Can you explain what has attracted Northern Graphite to acquire the Okanjande graphite deposit and Okorusu processing plant in Namibia?

Northern Graphite was attracted to these assets due to their strategic potential. As the former CEO of Imerys Graphite and Carbon, I was searching for a graphite deposit that could facilitate the development of the European market. The Okanjande mine, developed in the 1990s by Rio Tinto, caught our attention. Located just 22km away from the mine, the Okorusu plant, previously a fluorspar facility owned by Solvay, provided us with a brownfield opportunity to convert it into a graphite processing plant. This conversion allowed us to reduce capital costs significantly. Imerys acquired both the mine and the plant in 2016 and commenced mining operations the same year. However, due to depressed graphite markets, the plant was put on care and maintenance two years later. After conducting thorough due diligence, Northern Graphite acquired these assets earlier this year, with the goal of resuming production within the next 1-2 years.

Could you provide more details about the estimated CAPEX to restart the operation and the current progress?

Based on the recent Preliminary Economic Assessment (PEA), the estimated capital expenditure (CAPEX) required to restart the operation is $15 million. Currently, we have 48 people on site, and we have already ordered all the long-lead items necessary for the project. We are evaluating various options, including the possibility of dismantling the Okorusu facility and relocating it closer to the Okanjande site. By doing so, we would benefit from reduced operating costs as we eliminate the need to transport concentrates from the mine to the plant.

Can you elaborate on the potential of the Okanjande deposit and the advantages of a new plant?

The Okanjande deposit has significant potential and is amenable to operating at a capacity of 150,000 tons per year with the right investments. By establishing a new plant, we could increase production to 40,000 tons per year, compared to the 30,000 tons per year capacity offered by the Okorusu plant. This would provide us with a solid foundation to expand further through bolt-on investments. One advantage of a new plant is that essential infrastructure elements such as the tailings dam, electricity, water, and other facilities would already be in place, making future expansions easier and quicker. Additionally, the timing is favorable, as many large-scale battery factories in North America and Europe are set to begin operations in 2025, providing a window of opportunity for us to make strategic decisions. While relocating the plant would extend the timeline by approximately six months, it would allow us to commence production by early 2024.

Can you help us understand the significance of graphite for electric batteries?

Graphite plays a crucial role in electric batteries, regardless of their chemistry, such as nickel, manganese, cobalt, LFP (lithium iron phosphate), or others. Approximately 48% of a battery’s weight consists of graphite. This means that for every gigawatt (GW) of power capacity, between 800 and 1,200 tons of graphite are required, depending on the battery design. Currently, the majority of graphite production and processing takes place in China, which has been consistently expanding its capacity over the past decade. However, China has recently started importing graphite, and market specialists predict a shortage of 40,000 tons in 2023, with the deficit expected to grow further in the coming years. To meet the growing demand, more than 10 mines will need to be developed.

Why have graphite prices not yet reacted to the supply-demand imbalance?

Graphite prices have historically gone through cycles, largely influenced by China’s irregular supply into European and North American markets. The opacity surrounding graphite pricing, due to insufficient market data available for investors and developers, has made it challenging to finance graphite projects. However, with patience, we anticipate that this will change. There is a significant appetite for investment in the graphite sector, which will eventually lead to increased pricing visibility.

What factors make Namibia a favorable mining jurisdiction?

Namibia is considered a favorable mining jurisdiction for several reasons. Firstly, the country has a history of uranium mining and boasts a wealth of mining expertise among its talented workforce. Namibia also offers a business-friendly environment, with a relatively stable currency pegged to the South African Rand. Its proximity to South Africa provides the advantage of accessing local engineering talent. In the case of Okanjande, it is conveniently located just a five-hour drive away from the deep-water port of Walvis Bay, ensuring excellent shipping connectivity to Europe and North America. Furthermore, state agencies and institutions like the World Bank view Namibia favorably, creating the potential for accessing public funding to support mining projects.

Do you have any final message or remarks?

Northern Graphite sees Namibia as a project with immense potential, capable of expanding into a world-class operation. Leveraging our experience as the sole graphite producers in Canada, our aim is to be the first to reach the market and capitalize on the high growth in graphite prices. Some experts refer to the graphite challenge as being ten times the lithium challenge. To address the increasing demand from cell manufacturers and original equipment manufacturers (OEMs), it is crucial for the graphite sector to collaborate, consolidate, and create opportunities for scalability. By working together, the industry can effectively respond to the growing appetite for graphite and contribute to the development of sustainable energy solutions.