Northern Graphite posts Q2 results, faces challenging market
Northern Graphite Corp. [NGC-TSXV; NGPHF-OTCQB] reported a net loss of $9.4 million or $0.07 per share in the second quarter ended June 30, 2024. The company said the net loss included significant non-cash charges related to depletion and depreciation, share based compensation, capitalized finance expenses, impairment expenses and drawdown of inventories.
The company reported second quarter revenue of $5.5 million based on 2,772 tonnes of graphite concentrate sold at an average realized sales price of $1,972 per tonne (US$1,441 per tonne), 6.0% above the first quarter, due to a favourable product mix.
“In the second quarter, we took decisive action to manage our cash position to ease the strain on our working capital and provide us with greater flexibility to pursue our growth catalysts, including strict overhead cost cutting measures and the sale of inventory that came with the acquisition of the Lac des Iles mine in 2022, and these efforts are bearing fruit,’’ said Northern Graphite CEO Hugues Jacquemin.
“At the same time, we increased our operating income by ramping up production at LDI, and achieving near-record sales volumes to industrial customers for the third consecutive quarter, including sales in new geographies,’’ he said.
“However, commodity and financial markets remain difficult and in the second quarter the company was not able to meet all the financial covenants for its senior secured loan and royalty financing, including making the required interest and royalty payments.”
The company said all defaults have been waived by the lender and royalty holder and discussions are ongoing with respect to amending the terms of our senior secured loan and royalty financing.
“While the current situation is challenging, the long-term outlook for our strategy to sell to the EV battery space remains strong and we continue to implement measures to enable the company to weather the prevailing environment and carry us through until graphite markets recover,” Jacquemin said.
Northern Graphite shares were unchanged Thursday at $0.07 and currently trade in a 52-week range of 36 cents and $0.065.
Earlier this year, company said it has resumed processing ore at its Lac des Iles (LDI) graphite mine in Quebec amid rising market demand for the commodity.
Northern Graphite was focused on its Bissett Creek project in Ontario until its recent acquisition of a 100% interest in two graphite mines from French industrial minerals company Imerys Group for US$40 million, a move that Northern Graphite described as “transformational” for the company.
Those assets included LDI and the Okanjande graphite deposit/Okorusu processing plant in Namibia. The Namibian project was held by Imerys and a joint venture partner.