Northern Graphite completes PEA on Namibian operation; forecasts restart by mid-2023

Just two months after closing its acquisition of the Okanjande graphite deposit and Okorusu processing plant in Namibia, Northern Graphite (TSXV: NGC; US-OTC: NGPHF) has completed a preliminary economic assessment on a restart of the operation, which was put on care and maintenance in November 2018.

Northern Graphite says the project could be brought back into first production within nine to 12 months, and the PEA outlined a mine life of 10 years producing an average of nearly 31,000 tonnes of graphite concentrate a year at a C1 production cost of US$775 per tonne.

Initial capex of US$15.1 million, which would include the installation of a two-stage grinding circuit, additional regrind equipment in the flotation plant and a new tailings storage facility, could be repaid in two years, according to the early stage study.

The PEA outlined an after-tax net present value of US$65 million and internal rate of return of 62%, at a weighted average graphite price of US$1,500 per tonne. The graphite price was based on a concentrate containing 11% +50 mesh XL flake, 48% +80 mesh large flake, 24% +100 mesh medium flake and 16% +150 mesh small flake, and an average carbon content of 96%.

Mineralized material from the Okanjande deposit will be trucked 70 km to the Okorusu plant. The project benefits from access to grid power and is situated 388 km from the deep-water port of Walvis Bay, from where cargoes can access European and North American markets.

Refurbishment of the plant is already underway and long delivery items ordered, the company says. Modifications to the Okorusu plant are designed to increase throughput and recovery and improve the flake size distribution.

The processing plant is located at the idle Okorusu Fluorspar mine, which under previous owners Imerys and a joint-venture partner, had been retrofitted to process graphite-bearing material.

According to Northern Graphite, mining operations began at Okanjande in 2017 and the material was trucked to Okorusu, but the processing plant did not perform to expectations and was put on care and maintenance late the following year.

Northern Graphite announced in December 2021 that it was acquiring the Namibian operations along with the producing Lac des Iles graphite mine in Quebec from Imerys and affiliates for about US$40 million.

The acquisition closed in May, and was financed through US$36 million in debt, royalty and stream financing provided by funds managed by Sprott Resource Streaming and Royalty Corp. and a $23 million equity offering lead by Sprott Capital Partners LP. (Sprott invested $3.75 million in the equity offering and Imerys received US$4 million in equity on the same terms as the equity offering as partial payment of the purchase price.

Northern Graphite says its business strategy is to “rapidly expand production and develop the capacity to produce anode material for use in electric vehicles/batteries in both North America and Europe.”

The company’s ultimate plan is to build a large, new processing facility adjacent to the Okanjande mine, which will be capable of producing up to 150,000 tonnes per year to meet growing battery/EV demand

Okanjande has a historic weathered measured and indicated resource of 6.1 million tonnes grading 4.7% graphitic carbon and inferred resource of 1.2 million tonnes grading 3.9%.

The weathered resources overlie fresh rock with historic measured and indicated resources of 28.8 million tonnes grading 5.3% and fresh rock inferred resources of 24.3 million tonnes grading 4.5%. The historic resource was calculated using a 3% cut-off grade.

Over the last year, shares of Northern Graphite listed in Toronto have traded in a range of 33¢ and 94¢ and at press time were trading at 56¢. The junior has about 119.4 million common shares outstanding for a market cap of about $63.3 million.