NextSource Materials (TSX: NEXT; US-OTC: NSRCF) has signed a mandate letter with International Finance Corp., the private sector investment arm of the World Bank Group, to lead a senior debt facility totalling US$91 million.
The company expects to direct roughly half of the proceeds towards the expansion of its Molo graphite mine in southern Madagascar. The mine entered production a year ago and now produces 17,000 tonnes per year of NextSource’s trademarked SuperFlake graphite concentrate. The proposed expansion will increase that by nearly nine times to 150,000 tonnes annually.
A December 2023 feasibility study estimated the expansion will cost US$161.7 million (including contingency) plus working capital of US$25.2 million. This would result in a post-tax net present value (using an 8% discount rate) of US$370 million and an internal rate of return 29%.
IFC’s mandate to provide the financing is subject to technical, social, legal and environmental due diligence, which NextSource says has already begun and should be completed early next year.
With IFC’s support, NextSource CEO Craig Scherba said the company is now “poised to unlock Molo’s vast potential and further contribute to long term sustainable development in Madagascar,” he said in a release. The project is host to one of the world’s largest graphite deposits, containing a measured resource of 23.6 million tonnes grading 6.32% carbon and indicated resource of 76.8 million grading 6.25%.
The company’s long-term aim is to use this resource as an anchor and become a vertically integrated global supplier of the EV battery material. This involves building battery anode facilities capable of large-scale production of coated, spheronized and purified graphite.
The first graphite plant is to be located in Mauritius, where it has already submitted an application and signed a lease agreement for the site.
NextSource Materials’ shares rose 10.3% to 86¢ apiece on the IFC partnership announcement. The company’s market capitalization stood at $134 million.
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