BLSTF: Blackstone Minerals Advancing Upstream Nickel Sulfide Project in northern Vietnam, along with Downstream NCM811 Refinery Project

By Steven Ralston, CFA



Blackstone Minerals (OTC:BLSTF) (ASX:BSX) is advancing both upstream and downstream nickel projects in northern Vietnam. The upstream Ta Khoa Project is developing a series of nickel-sulfide deposits within a 12-kilometer district-scale exploration corridor. The Project has Maiden Resource, a processing facility and a permitted tailings facility, along with access to local, green hydroelectric power. In addition, management is pursuing a downstream refinery project in order to produce higher-margin NCM (Nickel-Cobalt-Manganese) products for the lithium-ion battery industry. Management’s downstream strategy includes collaboration with Tier1 partners in the development of a refinery.

Nickel is a strategic raw material in the EV battery industry, and there are growing concerns of a disruption in the supply of nickel and other metals, such as lithium and cobalt, that are crucial to the wide-scale adoption of electric vehicles and power grids. Due to the growing stainless steel production and the significant incremental demand from the adoption of EVs, the nickel industry is expected to experience significant supply shortages starting in 2023.

A Scoping Study on the Ta Khoa Project was completed in October 2020, after which management divided the Project into upstream and downstream components. Blackstone Minerals is advancing both segments: a PFS for downstream refinery business unit was completed in July 2021 and now work is beginning on a pilot plant and a DFS. The Scoping Study included a Maiden Resource on the Ban Phuc DSS deposit. The PFS on the upstream business unit should be completed in the second half of 2021. Resource drilling continues at four other prospects (Ban Chang, King Snake, Ta Cuong and Ban Khoa).

Critical Milestones Achieved

May 8, 2019       Entered term sheet for an option to acquire a 90% interest in the Ta Khoa Project

April 2020        Exercised option to acquire 90% interest in the Ta Khoa Project

October 2020        Completed Scoping Study on Ta Khoa Project, which included Maiden Resource on Ban Phuc deposit

July 26, 2021        Completed PFS on downstream Ta Khoa Refinery Project

Expected Future Milestones

3Q 2021        Maiden resource estimation on Ban Chang prospect

2H 2021        PFS on upstream business unit including Ban Phuc DSS ore-body & other ore-bodies

2H21-1H/22        Initial production from Pilot Plant

2H21-1H/22        DFS on downstream Ta Khoa Refinery Project

2022        DFS on upstream business unit

2022        Final Investment Decision

Blackstone Minerals is moving forward with both upstream and downstream nickel projects, which are located in proximity to major battery manufacturers that are supplying Asia’s growing demand for lithium-ion batteries. For example, in the first quarter of 2020, VinFast (a subsidiary of Vingroup JSC, Vietnam’s largest conglomerate) launched Vietnam’s first EV automobile, which is powered by NCM (nickel-cobalt-manganese) batteries. In 2020, VinFast sold about 30,000 vehicles (gas-powered cars, EVs and e-scooters) in Vietnam. VinFast has plans to expand production to 250,000 automobiles per year, including the sale of vehicles into the United States starting in March 2022. VinFast’s production facilities are located in northern Vietnam, a greenfield factory near the port of Hai Phong and an acquired GM factory in Hanoi.  Currently, LG Chem is producing NCM lithium-ion batteries for VinFast through a joint venture entered into during 2019. This strong and growing local demand for NCM-based batteries is in Blackstone’s backyard.  VinFast also signed a letter of intent with Gotion High-Tech in August 2021. VinFast is considering building a LFP battery factory in Vietnam.

Green Operational Advantage

Management plans to develop its mineable deposits in the Ta Khoa Project with a fully electric-powered fleet as management targets net-zero carbon mining operations. Also, the downstream refinery will utilize renewable, inexpensive (roughly US$0.07 per kWh) local, renewable hydroelectric power sources. To further its green efforts, Blackstone Minerals joined the Electric Mine Consortium in April 2021.

UPSTREAM PROJECT (TA KHOA Ni-Cu-PGE Project – 90% interest)

Blackstone’s upstream business unit consists of the Ta Khoa Project. Located 160 kilometers west of Hanoi in northern Vietnam, this upstream project is composed of several ore bodies and multiple advanced exploration prospects, namely:

• Ban Phuc – DSS ore body; Scoping Study (completed Oct. 2020); PFS in progress

• Ban Chang – Both MSV & DSS styles; maiden resource estimation expected in 3Q 2021

• King Snake – potentially promising MSV prospect with a 900 meter strike length

• Ta Cuong – in Feb. 2021, a discovery hole identified 20.4m grading 1.35% Ni & 0.80% Cu

• Ban Khoa – Bulk tonnage DSS opportunity analogous to Ban Phuc

In the future, the other higher grade Massive Sulfide Vein deposits listed above could potentially be additive to subsequent Prefeasibility Studies. Management plans to explore both Massive Sulfide Vein (MSV) and Disseminated Sulfide (DSS) targets throughout the project.

The exploration and mining tenements of the Ta Khoa Project encompass 34.8 km2 that contain multiple nickel, PGE, copper and cobalt prospects (both MSV and DSS), along with a well-maintained 450 ktpa processing plant, which includes a mill, concentrator and other mine facilities. The facility was constructed in 2013 at a cost of US$136 million.

On May 8, 2019, Blackstone Minerals entered into a binding term sheet with AMR Nickel Limited (a 90% owned subsidiary of Asian Mineral Resources Limited) for an option to acquire a 90% interest in the Ta Khoa Project. The 12-month option was exercised in mid-April 2020 with Blackstone having made the required exploration expenditures and the issuance of 8.6 million shares (worth AUD$1.0 million) to AMR Nickel Limited. An Exploration License issued by the Ministry of Natural Resources and Environment that covers the entire Ta Khoa Concession is currently in force.

Ban Phuc

Ban Phuc is the most advanced undertaking of the Ta Khoa Project. Between 2013 and 2016, a MSV underground Ni-Cu-Co-PGE resource was mined at Ban Phuc generating US$213 million in revenue. From a MSV vein with an average width of 1.3 meters, 975kt of ore was mined, which had average grades of 2.4% Ni and 1.0% Cu. Also at Ban Phuc, there is the infrastructure associated with an operating mine: a 450 ktpa concentrator, a permitted tailings facility, a modern 250-person mining camp and an assay lab building. However, when nickel prices declined to below US$4.00 in mid-2016, the mine and associated infrastructure was placed into care and maintenance.

Hosted in a shear, the mined Massive Sulfide Vein at Ban Phuc is 640 meters in length and descends to at least 450 meters below surface with an average width of 1.3 meters. Over 25 targets have been mapped at Ban Phuc.

Currently, management is primarily targeting the Disseminated Sulfide (DSS) deposits at Ban Phuc. Soon after entering into the binding term sheet with AMR Nickel Limited, Blackstone Minerals began a drilling campaign on July 8, 2019 and concurrently undertook an initial IP survey. Using the IP survey’s results, the second phase of drilling program targeted high chargeability zones, which tend to correlate with the higher-grade zones within the Ban Phuc DSS deposit.

In mid-October 2020, a Scoping Study was completed on the Ta Khoa Project, which included a Maiden Resource on Ban Phuc Disseminated Sulfide (DSS) ore-body. The JORC-compliant Indicated Resource estimate is 44.3 Mt grading at 0.52% Ni (229 kt Ni). The Scoping Study estimated that over 8.5 years project life, annual production of approximately 12.7 ktpa Ni (equivalent to 25 ktpa NCM production) would generate a 45% IRR with a capital payback period of 2.5 years assuming a nickel price of US$8 per pound. The Scoping Study envisioned an open pit mine design.

In order to bolster the Maiden Resource and in preparation for a PFS, management embarked on an infill drilling campaign to better define the DSS deposit. The final infill drill program was completed in late August 2021. With the resource better delineated, management anticipates a PFS to be completed during the second half of 2021. The PFS may include the option to mine several higher grade MSV deposits in order to reduce initial upfront capital requirements. Thereafter, the company will pursue the completion of a DFS and an open pit mining permit.

Ban Chang

Located 2.5 kilometers southeast of the Ban Phuc mine and processing facility, the Ban Chang prospect is adjacent to the Chim Van–Co Muong fault system. Both MSV and DSS mineralization styles are present with the massive sulfide deposits mainly in veins and lenses while the DSS mineralization is hosted within dykes.

Historically, between 1960 and 1963, the prospect area was sampled with drilling and 19 trenches through Vietnamese Geological Survey. Highlighted sample results included 3.9 meters grading 1.07% Ni and 0.95% Cu in a channel sample and drill-hole BLK 2 intersecting a 1-meter Massive Sulfide Vein grading 2.65% Ni and 1.07% Cu. Blackstone completed an electromagnetic (EM) survey at Ban Chang that identified a 1.2 kilometer MSV target, which the company initially drill tested in June 2020.

Subsequent drilling identified a 420-meter West Zone of MSV lenses, a 200-meter Central Zone of MSV lenses and an East Zone. Ensuing infill drilling should lead to a maiden resource estimation for Ban Chang, which management anticipates will be completed in 3Q 2021.

King Snake

Located 1.5 kilometers northeast of the Ban Phuc mine and processing plant, King Snake is a potentially promising MSV prospect. Historically, approximately 50 rock chip samples and 23 diamond drill holes (totaling 5,187 meters) indicated a 600-meter body of mineralization with an average width of 0.62 meters grading 1.79% Ni, 0.7% Cu and 1.14 g/t PGE.

Blackstone Minerals completed a ground-based EM survey that guided the company’s drilling program. Drilling has intersected MSV and has defined a 900-meter strike length. The longest continuous interval was with drill hole KS20-02 with 5.88 meters grating at 1.22% Ni and 0.49% Cu. The mineralization appears open down dip and down plunge to the west of the area of historic drilling results. Downhole electromagnetic (DHEM) surveys will help guide infill drilling, particularly for potentially identifying MSV targets at depth.

Ta Cuong

Located approximately 6 kilometers along strike from the Ban Phuc mine and processing facility, the Ta Cuong MSV prospect came to the forefront in February 2021 when the Taipan Discovery Zone (TMZ) was discovered by drill hole TC21-03, which identified 20.40 meters of DSS, SMSV and MSV mineralization grading at 1.35% Ni , 0.80% Cu, 0.07% Co and 0.72g/t PGE. The hole tested a previously untested zone which was identified by EM survey.

Historically, through Vietnamese Geological Survey, the Ban Phuc deposit was sampled by 13 trenches, a 100-meter adit and 50 drill holes (total of 2,338 meters). Highlighted drilling results included drill hole BK02 intersecting 15.0 meters grading 1.03% Ni and drill hole BK08 intersecting 14.65 meters grading 0.81% Ni.

Ban Khoa

Located approximately 1.5 kilometers north of the Ban Phuc deposit, Ban Khoa has MSV prospects, which are analogous to the mined Ban Phuc MSV ore body, within a broader DSS deposit.

Initially, Blackstone conducted a ground-based EM survey at Ban Khoa. Then in November 2020, Blackstone initiated a drilling program at the Ban Khoa prospect in order to test the targets generated from the EM survey. The drill holes were 200 meters apart on strike along a 1.2-kilometer target zone.

On September 2, 2021, Blackstone Minerals provided assay results from the maiden infill drilling program at the Ban Khoa DSS deposit, which is approximately 1 kilometer north of the Ban Phuc DSS deposit. With its 147.0-meter intersection of 0.31% Ni, drill hole BK21-11 also demonstrates the bulk tonnage potential of overall upstream Ta Khoa Project.


Pre-Feasibility Study

On July 26, 2021, the completion of a Pre-Feasibility Study (PFS) on the downstream Refinery Project was announced. In the base case (using estimated future prices of certain commodities), a refinery designed with the capacity to process 3.9 Mt of nickel concentrate feed at a rate of 400 ktpa over a 10-year Life-of-Operations would generate revenue of US$14.0 billion and produce a post-tax 67% IRR.

The projected annual refined nickel production is 43.5 kt, which is expected to generate average annual operating cash flow of US$451 million (post-tax cash flow of US$365 million). The payback period for the required upfront capital of US$491 million is estimated to be 1.5 years from the initiation of first production, which is targeted for 2024.

Assumptions include sufficient demand for NCM811 Precursor to support a premium to the price of nickel metal and the ability to procure sufficient concentrate feed grading at 11.5% Ni, 1.1% Cu and 0.3% Co.

Refinery Feed Profile

Under the base case of the PFS, the expected nickel concentrate feed (11.5% Ni, 1.1% Cu and 0.3% Co) to the refinery is 400 kt annually. Blackstone will give preference to its own upstream mining operations. Currently, the expected feed from the Ban Phuc DSS is approximately 200 kt, along with other Ta Khoa MSV’s (King Snake, Ban Chang, Ta Cuong, etc.) for a yet undetermined amount. Third party nickel concentrate feed supply will be solicited through off-take arrangements.

The PFS envisions securing third party concentrate feed to supplement the nickel concentrate feed from the company’s Ban Phuc Mine in order to support the scale of operations planned by the PFS. Currently, Blackstone has an arrangement with Trafigura Pte Ltd through a Non-Binding Letter of Interest (LOI) signed in January 2021. Trafigura is a significant global trader of physical commodities, including nickel, copper, cobalt, zinc and lead. The intended arrangement is for Trafigura to become a third party supplier of nickel concentrate to Blackstone’s Ta Khoa Refinery.

Refinery Production Profile

Though the PFS targets first commercial production NCM811 Precursor product in 2024, it is anticipated that the rate of production will ramp up to 85.6 ktpa NCM811 Precursor product based on an operational steady nickel concentrate feed of 400 ktpa being achieved in calendar 2026.

Approval from Board of Directors

On August 3, 2021, the Board of Directors of Blackstone Minerals approved the first phase of pilot plant work and the commissioning of a Definitive Feasibility Study (DFS) for the Ta Khoa Refinery Project, citing the compelling economics of the Pre-Feasibility Study. Management anticipates that the construction of a pilot plant and the completion of a DFS on the Ta Khoa Refinery will require approximately 12 months. The first phase of developing the pilot plant and the DFS can be fully funded by the company’s existing cash reserves.


The P/B valuation range for comparable, well-funded junior nickel development companies is between 2.58 and 14.40. Utilizing comparable analysis, the target price for Blackstone Minerals (BLSTF) is $0.93 per share, which is based on an expected second quartile price-to-book multiple.

SUBSCRIBE TO ZACKS SMALL CAP RESEARCH to receive our articles and reports emailed directly to you each morning. Please visit our website for additional information on Zacks SCR. 

DISCLOSURE: Zacks SCR has received compensation from the issuer directly, from an investment manager, or from an investor relations consulting firm, engaged by the issuer, for providing research coverage for a period of no less than one year. Research articles, as seen here, are part of the service Zacks provides and Zacks receives quarterly payments totaling a maximum fee of $40,000 annually for these services. Full Disclaimer HERE.