Northern Graphite Announces Year End 2022 Results
Northern Graphite Announces Year End 2022
Results
Ottawa, Ontario--(Newsfile Corp. - May 2, 2023) - Northern Graphite Corporation
(TSXV: NGC)
(OTCQB: NGPHF) (FSE: 0NG) (XSTU: 0NG)
(the "
Company
" or "
Northern
") is pleased to provide
an operating summary and financial highlights for the year ended December 31, 2022.
The Company's
Audited Financial Statements and Management's Discussion and Analysis have been filed on SEDAR.
Operational Highlights for the year include:
On April 29, 2022, the Company acquired 100% ownership of the producing Lac des Iles ("LDI")
graphite mine in Quebec, Canada, and the Okanjande graphite deposit and the Okorusu
processing plant in Namibia. The acquisition was funded through a combination of equity, debt and
the sale of a royalty and stream on the assets acquired;
The Company announced several executive officer appointments and additions to its Board of
Directors. Hugues Jacquemin was appointed CEO and a director of the Company on June 8,
2022 and Guillaume Jacq was appointed CFO on September 20, 2022. The Company also
announced the nomination of Greg Bowes, the Company's ex CEO as Chairman of the Board, and
the appointment of Frank O'Brien-Bernini to the Board of Directors, as well as Chair of the
Environment, Social, Governance and Nominating Committee;
The Company's LDI mine in Québec produced 9,460 tonnes of graphite concentrate with a
recovery rate of 90.5%;
On October 5,
2022, the Company exercised its option to acquire 100% of the Mousseau West
graphite project in Quebec to potentially provide another source of ore for the LDI mine.
Subsequent to December 31, 2022, the size of the project was increased by an additional 101.6
hectares to a total of 590.5 hectares;
In June 2022 the Company completed a Preliminary Economic Assessment ("PEA") on its
Namibian assets which evaluated the economics of shipping ore from the Okanjande graphite
mine to the Okorusu processing plant, located 70 km away. In late 2022 and early 2023, the
Company made the decision to relocate the Okorusu plant directly at the mine site in Okanjande.
An updated PEA is expected to be released in the second quarter of 2023 and includes plans for
a 31,000 tpy processing plant that will be ready for production in mid-2024; and
During the course of 2022, and subsequent to Dec 31, 2022 the Company provided clarity on its
mine-to-market strategy, with its intention to develop one of the world's largest battery anode
material ("BAM") facilities in Baie-Comeau, Québec with 200,000 tonnes per year ("tpy") of
capacity. The Company also announced the signing of an agreement to acquire a 33.33%
ownership interest and the majority of voting rights (50.1%) in NeoGraf Solutions, LLC ("NeoGraf"),
a US based company focused on the manufacturing of specialty value added products made from
natural graphite.
Financial Highlights for the year include:
Revenue of $12.0 million generated by 5,785 tonnes of graphite concentrate sold at an average
realized sales price of $2,073/tonne (USD$1,572/tonne);
(1)
Cash costs $1,364 (USD$1,033) per tonne of graphite concentrate sold;
(1)
Income from mine operations of $3.1 million;
An operating loss of $4.7 million which includes general and administrative expenses of $4.9
million;
A net loss of $14.6 million ($0.14 per share) which includes a non-cash, $2.6 million foreign
exchange loss on financial instruments and an impairment charge of $3.2 million arising from the
Company's decision to move its processing facilities in Namibia; and
Cash and equivalents of $5.1 million and working capital of $19.4 million as at December 31,
2022.
(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.
CEO Hugues Jacquemin commented, "April 29, 2023 marked the first full year since Northern Graphite
closed the acquisition of LDI and the Namibian operations from Imerys and it has been a year of
transformation for Northern Graphite. As the only significant producer of natural graphite in North
America, and with an established customer base and market share, we are advancing our strategy of
becoming a fully integrated, mine-to-market provider of mined and processed natural graphite to supply
our existing customers, and the energy transition and widescale electrification in North America and
abroad."
Selected Interim Financial Information
For the years ended
December 31, 2022
December 31, 2021
Revenue
$
11,993
$
-
Cost of Sales
Production costs
7,888
-
Depletion and depreciation
1,055
-
Total cost of sales
8,943
-
Income from mine operations
3,050
-
General and administrative
4,866
1,313
Share-based compensation
1,490
845
Project evaluation, acquisition, and integration
1,920
1,488
Foreign exchange gain
(498)
-
Total expenses
7,778
3,646
Operating loss
(4,728)
(3,646)
Loss (gain) on marketable securities
190
(414)
Finance expense
3,328
16
Foreign exchange loss on financing instruments
2,633
-
Interest income
(159)
(22)
Impairment
3,167
-
Loss before taxes
(13,887)
(3,226)
Current tax expense
701
-
Deferred tax expense (recovery)
(37)
-
Net loss
(14,551)
(3,226)
Other comprehensive loss
Foreign currency translation
(454)
-
Other comprehensive loss
(15,005)
(3,226)
Loss per share - basic and diluted
(0.14)
(0.04)
Weighted average shares outstanding
- basic and diluted
107,766,203
77,465,330
Lac des Iles Mine
During the year ended December 31, 2022, the LDI plant processed a total of 137,448 tonnes of ore
with an average head grade of 6.5% graphite and a recovery of 90.5% to produce 9,460 tonnes of
graphite concentrate. During the year LDI sold 5,785 tonnes of graphite concentrate with an average
realized sales price of $2,073 per tonne.
The LDI plant operated five days a week, 24 hours per day with one of the down days used for plant
maintenance. Operating targets of 1,000 tonnes/day milled and 60 tonnes/day of graphite concentrate
production have been consistently achieved with the purity of concentrates within specification.
On
October 5, 2022
the Company announced that it had exercised its option to acquire a 100% interest
in the Mousseau West graphite project, located approximately 80 km from LDI. Ore from this project has
the potential to significantly extend the life of the LDI infrastructure and return production to 25,000 tpy.
The Mousseau West project area has since been extended by the Québec ministère des Ressources
naturelles et des Forêts (the "Minister") to a total of 590.5 hectares. In order to satisfy existing and future
customer demand and to continue optimizing existing inventory levels the Company intends to operate
the LDI mine on an intermittent basis with an average yearly production rate of 15,000 tpy until the start-
up of Mousseau West when the Company expects to operate the LDI plant at full capacity of 25,000 tpy.
Namibia
In June 2022 the Company completed a Preliminary Economic Assessment ("PEA") which evaluated
the economics of shipping ore approximately 70 km from the Okanjande graphite mine to the Okorusu
processing plant. Key metrics include an average annual production of 31,000 tonnes of graphite
concentrate, production costs of US$775 per tonne, a post tax IRR of 62%, a post tax NPV of US$65
million and a payback of under two years based on a 10-year mine life and a weighted average graphite
price of US$1,500/tonne.
Long lead time items were ordered, however, following Covid related delays in the shipment of new
grinding mills from China management decided to evaluate installing the new mills in a plant built at the
Okanjande mine site.
This would represent phase 1 of an ultimate plan to build 100,000-150,000 tonnes
per annum of graphite production capacity adjacent to the Okanjande deposit to meet rapidly growing
EV and battery demand. The Company has been working with CREO Engineering to complete a new
PEA under this operating scenario and expects to publish the results during the second quarter of 2023,
including a revised capital cost estimate, with the goal of having the plant operating on a sustainable
basis by July, 2024.
Mine to Market Strategy
With the growth of the electric vehicle ("EV") market, the Company is moving downstream to further
process its graphite for use as the anode material in lithium-ion batteries ("LiBs") with shaping,
purification and coating technologies. This is expected to be done in partnership with companies that
are industry leaders in these technologies. On
December 21, 2022
the Company signed a letter of intent
with Graphex Technologies LLC with the intent of combining Northern's raw material supply capabilities
with Graphex's downstream processing expertise in a proposed BAM plant located at Baie-Comeau,
Québec with total capacity of 200,000 tpy.
Subsequent to December 31,2022, Northern announced the signing of an agreement (
February 13,
2023
) to acquire a 33.33% ownership interest and the majority of voting rights (50.1%) in
NeoGra
f
,
a US
based company focused on the manufacturing of specialty value added products made out of natural
graphite. This is part of the Company's strategy of also pursuing downstream integration into non-BAM
markets.
Liquidity and Capital Resources
As at December 31, 2022 the Company held cash of $5.1 million (December 31, 2021 - $3.6 million),
$2.1 million of restricted cash (December 31, 2021 - $0.8 million) and had working capital of $19.4
million (December 31, 2021 - $3.7 million). Working capital includes $18.6 million in inventory consisting
of 8,801 tonnes of graphite concentrate and 38,267 tonnes of ore stockpiles as well as materials and
supplies. The ore stockpile contains approximately 2,251 tonnes of recoverable graphite.
Inventories of
graphite concentrate, and the ore stockpile are recorded at cost. Their realizable value is significantly
higher and accordingly, the Company intends to reduce inventories in a controlled fashion over the next
12-18 months which is expected to generate a substantial amount of liquidity. In addition to the above the
Company also has $6.0 million of ore stockpiles (107,082 tonnes) available for processing which is
classified as non-current. Additional capital will be required to restart operations in Namibia and
advance the Bissett Creek, Mousseau West and South Okak projects but the Company's capital
investment programs are discretionary and flexible and will be managed to minimize the need to raise
financing at current share prices.
About Northern Graphite
Northern 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 is the only significant graphite producing company in North America and will become the third
largest outside of China when its Namibian operations come back online. The Company also has two
large scale development projects, Bissett Creek in Ontario and the expansions of the Okanjande project
in Namibia, that will be a source of continued production growth in the future. All projects have "battery
quality" graphite and are located close to infrastructure in politically stable countries.
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
http://www.northerngraphite.com/investors/presentation/
, the
Company's profile on
www.sedar.com,
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 release include statements regarding,
among others, plans for bringing the Company's Namibian operations back on line, advancing other
developments projects to production, developing the capacity to manufacture value added products
and raising the financing to complete all or any 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. 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
release.
To view the source version of this press release, please visit
https://www.newsfilecorp.com/release/164520