As the graphite market grapples with current challenges, Canadian miner Northern Graphite is strategically positioning itself to weather the storm and emerge stronger on the other side.

With long-term market fundamentals remaining robust, the TSX-V-listed flake graphite producer is proactively addressing short-term issues in anticipation of a market turnaround by mid-2025.

CEO Hugues Jacquemin is confident that a global graphite shortage is on the horizon, which could open the door for new financing opportunities.

“We think that by mid-2025 the world will be short of graphite, and we expect that turn to help us attract investors and the financing we need to build one of North America's most important, integrated, mine-to-battery graphite companies,” he said.

Northern Graphite, which owns the Lac de Illes (LDI) mine in Canada and an idled project in Namibia, has been taking action to manage its cash position to ease the strain on its working capital, including cutting overhead costs and selling inventory that came with the acquisition of the mine.

However, with commodity and financial markets remaining difficult, the company was not able to meet all the financial covenants for its senior secured loan and royalty financing, including making the required interest and royalty payments. All defaults have been waived by the lender and royalty holder and discussions are ongoing with respect to amending the terms of its senior secured loan and royalty financing.

“While the current situation is challenging, the long-term outlook for our strategy to sell to the electric vehicle (EV) battery space remains strong and we continue to implement measures to enable the company to weather the prevailing environment and carry us through until graphite markets recover,” Jacquemin said.

As the only producer of natural flake graphite in North America, Northern believes it has a first mover, competitive advantage in supplying Western markets with graphite for the EV revolution.

The company's projects in Canada and Namibia are all battery grade, and can be scaled in a relatively quick, low-cost manner by leveraging existing permitting and infrastructure at both LDI and at its Okanjande mine in Namibia.

Northern is also continuing to work towards its goal of becoming a vertically integrated, mine-to-market supplier to traditional downstream customers and to the emerging market for battery anode material (BAM), as well as for next generation all solid state battery chemistries.

The main catalysts of Northern’s strategy include growing graphite production from its cornerstone LDI mine, restarting the Okanjande mine, developing downstream capacity to produce advanced BAM for use in lithium-ion batteries and EVs in North America and Europe, and upgrading graphite mine concentrate into value added industrial products.

Northern is boosting output from the LDI mine and processing plant to meet growing demand from industrial customers and coming demand from North American battery makers. In April, the company restarted mining operations and moved its plant to a seven-day-a-week schedule to be able to meet customer orders in the cornerstone US market, as well as new demand from new clients in other markets.

Output from the plant, where the company is targeting nameplate capacity of 25 000 t/y, rose 59% in the period to 4 082 t, from 2,574 t in the first quarter, and it is working to increase output further in the second half of the year as further efficiencies are implemented.

In Namibia, Northern is continuing to evaluate options to fund the Okanjande project through the use of a royalty/stream/debt structure and equity contributed by a strategic partner without having to go to the market at current share prices. During the third quarter of 2023, Northern placed Okanjande on care-and-maintenance except for engineering and activities relating to moving the plant from its site at Okorusu to Okanjande. The timing of the restart is subject to the availability of project financing.