Northern Graphite ramping up production at Lac de Iles

Northern Graphite Corp. [NGC-TSXV; NGPHF-OTCQB] reported record sales in the first quarter of 2024, both in terms of volume and revenue. The company reported revenue of $5.5 million based on 2,968 tonnes of graphite concentrate sold at an average realized sales price of US$1,382 per tonne.

However, the company reported a net loss of $8.8 million ($0.07 per share), which included significant non-cash charges relating to depletion and depreciation, share-based compensation, capitalized finance expenses, impairment expenses and drawdown of inventories.

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.

The LDI mine and plant were temporarily placed on care and maintenance during the second and third quarters of 2023 amid challenging markets and lower prices for its products, while the company continued to supply customers from stockpiled inventories.

“While we were pleased to be able to report record sales volumes and revenue in the first quarter amid strong demand for customers that started in the second half of last year and has continued into this year, clearly there is more work to be done,’’ said Northern Graphite CEO Hugues Jacquemin.

“The level of production at Lac des Iles since its acquisition has not been sufficient to sustain the company on a cash flow basis, and operating deficits have had to be mitigated by external financings and the sale of inventories,’’ he said.

“In order to address this situation and make the company self-sustaining, LDI’s production is being ramped up to nameplate capacity of 25,000 tonnes per year to meet growing demand stimulated by electric vehicle sales, Chinese export controls and U.S. tariffs on Chinese graphite.’’

Jacquemin said that while the expansion will increase operating income, it also requires additional investment in working capital that is straining the company’s resources. “As North America’s only flake graphite producer, we have a sound plan to increase production and upgrade it into battery anode material in time to supply the electric vehicle revolution, but our efforts to secure support from federal, provincial and US government agencies as well as EV and battery manufacturers have yet to be successful, despite the critical need to establish a North American supply chain.’’

Meanwhile, in keeping with the plan to boost capacity to 25,000 tonnes per year, the company moved the LDI plant to seven days a week per week operation. The company has said it aims to increase LDI production through successful exploration and/or the potential to process material from the company’s Mosseau project. Mousseau is located about 80 kilometres from LDI.

Northern Graphite shares were unchanged Friday at 12.5 cents and trade in a 52-week range of 42 cents and 11.5 cents.