Northern Graphite Corp. [NGC-TSXV; NGPHF-OTCQB] said Wednesday June 9 that it has struck a deal to earn an 80% interest in the South Okak nickel-copper-cobalt project, which is located 80 km southeast of Voiseys’ Bay, Labrador.
The company said the South Okak area produced some of the best nickel-copper-cobalt drill intervals outside of Voisey’s Bay during the 1990s exploration rush. The 6,350-hectare South Okak property has been consolidated into one exploration license for the first time and covers the most prospective ground, the company said in a press release.
Northern Graphite is a mineral development and technology company that is working to develop its flagship Bissett Creek graphite deposit in northern Ontario. The company has already completed a bankable feasibility study for Bissett Creek. It has also received its major environmental permit. With capital costs estimated at US$85 million, the company is hoping to start up at a rate of 25,000 tonnes per year from open pit production.
The company is also focused on upgrading mine concentrates into high value components used in lithium-ion batteries, electric vehicles, fuel cells, graphene and other advanced technologies.
Prior to taking the Voisey’s Bay option, Northern Graphite was aiming to become a leading supplier of graphite, an industrial mineral that has long been associated with steel manufacturing, lead pencils and golf clubs, but is now a key ingredient used in the production of electric vehicles.
“The company has been searching for a complimentary battery minerals asset for some time and South Okak exactly meets our criteria,” said Northern Graphite CEO Greg Bowes. “It is a relatively advanced stage project with a substantial body of historical work that has enabled high quality targets to be identified relatively quickly with modern technology and geological concepts,” he said. “It is elephant country in a politically stable jurisdiction and nickel-copper-cobalt are key battery metals that will be in high demand as the electric vehicle and battery markets grow.”
On Wednesday, Northern Graphite shares eased 10.6% or $0.055 to 46.5 cents on volume of 377,350. The share are trading in a 52-week range of 70 cents and 15 cents.
Under the option agreement, Northern Graphite can earn up to an 80% stake in South Okak by spending $1.5 million over four years as well as issuing shares and making cash payments. They include a payment of $50,000 in cash and the issuance of 500,000 shares on closing.
Additional payments of $75,000 in cash and $200,000 in cash or common shares must be made on the 24-month and 36-month anniversaries of the option agreement. Once it has been exercised the owners of South Okak will then be carried to production on their 20% interest.
Northern Graphite has already approved an initial budget of $500,000 for exploration activities during the 2021 exploration season, consisting of sampling, mapping and geophysics, together with a review of historical, untested targets.