Eagle Graphite unveils debt restructuring deal

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Eagle Graphite Inc. [EGA-TSXV] said Friday it has entered into a binding letter of intent to restructure the terms of approximately US$2.4 million of secured debt associated with a supply agreement that has remained unfulfilled since 2013.

Eagle Graphite’s key asset is the Black Crystal Graphite quarry, located 35 kilometres west of Nelson, B.C. The company says Black Crystal is the only constructed graphite quarry with a production history in western North America. The project includes two mining leases with a combined area of 300 hectares. The production-ready facility has historically produced at an equivalent output of 4,000 tonnes of graphite annually.

“This agreement is an exciting achievement for us,’’ said Eagle Graphite CEO Jamie Deith. “This binding LOI (letter of intent) markedly improves our financial situation, and is a crucial first step in our efforts to move the project forward,” he said.

“We are grateful to have a customer that supports our objective of being a long-term reliable source of graphite for North America.

Under the terms of the LOI, Eagle has agreed to the following:

  • Make three payments of US$75,000 by July 31, 2022, September 30, 2022, and March 31, 2023 respectively.
  • Make available for pickup, from inventory, 30 tonnes of graphite by June 30, 2022. The agreed value of the shipped graphite will be deducted from the total amount due.
  • Repay the balance of the outstanding principal of US$1.53 million by September 30, 2023.

Once the above conditions have been satisfied, the debt would be considered fully paid. Providing the payments are made as scheduled, the purchaser has agreed to forbear from enforcing its security, and accumulated interest of more than US$870,000 would be effectively forgiven.

As of the company’s most recent quarter end, the value of the unsatisfied commitment stood at US$1.53 million (the principal) plus accrued interest of US$867,918. Prior the executing the LOI, the combined liability of US$2.39 million (approximately C$3.05 million) stood due upon demand.

The Investment Industry Regulatory Organization of Canada (IIROC) on Friday said trading in Eagle Graphite shares was scheduled to resume at 11.00 AM (EDT). Before trading was halted, the shares were trading at 16.5 cents in a 52-week range of 21.5 cents and $0.095.

Graphite is an essential but often unrecognized material for modern life, with broad industrial applications due to its unique properties. They include high electrical and thermal conductivity, low frictionality and light weight, properties that make it ideal for industrial applications.

Traditional uses of graphite include steelmaking, electrodes in electric arc furnaces, brake linings, modern pebble bed nuclear reactors and dry lubricants.

Eagle has said it is partnering with the University of British Columbia to research next generation anodes for lithium-ion batteries with superior performance.

In 2019, the company said it had received $290,000 in grant funding from the B.C. government to support a 2.0-year program to develop and commercialize silicon-modified battery anodes made with graphite from Black Crystal.

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