North America's Only Producing Natural Graphite Mine
Amid tighter graphite markets in the second and third quarters, Northern Graphite resumes processing ore at its Lac des Iles mine in Quebec, and markets will likely remain tight after China announced controls on graphite exports on October 20, 2023.
Positioning to be World's 3rd-largest Graphite Producer Outside of China
The company's strategy is to expand production at its existing mine, bring a second mine online next year and advance two large scale projects towards development.
Graphite is the Predominant Component of a Lithium-ion Battery
Graphite is the main ingredient in lithium-ion batteries, and its demand from battery production is projected to grow 10.5X by 2030.
Graphite is the least known of the five minerals deemed by the U.S. Department of Energy (DOE) as critical to the development of electric vehicles (EVs), but potentially the one we should be looking at the most. Global demand for graphite, which is the largest component by weight in EV batteries and for which there is no ready or economic replacement, is set to vastly exceed supply.
Identifying a reliable North America-based graphite supplier has perhaps never been more important to EV manufacturers than it is now. On October 20, 2023, China, by far the world’s leading graphite producer and exporter, announced that it would require export permits for graphite products used in EV batteries “to protect national security.” The global impact of this action could be enormous. Analysts speculated the move would see battery makers that rely heavily on China for graphite imports to seek alternatives. Right now those options are few and far between.
By 2030, graphite demand for use in EV batteries will absorb all projected global graphite supply. There isn’t enough graphite in North America to supply the plans of automakers, and that doesn’t even take into account the broader energy transition – graphite is lighter and more conductive than copper – and demand from industrial uses, from refractory bricks for steelmaking to heat management in mobile phones and friction and lubrication products for brakes and brake linings for the global automobile industry.
A typical EV contains more than 50 kilograms of graphite, nearly ten times that of lithium. By weight, graphite is the largest component of lithium-ion batteries. Graphite accounts for more than half of the mineral demand in EV batteries. In comparison, lithium, a staple in electric vehicle batteries, accounts for only about 4%, per the World Bank.
One more thing: Purchasing graphite from Northern Graphite may have significant positive economic implications for EV manufacturers. For a vehicle to qualify for the full US$7,500 EV tax credit reflected in the landmark U.S. Inflation Reduction Act (IRA), at least 40% of the critical minerals in the battery (such as graphite, lithium, and cobalt) by value must be sourced from the United States or one of the countries with which the U.S. has a free trade agreement. This increases to 80% by 2026 and 100% by 2028! Canada is of course on this list; China is not.
As the only producer of natural graphite in North America, Northern Graphite (TSXV: NGC) (OTCQB: NGPHF) is clearly in the driver's seat with tremendous competitive advantage.
LAC DES ILES
Located in Quebec, one of the most mining-friendly jurisdictions in the world, Lac des Iles is the only producing natural graphite mine in North America. The 100%-owned, fully permitted mine and facility, have been producing and selling graphite to an established customer base for more than 20 years.
- Existing customer base
- Currently produces 15,000 tonnes of graphite concentrate per year
- Generates annual EBITDA of C$10 million to C$15 million*
- Recently completed drill program confirms the potential for near-term extension of mining operations with mineralization open to the north and south
Located in Namibia, one of Africa’s finest mining jurisdictions, the Okanjande mine, mill and tailings facilities are fully permitted, and the processing plant is being moved to the mine site in order to reduce operating costs, cut greenhouse gas emissions and improve sustainability as well as enhance the mine’s expansion potential.
- Production to resume in 2025
- 1.6 million tonnes of graphite (on a Measured & Indicated basis) at a grade > 5.0%
PEA supports potential to expand facilities over time to serve fast-growing market for battery anode materials.
- It has one of the highest percentages of large/XL flake in the industry
- Near construction ready, subject to financing and finalization of permitting
- Southern Canada location with ready access to labour, supplies, equipment, natural gas & markets
The Bissett Creek project has been described by Benchmark Mineral Intelligence as the highest margin graphite deposit in the world.
Northern Graphite is Building for the Battery Minerals Demand Bonanza.
Northern Graphite plans to develop a battery anode material (BAM) plant at Baie-Comeau, Quebec, to supply the coming demand boom for battery minerals.
- Capacity of 200,000 tonnes per year BAM will make it one of the largest such facilities in the world. With access to affordable, green energy in Quebec, the facility will also be one of the world’s cleanest.
- The all-season port of Baie-Comeau provides easy shipping access to planned battery giga-factories clustered in the Eastern United States and to European markets.
Other Graphite Stocks with Similar Profiles to Northern Graphite Include:
Capital Markets Summary:
As of December 09, 2023
Why Northern Graphite (TSXV: NGC) (OTCQB: NGPHF) should be on your watchlist
Only natural graphite producer in North America, with fully permitted mines and facilities in Canada and Namibia, putting it years ahead of most other companies targeting commercial production.
Graphite is probably the least known of the five minerals deemed by the DOE as critical to the development of EVs. Global demand for graphite, which is the largest component by weight in EV batteries and for which there is no ready or economic replacement, is set to vastly exceed supply in coming years.
Northern Graphite is setting itself up to be THE Next Generation Carbon Materials Company for the energy transition, with a sustainable, integrated, mine-to-market solution that will be available as U.S. credits on EV batteries produced by the United States and their trading partners come into force over the next five years.
An investment in Northern Graphite is an investment in the clean energy/green energy movement sweeping the globe. It’s also an investment in the future of the planet.
Northern Graphite’s cornerstone operating mine, Lac des Iles in Quebec, generates $10-$15 million of annual EBITDA, and the company is set to restart production at its Okanjande mine in early 2025.
Phase 1 of Northern Graphite’s planned Baie-Comeau Battery Anode Material plant is forecasted to come on line in 2026, just as demand is set to take off for lithium-ion batteries for North America’s EV revolution. The plant will be one of the world’s largest and cleanest.
$NGC / $NGPHF trades at a markedly lower stock market valuation than comparable, publicly traded graphite companies – and is producing and generating revenue now.
Northern Graphite is engaged with governments, battery makers, car companies and other original equipment manufacturers that are looking to secure supply of battery-grade materials to feed the EV revolution.
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Market & Industry Data
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*Certain non-IFRS measures have been included in the information contained herein. NGC believes these measures, in addition to measures prepared in accordance with IFRS, provide investors an improved ability to evaluate the underlying performance of NGC and to compare it to information reported by other companies. The non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These measures do not have any standardized meaning prescribed under IFRS, and therefore may not be comparable to other issuers.
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