Australian mining company Black Rock Mining has secured approval for a $59.6m (A$92.58) loan from the Development Bank of Southern Africa (DBSA) to support its Mahenge graphite project in Tanzania.

Approval of the loan is currently subject to legal documentation and will be closed in accordance with the conditions laid out in the approval.

The funding from DBSA will form part of a much larger project debt financing to be offered by several potential lenders from Africa.

Some of the lenders include development finance institutions and Tanzanian commercial banks, which have completed a significant part of the due diligence process.

Black Rock anticipates board approvals from the potential lenders during the last quarter of this year.

Once these clearances are obtained, the company will begin discussions and sign agreements with successful lenders, as well as confirm the structuring of the funding package.

In a statement, the miner said: “Such approvals and facilities are expected to contain terms and conditions usual for facilities of this type, but there is no guarantee of the conditions potential lenders may seek to impose, or that facility agreements will ultimately be entered into.”

For the project to reach production, it will need combined debt and equity financing. The company is looking to secure up to 50% in debt through traditional project financing.

In September 2023, Black Rock signed a memorandum of understanding (MoU) with POSCO for the long-term offtake of graphite concentrate from the project.

As part of the agreement, POSCO will invest up to $40m or an equity stake of 19.9%, whichever is lower, in the company.

The Mahenge graphite project, 100% owned by Black Rock, is located in Tanzania’s Ulanga district, approximately 250km from the border with Mozambique.

Spread across 324km² of exploration tenements, the project hosts multi-generational graphite resources, with 212 million tonnes (mt) at 7.8% total graphitic carbon (TGC) and a reserve of 70mt at 8.5% TGC.

A definitive feasibility study conducted by Black Rock indicates that a four-stage construction can deliver up to 340,000 tonnes per annum of 98.5% graphite concentrate for 26 years.

The project is said to have the lowest capital expenditure (A$115m) per annual tonne of production for any graphite project in the developmental stage.

The net present value for the project is estimated to be $1.16bn, with an internal rate of return at 44.8% and a margin of 63.1%.