Northern Graphite Announces 2024 Year-End Results Growing Resources & Managing Costs at Cornerstone LDI Mine
Northern Graphite Announces 2024 Year-End
Results
Growing Resources & Managing Costs at Cornerstone LDI
Mine
Ottawa, Ontario--(Newsfile Corp. - May 1, 2025) - Northern Graphite Corporation
(TSXV: NGC)
(OTCQB: NGPHF) (FSE: 0NG) (XSTU: 0NG)
(the "
Company
" or "
Northern
") announces that its
Audited Financial Statements and Management's Discussion and Analysis for the year ended
December 31, 2024 have been filed on SEDAR+ and
posted to the Company's website.
The Company
is pleased to provide the following operational and financial summary.
"In 2024, we implemented strict cost controls to preserve cash while simultaneously expanding
resources through exploration success at our cornerstone Lac des Iles ("LDI") mine and advancing our
vertical integration strategy with the launch of our battery materials division in Frankfurt. Despite
geopolitical uncertainty, we sold near-record volumes and continued to broaden our market reach," said
Northern Chief Executive Officer Hugues Jacquemin.
"We now have sufficient data to support an
expansion of our LDI pit, which is good news considering that demand for our product continues to
strengthen. But none of this will matter if we cannot secure financing to extend the pit before we run out of
ore by the end of this year. We are doing everything in our power to respond, but like many in our
industry, we are operating in a capital environment that remains extremely difficult. Without near-term
access to the funding, we may be forced to place Lac des Iles, the only operating graphite mine in North
America, on care and maintenance. That is not a decision we take lightly. The world needs more
graphite, and Northern is positioned to deliver it, but we cannot do it alone."
Operational Highlights: Growing Resources
To meet increasing customer demand, the Company maintained
strong production and sales
volumes up until the fourth quarter
, when management made the decision to shut down the LDI
plant for
two months
to accelerate repairs and maintenance and enable the Company to increase
throughput going forward to meet growing demand for natural graphite sourced outside of China;
After publishing a new resource estimate in the first quarter, which showed the potential to
significantly extend the life of LDI, the Company embarked on a
second drilling program in the
fourth quarter
with the goal of further increasing its resource base;
The Company started the
permitting process in the first quarter of this year to extend the
current pit
which, pending financing, will allow for continued mining after the current pit is mined
out;
The Company
advanced its mine-to-battery capabilities
with the launch in February of the
NGC
Battery Materials Group ("NGCBM")
. Based in Frankfurt and armed with a state of the art lab,
NGCBM will oversee construction of Northern's planned Battery Anode Material ("BAM") facilities
in Baie-Comeau and in France. NGCBM is also advancing the development, production, and
commercialization of Porocarb®, its patented high-performance macro-porous hard carbon
material designed to boost the performance of next generation battery chemistries. Non-disclosure
agreements have been signed with top-tier global battery manufacturers from South Korea, Japan,
China, and several Western countries;
The Company is in
ongoing, active discussions with government organizations
in Canada
at the Federal and Provincial levels, as well as in the United States and internationally to gain
support for its projects and to speed up development of the battery anode supply chain;
The Company has been continuously and actively involved in
discussions and negotiations
with technology and original equipment manufacturing ("OEM") partners
in both the US
and Europe who want to collaborate with a quality supplier of graphite that has current production,
immediately available inventory and the capacity to support future growth;
The Company announced some
key management changes
, including the appointment of Niall
Moore as interim Chief Financial Officer in the fourth quarter. In order to enhance operational
efficiencies and better align sales strategy to meet increasing demand from the battery sector, in
February, 2025, Northern appointed Maximillian Meier as Chief Operating Officer and Michael
Grimm, the President of Northern's Battery Materials Division, as Chief Commercial Officer; and
At the Board level, Northern welcomed a
new Board member in January in Ms. Samantha
Espley
, an industry veteran who has a history of making transformation happen at some of the
world's most important mining companies.
Financial Highlights: Focus on Cash Management
(Stated in thousands of Canadian Dollars except for per-tonne amounts)
Northern responded in 2024 to
rising industrial demand for its graphite in North America
,
increasing revenues by 33% compared to 2023 and sales volumes by 45%. The Company
generated revenue of $22.7 million for the year, based on 12,442 tonnes of graphite concentrate
sold at an average realized sales price of $1,827 per tonne (US$1,306 per tonne). (1) The impact
of the tonnage increase on revenue was partially offset by a decrease in the average sales price
per tonne of 8%, primarily due to inventory spot sales for cash management purposes;
The LDI plant produced 11,697 tonnes of graphite concentrate in 2024
as operations ran
continually until November 3 when it and the mine went into a temporary shutdown for maintenance
and repairs.
Plant and mine operations recommenced in mid-January 2025. In order to preserve
cash, mining operations were halted again for the first four months of the year and for just under
two months in the third quarter;
Production costs of $18.1 million
were 47% higher than the prior year, primarily as a result of a
45% increase in sales volumes, while cash costs were $1,455 (US$1,041) per tonne of graphite
concentrate sold, in-line with the prior year. Lower average sales prices for the year contributed to
a loss from mine operations of $0.3 million in 2024 compared to income of $1.9 million in 2023;
The Company reported
an operating loss of $7.5 million
for the year which included $5.4 million
in non-cash charges relating to depletion and depreciation and share-based compensation;
Finance costs were $16.0 million during 2024 (2023 - $6.6 million). They increased due to a loss
on extinguishment of $4.4 million on the Company's royalty liability due to an update of the LDI
production plan and related revenue forecast, increased interest rates on the Company's senior
debt and no capitalization of interest while the Okanjande project is under care and maintenance.
These increases were partially offset by modification gains on the Company's royalty liability and
senior debt of $520,000 and $346,000, respectively, due to changes in the anticipated timing of
royalty and interest payments. Almost all of the finance costs were non-cash items.
An
overall net loss of $38.8 million
($0.30 per share) was recorded in 2024 which included
significant non-cash charges relating to depletion and depreciation, finance costs, foreign
exchange, share-based compensation, impairment expenses and drawdown of inventories. Cash
used in operating activities was $1.2 million;
The Company's lender and royalty holder have waived all defaults as of April 29, 2025, effective
December 31, 2024. Discussions continue with respect to amending the terms of the senior
secured loan and royalty financing to better align them with project timelines that have shifted with
markets that are evolving at a slower pace than forecast. As of December 31, 2024, in line with
June and September 30, 2024, the Company continued to report its senior secured loan ($25.1
million) and its royalty financing ($14.8 million) as current liabilities as the Company has not met
the following covenants related to these instruments:
Senior secured loan
- As at December 31, 2024, the Company had not met some of the
covenants relating to the amended and restated credit agreement dated November 29,
2023, including the payment of accrued interest of $3.5 million (US$2.5 million), maintaining,
at all times, on a consolidated basis, positive working capital, and maintaining, at all times,
on a consolidated basis, a minimum cash balance of US$750,000.
Royalty Financing -
As at December 31, 2024, the Company had not made royalty
payments for 2024 totaling $2.1 million.
Cash and Working Capital
Cash and equivalents were $0.4 million as at December 31, 2024, compared to $3.1 million as of
December 31, 2023; and
The Company's working capital optimization efforts on inventories and receivables were offset by
the above noted senior debt and royalty classification to current liabilities ($39.9 million in total),
resulting in a negative working capital balance of $37.4 million as at December 31, 2024.
(1)
The Company reports the non-IFRS financial measures of average realized sales price per tonne of graphite concentrate sold and cash costs
per tonne of graphite concentrate sold to manage and evaluate its operating performance. See "Cautionary Note Regarding Non-IFRS Performance
Measures" below.
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Northern is advancing toward its goal of becoming a vertically integrated, mine-to-market supplier to
traditional downstream customers and to the emerging market for battery anode material. The main
catalysts of that strategy include growing graphite production from its cornerstone Lac des Iles asset,
restarting its Okanjande mine in Namibia and developing downstream capacity to produce anode
material for use in lithium-ion batteries and electric vehicles (
"EVs"
) in North America and Europe and
to upgrade graphite mine concentrate into value added industrial products.
Graphite Market Outlook
Non-battery demand for graphite in industrial applications, particularly in the refractory industry, was
robust throughout 2024 and is expected to remain strong through 2025
, particularly in North
America, the destination for about 85 percent of the Company's production. Large and jumbo flake
graphite, which is critical to these sectors, has become increasingly scarce as China curtailed mining
capacity amid elevated inventories of anode material, effectively removing Chinese supply of these flake
sizes from the market. Outside of China, supply has been further constrained by force majeure being
declared at a large mine in Mozambique and operational challenges at new mines globally, leading to
increased supply pressures. Looking ahead, demand is expected to remain resilient while supply
remains tight, particularly following the imposition of tariffs on both natural and synthetic graphite imports
from China by U.S. President Donald Trump amid escalating trade tensions. These tariffs could rise
even further after U.S. graphite producers petitioned for anti-dumping tariffs on imports of Chinese
graphite of as high as 920%, alleging unfair trade practices. A decision from the U.S. Department of
Commerce and the International Trade Commission is anticipated in the coming months.
Demand for the Company's graphite products increased throughout 2024 despite geopolitical
turbulence and is expected to continue doing so through 2025, even with price increases announced in
January of this year. During the year ended December 31, 2024, in line with the trend evidenced during
the second half of 2023, graphite sales volumes and revenues from LDI increased significantly and
continuously. During the year ended December 31, 2024, revenue increased 33 percent compared to
2023 along with a 45 percent increase in sales volumes due to robust demand from industrial customers
in the United States. The US is the Company's primary market and provides a stable source of revenue
until it can supply the growing demand from battery clients currently being served by China. While overall
market performance was solid, sales volumes and revenues were impacted by a scheduled two-month
shutdown of the Lac des Iles mill in the fourth quarter of 2024 in order to carry out critical maintenance
and prepare the mill to increase throughput and meet rising demand. Despite this temporary disruption,
the market environment remains stable, with clients continuing to prioritize secure and reliable supply
amid ongoing geopolitical uncertainty. The United States' recent announcement of new tariffs on goods
from various global trading partners has created additional market unease. Graphite from Canada
remains exempt under the terms of the United States-Mexico-Canada Agreement (USMCA) and
customers have not experienced any negative tariff-related impacts to date. Management has also been
aggressively pursuing new markets/customer opportunities in North America and Europe in order to
balance liquidity with the amount of working capital tied up in inventories, and to create a market for
future expected Namibian production.
Mining Operations
Northern is advancing its key growth catalyst of adding resources that will enable it to bring on quick,
scalable, low capex production from its existing mine and development projects in time to supply
growing demand amidst widescale global electrification and the EV revolution.
Lac des Iles Mine - Quebec
In order to meet growing demand from industrial customers and from North American battery makers,
the Company is
working to boost mill output and extend the life of its cornerstone Lac des Iles
mine
in Quebec. LDI is the only producing graphite mine in North America but its existing pit will be
mined out and stockpiles used up by the fourth quarter of 2025. The Company requires an investment of
up to $10 million to extend the existing pit and there is a lead time from an investment decision to
production of approximately six months.
The Company is pursuing a number of options for raising the
necessary financing. The pit extension will be based on the LDI resource estimate published in January
2024 which showed potential to extend the life of the mine by approximately eight years. The goal is to
be able to break ground as soon as possible and ensure a continuous flow of ore to the plant. The new
mineral resource estimate also supports the Company's intention to meet rising demand by permanently
moving the LDI mill to a seven-days-per week operation, targeting annual nameplate capacity of 25,000
tonnes per year ("tpy"). A technical report in respect of the mineral resource estimate prepared in
accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101")
- was filed under the Company's profile on SEDAR+ (www.sedarplus.ca) on March 1, 2024. Northern
also completed an additional drilling program in the fourth quarter with the objectives of further identifying
and expanding resources with a lower strip ratio. Core logging and data compilation are ongoing but the
release of results has been delayed due to financial constraints the Company is experiencing.
Okanjande Mine - Namibia
The Company continues to evaluate options to fund the Okanjande project through the use of a
royalty/stream/debt structure and equity contributed by a strategic partner without having to go to the
market at current share prices. During the third quarter of 2023, Northern placed Okanjande on care and
maintenance. A technical report in respect of a preliminary economic assessment ("PEA") for the
Okanjande project prepared in accordance with NI 43 101 was filed under the Company's profile on
SEDAR+ (www.sedarplus.ca) on August 28, 2023. The PEA indicated that the economics are attractive
under a plan to move the processing plant from Okorusu to the mine site with higher capital costs but
lower operating costs. In addition, greenhouse gas emissions are reduced, sustainability is improved,
and the expansion potential of the project is substantially enhanced. Battery grade graphite ore from
Okanjande is within easy maritime access to European and North American markets and is intended to
be used to supply Northern's planned BAM facilities in France and in Canada.
Okanjande represents
an opportunity to substantially increase graphite production at a lower cost and with a shorter
time to market than most competing projects
.
Mine-to-Market-to-Battery Strategy
Northern launched its
Battery Materials Group ("NGCBM")
in February of 2024 to help drive its mine-
to-market-to-battery strategy and its goal of becoming one of the world's few integrated producers of
Battery Anode Material ("BAM") outside of China. Based in Frankfurt, NGCBM has a state of the art
electrochemical lab which enables it to process battery grade graphite from the Company's mines and
produce anode material that is tailored to battery makers' specific needs. NGCBM will oversee
construction of Northern's planned BAM facilities in Baie-Comeau, Quebec, which will process graphite
from the Company's Canadian and Namibian operations, and in France, which will also process
graphite from Namibia.
The French BAM project has been
designated as "strategic" under the
European Critical Raw Materials Act
by the European Commission, the EU's executive body. This
qualifies it for fast-tracked permitting and greater access to financing and off-take support mechanisms
in order to boost Europe's strategic raw material capacities and diversify its sources of supply.
Northern's Battery Materials Division submitted the proposal last year to take battery grade graphite
from its Okanjande project in Namibia and upgrade it into Battery Anode Material in a facility in France
for investment of an estimated €159,000,000. Under the scope of the project, pre-purification, milling
and shaping of the graphite would occur in Namibia and purification and coating would take place at a
new facility in France. Battery testing would take place at NGCBM's laboratory in Germany. The mining
of graphite at Okanjande is not covered under the scope of the Strategic Project, although Northern
intends to file a subsequent proposal that will include extraction activities at the Namibia site.
Battery Anode Material, the single largest component of lithium-ion batteries, is made by upgrading
graphite mine concentrate to the exacting specifications of EV battery manufacturers and Northern's
BAM facilities will address this critical need that is currently missing from the energy transition supply
chain in the West. Independent testing has determined that graphite from all of Northern's assets, all
located close to infrastructure and in politically stable jurisdictions, is battery grade. Also, in preparation
to supply growing demand from North American battery markets, in the fourth quarter Northern signed a
Joint
Development Agreement with Rain Carbon Inc.
to develop and commercialize advanced,
natural graphite BAM products used in lithium-ion batteries for electric vehicles. NGCBM is also
advancing efforts related to the development, production, and commercialization of Porocarb®, its
patented high-performance macro-porous hard carbon material aimed at boosting performance in next
generation battery chemistries and has signed non-disclosure agreements with top-tier global battery
manufacturers from South Korea, Japan, China, and several Western countries. The Company is also
pursuing opportunities to move downstream into non-EV applications in the electronics, construction,
graphene and hydrogen fuel cell markets. These markets provide the opportunity to increase revenues
and profits through further processing of the Company's graphite mine concentrates.
Balance Sheet and Corporate Update
Northern implemented
strict cost control measures during 2024
to better manage its cash position
and optimize its working capital, including sales of inventory, optimization of accounts receivable and
operating the LDI mill on a seven-days-a-week schedule until the shut down for maintenance and repairs
in the last two months of the year. The level of production at LDI since its acquisition has not been
sufficient to sustain the Company on a cash flow basis, and operational deficits have been financed by
external means and the sale of inventories. In order to make the Company self-sustaining and meet
growing demand stimulated by EV sales, Chinese export controls and US tariffs on Chinese graphite,
Northern is working to ramp up output at LDI to nameplate capacity of 25,000 tpy. While the expansion is
expected to increase operating income, it will require additional investment in the planned pit extension
and working capital that is straining resources.
Northern continues to report as current liabilities its senior secured loan ($25.1 million) and its royalty
financing ($14.8 million) as a result of the Company not meeting certain covenants related to these
instruments. While the
lender and royalty holder have waived all defaults as of April 29, 2025
effective December 31, 2024
, discussions continue with the parties relating to amending the terms of
the senior secured loan and royalty financing to better align with project timelines that have shifted with
markets that are evolving at a slower pace than forecast. While discussions continue, the lender and
royalty holder is supportive of Northern's growth plans and is keen to work with the Company to find ways
to capitalize on the new resource and extended mine life potential at LDI and allow the Company to
benefit from a strong industrial market for graphite in North America as well as coming demand from EV
markets. Going forward, the Company intends to continue to reduce inventories to generate liquidity and
maintain strict overhead cost controls that were implemented in 2024, as well as consider a number of
other strategies until support for the only operating graphite mine in North America materializes or
markets improve. The Company also continues to seek support from federal, provincial, US and
European government agencies as well as EV and battery manufacturers.
Closing Remarks
"As we close the books on 2024, we do so with a clear sense of both accomplishment and urgency,"
said Mr. Jacquemin.
"Northern Graphite is attempting to build a unique position in the global supply
chain as a fully integrated, Western supplier of natural graphite and battery anode material. We've grown
our market share, deepened customer relationships, advanced our technical and downstream
capabilities, and continued to develop our resources to help power the energy transition. At the same
time, we recognize that capital markets have not yet caught up to the critical role graphite plays in
electrification and energy security. We remain fully committed to unlocking the full potential of our assets
and to working with customers, governments and partners to ensure North America and Europe have a
secure, transparent graphite supply chain. The building blocks are in place and with the right support,
we're ready to lead. That said, we must also remain pragmatic, prioritizing regions where stronger
progress is being made and where our efforts are best supported."
About Northern Graphite
Northern, the only flake graphite producing company in North America, is a Canadian, TSX Venture
Exchange listed company that is focused on becoming a world leader in producing natural graphite and
upgrading it into high-value products critical to the green economy, including anode material for lithium-
ion batteries/EVs, fuel cells and graphene, as well as advanced industrial technologies.
Northern expects to become one of the largest natural graphite producers outside of China when its
Namibian operations come back online. The Company also has the large-scale Bissett Creek project in
Ontario and substantial additional measured and indicated resources in Namibia and the Mousseau
property in Quebec which are expected to be sources of continued production growth in the future. All
projects have "battery quality" graphite and are located close to infrastructure in politically stable
jurisdictions.
For media inquiries contact
Pav Jordan, VP of Communications
Email:
For further information contact
Niall Moore, CFO
Telephone: (613) 271-2124
Email:
Qualified Person
Gregory Bowes, B.Sc. MBA P.Geo, the Chairman of Northern, is a "qualified person" as defined under
NI 43-101 and has reviewed and approved the content of this news release.
For additional information
Please visit the Company's website at
www.northerngraphite.com/investors/presentation
the Company's
profile on
www.sedarplus.ca
our
Social Channels
listed below or contact the Company at (613) 271-
2124.
YouTube
Cautionary Note Regarding Non-IFRS Performance Measures
This news release includes certain non-IFRS performance measures that do not have a standardized
meaning prescribed by International Financial Reporting Standards ("IFRS"). The Company believes
that these measures, in addition to measures prepared in accordance with IFRS, provide investors with
an improved ability to evaluate the underlying performance of the Company and to compare it to
information reported by other companies. The non-IFRS measures are intended to provide additional
information and should not be considered in isolation or as a substitute for measures of performance
prepared in accordance with IFRS. These measures do not have any standardized meaning prescribed
under IFRS, and therefore may not be comparable to other issuers. The calculation and an explanation of
these measures is provided in the Company's Management's Discussion and Analysis and such
measures should be read in conjunction with the Company's Management's Discussion and Analysis
and financial statements.
Cautionary Note Regarding Forward-Looking Statements
This news release contains certain "forward-looking statements" within the meaning of applicable
Canadian securities laws. Forward-looking statements and information are frequently characterized by
words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "potential",
"possible" and other similar words, or statements that certain events or conditions "may", "will",
"could", or "should" occur. Forward-looking statements in this news release include statements
regarding, among others, plans for extending the mine life and output at LDI, bringing the Company's
Namibian operations back online, advancing other developments projects to production, developing
the capacity to manufacture value added products and raising the financing to complete any or all of
these initiatives. All such forward-looking statements are based on assumptions and analyses made
by management based on their experience and perception of historical trends, current conditions and
expected future developments, as well as other factors they believe are appropriate in the
circumstances. However, these statements are subject to a variety of risks and uncertainties and other
factors that could cause actual events or results to differ materially from those projected including, but
not limited to, unexpected changes in laws, rules or regulations, or their enforcement by applicable
authorities; the failure of other parties to perform as agreed; social or labour unrest; changes in
commodity prices; unexpected failure or inadequacy of infrastructure and the failure of ongoing and
contemplated studies to deliver anticipated results or results that would justify and support continued
studies, development or operations, and the inability to raise the required financing. Readers are
cautioned not to place undue reliance on forward-looking information or statements.
Although the forward-looking statements contained in this news release are based on what
management believes are reasonable assumptions, the Company cannot assure investors that
actual results will be consistent with them. These forward-looking statements are made as of the date
of this news release and are expressly qualified in their entirety by this cautionary statement. Subject
to applicable securities laws, the Company does not assume any obligation to update or revise the
forward-looking statements contained herein to reflect events or circumstances occurring after the
date of this news release.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this
press release.
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