NextSource Materials produces first SuperFlake graphite from Molo mine, Madagascar

NextSource Materials Inc. [NEXT-TSX; NSRCF-OTCQB] reported the first production of SuperFlake graphite concentrate at its Molo mine in Madagascar.

Craig Scherba, president and chief executive officer, commented: “First production of our SuperFlake graphite is a significant achievement for NextSource and a testament to the dedication and hard work of our commissioning and operations teams, our employees and contractors, as well as the ongoing support that we have received from the local community and government. As we ramp up the production stage of operations, the company is in the enviable position of transitioning into a significant and sustainable global producer of high-quality graphite and anode material just as demand for their use in lithium-ion batteries is growing exponentially.”

As part of the commissioning and optimization of the processing plant, the commissioning sequence was prioritized for initial production of coarse flake concentrate, with the first tonne of production consisting of plus-48 mesh (jumbo size) SuperFlake graphite.

Since initiation of plant commissioning on March 23, 2023, the commissioning and operations teams have progressed methodically through debottlenecking and optimization activities. The operations team will now shift their focus to ramping up the plant throughput to its nameplate capacity of 17,000 tonnes per annum.

The company expects to sell all the flake graphite produced at the Molo graphite mine to key customers under existing offtake agreements, which includes Germany’s thyssenkrupp Materials Trading GmbH and the company’s Japanese technical partner, which is the main supplier of value-added graphite to Japan’s largest anode processor that in turn supplies multiple Japanese and international OEMs (original equipment manufacturers) with graphite anode material.

The company continues to be engaged in advanced discussions with several major EV (electric vehicle) companies (OEMs) and has received requests for multitonne samples of battery anode material as part of the OEMs qualification process. As such, the company will begin sending flake graphite qualifying material to its battery anode facility (BAF) technical partners for conversion into coated, spheronized, purified graphite (CSPG), which is the final form of anode material that is assembled, along with cathode material into finished lithium-ion batteries used in electric vehicle (EV) applications.

The company announced on Feb. 28, 2023, its strategy for the staged buildout of a series of BAFs in key geographic locations. The BAFs are value-added processing facilities that convert flake graphite into CSPG.

BAF strategy highlights: Plans to construct multiple BAFs capable of producing CSPG anode material for use in lithium-ion batteries for EV applications in key jurisdictions. The BAF designs will leverage the company’s exclusive partnership with two leading value-added graphite processors, and use their proprietary and well-established graphite anode processing technology, which currently produces CSPG for the supply chains of major OEMs, including Tesla and Toyota.

The first BAF will be in Mauritius, selected due to its proximity to the Molo graphite mine in Madagascar and its position on strategic shipping routes to Asian markets.

A long-term industrial lease has been signed to build the Mauritius BAF within an existing industrial facility in Port Louis, Mauritius. The BAF site location is also classified as an industrial freeport, with a 3-per-cent corporate tax rate and 0-per-cent VAT (value-added tax).

A technical study for the Mauritius BAF with an initial production capacity of 3,600 tpa (tonnes per annum) (Line 1) of CSPG dated Feb. 28, 2023, estimated initial capital costs and working capital investments of US$32.8-million and annual revenues at US$33.7-million, with an EBITDA (earnings before interest, taxes, depreciation and amortization) of US$13.2-million. The resulting posttax economic results demonstrated a net present value (NPV) of US$106.9-million using an 8% discount rate, an internal rate of return (IRR) of 42.7% and a payback of 2.2 years.

Adding three additional lines (lines 2, 3 and 4) to the Mauritius BAF for a total capacity of 14,400 tpa of CSPG demonstrated a total post tax NPV (8% discount) of US439.7-million, incremental capex (capital expenditures) of US$74-million and IRR of 45.8%.

Subject to obtaining necessary financing, completion of the front-end engineering and design (FEED) study, and completion of the environmental and social impact assessment (ESIA) process, the company is targeting the start of a 12-month construction process in Q3 2023, resulting in potential initial production at the Mauritius BAF in Q3 2024.

Evaluation of the potential construction of a BAF in North America, and initiation of the application process to access various financial loans and grants offered under Canadian federal and provincial programs, and under the United States Inflation Reduction Act.

Evaluation of the potential construction of a BAF in the United Kingdom and initiation of the application process to access various financial loans and grants offered under the U.K. Government Automotive Transformation Fund.

Evaluation of the potential construction of a BAF in the European Union. Evaluation and potential construction of an artificial graphite (AG) production facility, which would enable the company to supply AG anode material along with natural flake-based anode material.