Northern Graphite Corporate and Market Update
Northern Graphite Corporate and Market
Update
Ottawa, Ontario--(Newsfile Corp. - December 30, 2021) - Northern Graphite Corporation
(TSXV: NGC)
(OTCQB:
NGPHF
)
(the "
Company
" or "
Northern
") is pleased to provide the following year end
corporate and market update following a very positive year for the Company.
2021 started with the
completion of a $3 million financing, which included a half warrant at $0.45 per share.
The share price
subsequently performed well with the last trade at $0.83.
The Company diversified its asset base by
optioning the South Okak nickel-copper-cobalt project and testing continued to confirm that concentrates
from the Bissett Creek project are of the highest quality and suitable for all applications, especially
lithium ion batteries.
The year culminated with the announcement that Northern has agreed to acquire
two producing graphite mines from Imerys SA.
This transaction will arguably transform Northern into the
leading public natural graphite company and one that is well positioned to benefit from the projected
growth in EV and battery markets.
Acquisition of Imerys' Natural Graphite Division
On December 2, 2021 the Company announced that it has signed binding agreements to acquire 100%
ownership of the producing Lac des Iles graphite mine in Quebec (the "LDI Project") and the Okanjande
graphite deposit/Okorusu processing plant in Namibia (the "OK Project") from subsidiaries of Imerys SA
(collectively with any subsidiaries "Imerys") for approximately US$40 million (the "Transaction).
See
press release here
.
Because the Transaction is considered a "Fundamental Acquisition", it is subject to
TSX Venture Exchange ("TSX-V") approval and trading in the Company's shares is halted until such
time as the TSX-V completes a satisfactory review including National Instrument 43-101 Technical
Reports for both the LDI Project and the OK Project and financial statements for the
businesses/companies being acquired.
The Company will provide further updates with respect to TSX-V
approval and the trading halt as they develop.
Northern intends to raise US$55 million in financing to complete the Transaction and has signed a term
sheet with Sprott Resource Streaming and Royalty Corp. for US$40 million in debt/royalty/stream
financing and has engaged Sprott Capital Partners LP to act as lead agent with respect to an equity
offering of up to US$15 million (collectively with any subsidiaries the "Sprott Group").
The Sprott Group
intends to participate in the equity offering with an investment of US$3 million and Imerys will receive
US$3 million in equity on the same terms as partial payment of the purchase price.
Marketing of the
equity offering has started through a syndicate of agents lead by the Sprott Capital Partners LP and
including Cormark Securities Inc. and Canaccord Genuity Corp. and Tamesis Partners LLP.
Pricing and
other terms for the financing, which is being completed on a private placement basis, will be determined
within the context of the market.
It is expected that the proceeds of the financing will be placed into
escrow and released on closing of the Transaction.
Any shareholders of Northern who qualify as
"accredited investors" and who wish to participate should contact their broker, the agents or the
Company for additional information.
For a definition of Accredited Investors
please click here
.
As a result of the Transaction Northern will become the only North American and the world's third largest
non-Chinese graphite producing company. Gregory Bowes, CEO commented that: "We believe
completion of the Transaction will make Northern the leading public graphite company by virtue of having
substantial near term production and two large scale development projects that will enable the Company
to significantly expand production to meet growing demand from the EV/battery markets.
All projects
have high quality "battery grade" concentrate and are located close to infrastructure in politically stable
countries."
Closing of the Transaction requires a number of other conditions to be met including closing of the
financing package and approval of the Namibian Competition Committee.
The Company will provide
further updates with respect to the status of these approvals as they develop.
Any securities to be offered pursuant to the proposed equity offering have not been, and will not be,
registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or
any securities laws of any state of the United States and accordingly may not be offered or sold within
the United States except in compliance with the registration requirements of the U.S. Securities Act and
applicable state securities laws or pursuant to exemptions therefrom.
Corporate Strategy for 2022 and Beyond
1.
Complete the
Imerys acquisition
and associated financing
2.
Expand corporate leadership to manage the Company's rapid growth
3.
Bring the Namibian operation back into production in 2022
4.
Develop
strategic partnerships
in the graphite/battery space
5.
Extend and expand the mine life at Lac des Iles
6.
Implement a strategy to manufacture
battery anode material
7.
Finance and start construction of the
Bissett Creek Project
8.
Acquire/develop the capacity to produce value added products for industrial markets
9.
Acquire/develop the capacity to manufacture
graphene
based products
10.
Significantly
expand production
from Bissett Creek and Namibia as EV/battery market demand
grows
Graphite Market Update
Graphite is the anode material in a lithium ion battery ("LiB") and its single largest component.
Despite
the rapid growth in the EV/battery market, graphite prices have lagged other battery minerals due to
excess production capacity in China.
It has been the Company's position that EV sales needed to reach
the five million vehicles per year range for them to have a meaningful effect on the graphite market.
That
now appears to be happening.
Bloomberg has estimated that 2021 will be "yet another record year for EV sales globally with 5.6 million
sold". That is 83% higher than 2020 sales, a 168% increase over 2019 and about five per cent of the
new car market.
Bloomberg expects EVs to make up 20-30% of new car sales by 2025 based on
"proposed and confirmed rules".
The International Monetary Fund has predicted that graphite will have the largest supply shortage of
metals/minerals used in clean energy technologies:
https://blogs.imf.org/2021/12/08/metals-demand-from-energy-transition-may-top-current-global-supply/
While Graphite has underperformed other battery minerals to date, the substantial growth in EV/battery
demand is now having an effect on supply/demand/pricing and this is just beginning to be reported by
the mainstream press.
Reuters: Battery makers grapple with graphite supply
In addition, supply is being restricted by the winter shut down of operations in Luobei, a major Chinese
graphite producing region near the Russian border.
Producers generally build inventory to carry them
through to spring but this year there is no inventory because of high battery demand.
Fastmarkets
(formerly Industrial Minerals) reports that "prices continue to set historic new highs, with the latest
assessment up by 41.5% since September."
"We are not quoting prices now because we have zero
stock," a supplier in Heilongjiang said.
Most recently, Tesla announced an offtake agreement for natural graphite based anode material making
it one of the first major battery/auto makers to publicly recognize the graphite supply problem.
A number
of LiB manufacturing plants are in operation or under construction in North America and it will take
multiple graphite mines/conversion plants to supply them.
Shipping all that material around the world is
not a green or economic solution.
The following articles also describe positive developments for the graphite industry:
https://www.utilitydive.com/news/global-ev-sales-rise-80-in-2021-as-automakers-including-ford-gm-
commit-t/609949/
https://miningfeeds.com/think-the-lithium-crisis-is-bad-the-graphite-crisis-might-be-worse/
https://www.enr.com/articles/53247-gm-ramps-up-to-expand-billions-in-us-battery-and-supply-chain-
production
https://www.constructionequipmentguide.com/central-north-carolina-to-become-home-to-12b-lithium-
battery-plant-for-toyota-usa/54754
About Northern Graphite
Northern Graphite is a Canadian company, listed on the TSX Venture Exchange, that is focussed on
becoming a world leading producer of natural graphite and on the upgrade of mine concentrates into
high value products critical to the green energy revolution including electric vehicles, lithium-ion batteries,
fuel cells and graphene, as well as advanced industrial technologies.
Qualified Person
Gregory Bowes, B.Sc. MBA, P. Geo., a Qualified Person as defined under National Instrument 43-101,
has reviewed and is responsible for the technical information in 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,
contact Gregory Bowes, CEO (613) 241-9959 or visit our
Social
Channels
.
YouTube
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: the Company's intentions with respect to the completion of the Transaction and related
financings; the Company's corporate strategy and objectives; and the graphite market including
graphite prices and industry economic and technical studies. 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.
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THE UNITED STATES
To view the source version of this press release, please visit
https://www.newsfilecorp.com/release/108667