Northern Graphite resumes processing in Quebec, shares up

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Northern Graphite Corp. [TSXV-NGC; OTCQB-NGPHF] shares rallied Wednesday after the company said it has resumed processing ore at its Lac des Iles (LDI) graphite mine in Quebec amid rising market demand for the commodity.

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.

The company said global graphite markets were negatively impacted by lower-than-anticipated demand from steel and electronics markets and after China removed electric vehicles sales incentives at the end of last year.  “Those factors led to excess Chinese graphite production coming to export markets at lower prices,’’ said Northern CEO Hugues Jacquemin.

“We saw a total shift in demand after China reinstated electric vehicle incentives this year,’’ said Jacquemin. “We also had the October 20th news that China would start imposing controls this December on certain graphite exports used in battery making, which will drive further supply concerns. Fortunately for our customers, Northern Graphite has immediate capacity available to supply the market and we also have the ability to scale quickly with our mine in Namibia.”

Northern Graphite shares advanced on the news, rising 6.25% or $0.015 to 25.5 cents in early morning trading, Wednesday. The shares are currently trading in a 52-week range of 70 cents and 20.5 cents.

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.

Sales volumes at LDI rose each month in the third quarter. Total sales in quarter were 2,587 tonnes, representing an increase of more than 25% over the 2,106 tonnes sold in the second quarter, based on preliminary, unaudited data.

Its aim is 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.

Graphite is the anode material in a lithium-ion battery and is the single largest component by weight. There are no substitutes, and almost all of it comes from China.

Northern Graphite recently released a resource estimate for its Mousseau property, an asset that has the potential to expand production and extend the life of LDI. Mousseau is located about 80 kilometres from LDI.

According to the latest estimate, Mousseau contains 2.8 million tonnes of 7.9% graphite or 223,079 tonnes of graphite.

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