and 500k e-scooters per year.In 2019,VinFast and LG established a JV to produce lithium-ion batteries for its electric cars and scooters.
The top five foreign investors (by registered capital) into Vietnam includeSouth Korea, Hong Kong, Singapore,Japan& China
Vietnam's GDP Growth
Infrastructure
The Ta Khoa Nickel-Cu-PGE project is located350km from Hai Phong portand it iswell connected to both the port and Hanoi via both modern roadways and rail,allowing for easy and efficient transport.
Son La Hydropower Plant and Hoa Binh Hydropower plant are nearby and willoffer cheap, reliable and renewable energyto the project.
Available Infrastructure
Green Nickel™
Blackstone Minerals hastrademarked the term‘Green Nickel’ as they plan on being alow emissions supplier of battery materialsbyutilising plentiful and readily available renewable energy.
This is beneficial as OEMs are increasingly looking at sourcing only “Green” materials with decent ESG credentials for their supply chains. You can learn more via their2020 Sustainability Report
Green Nickel
Mining Green / Responsibility Sourced Nickel
By utilising a Hydrometallurgical (POX) process flow sheet, along withrenewable energy from nearby hydropower plants, Blackstone will be able to produce bothNickel concentrateandNCM precursor productsat amuch lower carbon intensitycompared to legacy mining methods - reducing the company’s carbon footprint and boosting ESG credentials.
Responsibility Sourced Nickel Process
Low Labour Cost
Vietnam's Low Labour Costs Ensure Low OPEX
Tax Incentives
Vietnam, specifically the industrial zone in which Blackstone is looking to set up their downstream facility, offersattractive corporate tax incentives for early stage businesses, boosting overall economics of the project.
![https://hotcopper.com.au/data/attachments/4012/4012260-3ae55179847e7eea068f8428fab84ef0.jpg](https://hotcopper.com.au/data/attachments/4012/4012260-3ae55179847e7eea068f8428fab84ef0.jpg)
Timeline
Upstream Business Unit
![https://hotcopper.com.au/data/attachments/4012/4012271-67fea3d2d4387a44cf775a4f010c0ba9.jpg](https://hotcopper.com.au/data/attachments/4012/4012271-67fea3d2d4387a44cf775a4f010c0ba9.jpg)
Downstream Business Unit
![https://hotcopper.com.au/data/attachments/4012/4012268-1d4a88eacd0f9303ed4d4f7364a86447.jpg](https://hotcopper.com.au/data/attachments/4012/4012268-1d4a88eacd0f9303ed4d4f7364a86447.jpg)
Media
The current board and management have taken part in a number of really interesting interviews with Samso Media. Full playlistherehowever, I highly recommend watching the below.
Government Engagement
As well as exploring potential drill targets with the Government, Blackstone is also a part of theMining Working Group under the Vietnam Business Forum (VBF)and through this forum,can provide input to the Central Government on policies. Vietnam Business Forum (VBF) is anon-going policy dialogue channel between the Government of Vietnamand has been supporting the business community for a favourable business environment since 1997.
Funding/Finance
Blackstonerecently raised $55mvia an oversubscribed SPP to advance phase 2 of it’s pilot Plant Phase 2, PFS for upstream and DFS for downstream as well further drilling and exploration. $5m from shareholders and $50m from soph’s and insto’s. Shares were issued at5.1% discount to the 10 day VWAP.
Blackstone is looking to develop and fund (while retaining a significant interest) the construction of the downstream refinery via a mix of:
JV Partners
Investment Loans
Equity Raising
Offtake Prepayment
Blackstonerecently appointedThe Korea Development Bank (KDB) to arrange debt financing for both the upstream and downstream components of its projects. Korea Development Bank (KDB) and BurnVoir Corporate Finance (BurnVoir) will act jointly to secure an attractive, flexible funding package for the development of the Ta Khoa Project.
BurnVoir hasarranged finance for a number of battery metals projects in recent years, including forPilbara Minerals Limited (Pilgangoora Project, lithium)and A$1.1 billion in debt facilities for IGO’s recent acquisition of an interest in theGreenbushes Lithium Mine and theKwinana Lithium Hydroxide Refinery.
A number of different brokers have suggested the company will likely adopt a 70:30 mix of debt and equity to fund the project; however, this is just a vague and general suggestion.
Technical Analysis
I know SFA regarding TA but looks to has recently broken out of symmetrical triangle with volume on the daily chart.
Squiggly Lines
Broker Targets/Reports/Data
While offering some key additional info and analytical value, people should be reminded that broker reports, are paid for by the company.
Broker Data 12/01/022 - 18/01/2022
Upcoming Catalysts / Next Steps
Pre-feasibility Study for the Upstream Business Unit is due‘early 2022’so could land any moment. With a 74% increase in resource, it's expected this will be received well although could be partially priced in.
Completion of the Ta Khoa Refinery Definitive Feasibility Study.
Phased construction of Phase 1 Pilot plant in Vietnam to produce NCM811 Precursor and ensure product meets consumer specification. As per the upstream PFS (July 2021), Blackstone has commenced development of the Phase 1 Pilot Plant and mentioned the recent CR will support this.
Continued aggressive drilling to increase mineral resources at the Company’s flagship Ta Khoa Nickel Project
Secure offtake for third party feed material
Final Investment Decision
Detailed Engineering and Construction
NCM811 Precursor production currently targeted in 2024
Risks / Concerns:
While an integrated approach, including both an upstream and downstream component will bring some serious profit and higher margins, it’s a lot of moving parts and increases the risk of something going wrong.
LFP batteries, which use little to no Nickel, could be seen as a threat however all SE Asia based manufacturers (who are considered the best and most advanced in the world) have signalled they'll be sticking with NCM batteries for the foreseeable future.
Overall Nickel grades of their largest deposit (Ban Phuc) while well above cut off, could still be considered low however, as perthis article, which focuses on the economics of lower grade, higher tonnage mines, I think it is still perfectly viable. Other sources will bring the overall grade of the concentrate up. Areport from 2019highlighting the benefits of disseminated sulphide projects.
NICO’s Central Musgrave deposit appears to be mostly laterites which could be harder and more carbon intensive to mine, although, I’m confident Scott wouldn’t have made this purchase without consulting his team who would've ensured it would be suitable and feasible.
While Vietnam is a considered a pretty stable country, with consistent and steady GDP growth, foreign investment and a number of foreign mining companies running, there is always a small chance their could look to impede on the project.
COVID. Omicron is messing stuff up globally but Vietnam’s response to COVID has been very good and should be able to see this through.