Black Rock (ASX:BKT) share price falls on FIRB outcome

The Black Rock Mining Ltd (ASX: BKT) share price has fallen today on the news of its POSCO equity investment. Here's all the details.

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The Black Rock Mining Ltd (ASX: BKT) share price has fallen in late afternoon trade. This comes after the company received news from the Commonwealth Treasurer on the POSCO equity investment. At the time of writing, the graphite developer's shares are down to 14 cents.

Established in 2000, Black Rock is an Australian mining company focused on developing its Mahenge Graphite Project in Tanzania. It is known to be the world's fourth-largest graphite resource. Thus, indicating huge potential for the future. Indeed, demand for graphite has grown considerably and is expected to double in the next decade. This is due to the strong adoption by consumers for batteries in electric vehicles and other emerging applications.

So let's take a closer look at what was in the announcement.

FIRB outcome

Black Rock has received a positive outcome from the Foreign Investment Review Board (FIRB) decision. According to its release, Black Rock advised that the Commonwealth Treasurer, acting on the advice of the FIRB, has approved POSCO for a 15% interest in Black Rock. Nevertheless, the Black Rock share price is in negative territory. 

Consequently, POSCO will invest US$7.5 million as part of its Subscription & Umbrella agreements. The successful result will enable both companies to form a strategic alliance for the development of the Mahenge Graphite Project.

Currently, Black Rock and POSCO are continuing to work together to satisfy the remaining conditions for Tanzanian Government Fair Competition Commission approval. It is expected that this will be procedural and routine.

In the near future, Black Rock will hold a general meeting to obtain shareholder approval for the POSCO transaction. Should the company get the green light, it will issue over 126 million shares to POSCO at a placement price of 8.2 cents apiece.

What did management say?

Black Rock managing director and CEO John de Vries commented:

Access to POSCO's equity contribution of US$7.5m enables Black Rock and our 100% owned Tanzanian subsidiary Mahenge Resources Ltd, to complete detailed engineering, early site clearance planning and commercial scale product qualification. With this, the Mahenge Graphite Project will be positioned to complete required financing in an efficient and timely manner.

The Company anticipates site works in the second half of CY2021, pending resolution of the Government of Tanzania Free Carry Interest Agreement.

About the Black Rock share price

The Black Rock share price has gained close to 250% in the past 12 months, and 45% year-to-date. Interestingly, the company's shares have raced higher on the back of renewed investor confidence in the materials sector.

Based on the current share price, Black Rock commands a market capitalisation of around $100 million.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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