Tanzanian graphite developer Black Rock Mining has signed a memorandum of understanding agreement with its strategic partner Posco International, pertaining to graphite supply from Module 2 of the Mahenge project in Tanzania.

Under the non-binding agreement, POSCO will purchase fine graphite from the planned production of the Mahenge Module 2 project.

In exchange, POSCO will make an additional investment of up to $40m in Black Rock Mining or a stake of 19.99%, whichever is smaller.

In a press statement, Black Rock said: “The agreement builds on the strategic partnership between Black Rock and POSCO, which is working towards developing the Mahenge graphite project to provide a significant new source of natural graphite into a highly dependent global market driven by clean energy demand.”

The Tanzanian company expects the agreement to further de-risk its funding strategy to develop the Mahenge graphite project, which is spread across 324km² of exploration tenements in Tanzania’s Ulanga district.

According to the definitive feasibility study, the project could deliver up to 340,000tpa of 98.5% graphite concentrate for a period of 26 years.

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Black Rock Mining CEO John de Vries said: “We are extremely pleased to be further deepening our relationship with POSCO and we believe today’s announcement represents a strong endorsement of the promising future of the Mahenge graphite project.

“POSCO’s confirmed interest in Mahenge Module 2 also represents a major de-risking milestone for the company, providing increased confidence for all of our stakeholders, as well as improved visibility on funding and our pathway to production.”

The Mahenge graphite project is owned by the Tanzanian joint venture (JV), Faru Graphite.

Black Rock Mining owns an 84% stake in the JV while the remaining 16% interest is held by the Tanzanian Government.