Northern Graphite closes acquisition of two graphite mines; 3rd largest non-Chinese graphite company
Canada-based Northern Graphite Corporation has closed its previously announced acquisition of the producing Lac des Iles graphite mine (LDI) in Québec from a subsidiary of Imerys SA and the Okanjande graphite deposit/Okorusu processing plant in Namibia from a subsidiary of Imerys and its joint venture partner. All deposits have high quality flake graphite that is suitable for all battery and industrial applications.
The acquisitions will provide Northern with 40-50,000 tonnes per year (tpy) of graphite production capacity in Québec and Namibia, which will make it the third-largest non-Chinese natural graphite producing company.
The acquisition of the two mines was financed through US$36 million in debt, royalty and stream financing provided by funds managed by Sprott Resource Streaming and Royalty Corp. and a CDN$23-million equity offering lead by Sprott Capital Partners LP. Sprott invested CDN$3.75 million in the equity offering and Imerys has received US$4 million in equity, on the same terms as the equity offering, as partial payment of the purchase price.
Northern now also has two large-scale development projects, Bissett Creek in Ontario and an expansion of Okanjande in Namibia, which it intends to build to meet growing EV demand.
Bissett Creek has been independently rated as the highest margin graphite project in the world.
The Okanjande deposit has large measured and indicated resources and the Company intends to assess building a new processing plant with 100-150,000 tpy of production capacity.
As consideration for the acquisition of LDI, which was completed through Northern’s wholly-owned subsidiary Graphite Nordique Inc., the company paid Imerys approximately CDN$17.8 million in cash and issued to Imerys US$4 million worth of units.
The LDI mine has been in operation for more than 20 years and is the only significant graphite producer in North America. LDI will produce up to 15,000 tpy of graphite concentrate over the next two to three years. A technical report with respect to LDI prepared in accordance with National Instrument 43-101 (“NI 43-101”) will be filed under Northern’s profile on SEDAR.
Northern believes there are opportunities to expand production and extend the mine life. An option has already been secured on the Mousseau West project in Québec, which the company believes will provide a source of graphite mineralization to supply LDI.
As consideration for the acquisition of the Okanjande graphite deposit and a processing facility located 78 km away at the Okorusu Fluorspar Mine, the company paid Imerys and its joint venture partner US$15.8 million in cash. The company also paid the owner of the lands on which the Okorusu plant is located EUR2.2 million in lease payments for use of the land and buildings. The Okorusu plant was retrofitted to produce graphite and has been on care and maintenance since November 2018.
The balance of the financing proceeds will be used to fund the restart of operations in Namibia and for working capital purposes. Northern intends to invest approximately US$14 million to build a new tailings facility and to further modify the Okorusu processing plant to increase throughput and recovery and improve the flake size distribution.
The operation, which is based on processing weathered resources, is expected to be back in production at a rate of approximately 30,000 tpy in nine to twelve months. A technical report with respect to the mineral resources contained in the Okanjande deposit has been prepared in accordance with NI 43-101 and will be filed under Northern’s profile on SEDAR.
The company also intends to file a Preliminary Economic Assessment, prepared in accordance with NI 43-101, with respect to the proposed mining operations at the Okanjande deposit and processing at the Okorusu plant within 45 days from the date hereof.
Northern intends to evaluate building a new processing plant adjacent to the Okanjande deposit based on its large measured and indicated hard rock resources in order to produce 100-150,000 tpy of graphite concentrate to meet rapidly growing EV and battery demand.
Namibia is one of the best jurisdictions in Africa in which to operate, Okanjande graphite is of the highest quality, the operation has access to grid power and it is five hours over good roads from the deep water port of Walvis Bay which provides ready access to European and North American markets. These attributes, plus a much shorter time to market, provide a competitive advantage over other African graphite projects, Northern asserts.
Northern’s existing Bissett Creek project is an advanced stage project with a full Feasibility Study. It is located in the southern part of Canada with ready access to labor, supplies, equipment, natural gas, green hydro-electric power and markets. An independent study estimates that Bissett Creek will have the highest margin of any existing or proposed graphite deposit due to it having the highest quality concentrates, a very favorable location and simple metallurgy.
The company plans to start production at 25,000 to 40,000 tpy and to expand production to 80,000-100,000 tpy as the EV/battery markets grow (based on measured and indicated resources only).