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Northern Graphite to Acquire 2 Graphite Mines from Imerys Group
Company to go the but North American and 3rd largest¹ not-Chinese graphite producer
Northern Graphite CEO Greg Bowes hosted a conference call on December ii/21 to answer questions near this transaction.
View the telephone call recording
December ii, 2021: Northern Graphite Corporation (NGC:TSX-V, NGPHF:OTCQB) (the "Company" or "Northern") announces that it has signed binding purchase and sale agreements to larn 100% ownership of the producing Lac des Iles graphite mine ("LDI") in Quebec from a subsidiary of Imerys Group (collectively with any subsidiaries "Imerys") and the Okanjande graphite deposit/Okorusu processing plant in Namibia from Imerys and its articulation venture partner (the "Transaction") for approximately U.s.a.$40 one thousand thousand. Endmost of the Transaction is subject to a number of weather condition including the approval of the TSX Venture Exchange (the "TSX-V"). The Transaction is considered a "Fundamental Acquisition" under TSX-V policies and appropriately, trading in the Company's shares has been halted until the earlier of satisfactory review of the Transaction by the TSX-V or endmost of the Transaction.
Northern intends to heighten United states$55 one thousand thousand in financing to complete the Transaction which includes payment of the buy price, capital letter improvements, reclamation bonding, working capital letter and transaction expenses. The Company has signed a term sail with Sprott Resource Streaming and Royalty Corp. for US$40 one thousand thousand in debt/royalty/stream financing and an date letter with Sprott Majuscule Partners LP to deed as atomic number 82 agent with respect to an equity offer of up to US$15 million. The Sprott grouping intends to participate in the equity offer with an investment of Us$3 million and Imerys will receive The states$3 1000000 in equity, on the same terms as the offering, every bit partial payment of the buy cost. Imerys is also providing other support for the Transaction. Further details on the financing are provided below.
Gregory Bowes, CEO commented that: "This is a truly transformational bargain that will drag Northern from one of over twenty junior graphite companies looking for project financing to beingness the only North American and the earth's third largest¹ non-Chinese graphite producing company. In addition, Northern will have two big scale development projects in politically stable jurisdictions that volition enable the Company to significantly expand production to run across growing need from the EV/battery markets. He added that: "Post-obit completion of the Transaction Northern intends to aggressively aggrandize into value added EV/bombardment, graphene and industrial markets through both acquisitions and investments."
Click above to spotter CEO Greg Bowes annotate on the Transaction
Transaction Highlights
- Northern is acquiring 40-fifty,000tpy of graphite concentrate production capacity which will brand it the tertiary largest¹ natural graphite producing company outside of Mainland china
- The Visitor will become the only significant Northward American graphite producer and will acquire an existing customer base and marketplace share
- The Namibian operation will be brought back online and enable Northern to expand its marketplace share in North America and Europe past reducing dependence on Chinese supply
- The Transaction will provide a platform from which to finance and develop Northern's Bissett Creek eolith which an independent source has rated as the highest margin graphite projection in the world
- The Lac des Iles, Bissett Creek and Okanjande deposits are all located shut to infrastructure in politically stable countries with high ESG standards
- Tertiary party sources take verified that all deposits take high quality flake graphite that is suitable for all bombardment and industrial applications which is non the case with all deposits
- Both Bissett Creek and Okanjande have substantial measured and indicated resources which provide the ability to significantly expand production to meet growing demand from the EV/battery markets
1. As per study by Benchmark Mineral Intelligence
Acquisition Summary
Under the terms of the purchase and sale agreements for the Transaction (the "Agreements"), Northern will acquire all of the avails of the LDI operation and all of the outstanding shares of Imerys Geckco Holdings (Namibia)(Pty) Ltd. ("JVCo"), on a cash and debt gratis basis. The purchase cost is approximately United states of america$xl 1000000 and Northern will assume rehabilitation obligations for the eventual closure of LDI which take been estimated at US$vi.6 million.
The Agreements provide for, amongst other things, customary representations, warranties, conditions precedent and termination rights. Completion of the Transaction is targeted for on or about January 15, 2022 and is bailiwick to customary closing conditions including closing of the related acquisition financings and receipt of regulatory and other approvals, including the approval of the TSX-Five and for the conquering of JVCo, the approval of the Namibian Competition Committee. Every bit the terms of the Transaction were negotiated at arm's length and every bit no new control persons are expected to be created under the Transaction or related financings, shareholder approval is not expected to be required. The Agreements provide for an outside engagement of v months for completion of the Transaction, subject to extension through agreement of the parties.
Lac des Iles has been in operation for over 20 years and is the but significant graphite producer in North America. It volition produce up to 15,000 tonnes of graphite concentrate annually over the next three years and the Company believes there are opportunities to extend and expand production. With LDI, the Company is also acquiring an established market share and customer base that tin be transitioned to supply from Namibia and Bissett Creek. The Company intends to file a technical report with respect to LDI in accordance with National Instrument 43-101 inside 45 days of the appointment hereof.
The Namibian operation consists of the Okanjande graphite eolith and a processing facility located 78 km away at the idle Okorusu Fluorspar Mine which Imerys retrofitted to process graphite bearing material. The JV started mining operations at Okanjande in 2017 and the cloth was trucked to Okorusu for processing. The processing found did not perform to expectations and it was put on care and maintenance in November 2018.
Northern has adult a plan to alter the Okorusu processing plant to increase throughput and recovery and improve the scrap size distribution. The plan will cost approximately U.s.$seven million and accept up to nine months to implement and bring the operation back into production at a charge per unit of approximately thirty,000tpy. Namibia is one of the all-time jurisdictions in Africa in which to operate, Okanjande graphite is of the highest quality, the operation has access to grid power and it is five hours over expert roads from the deep water port of Walvis Bay which provides ready access to European and N American markets. These attributes, plus a much shorter time to market place, provide a competitive advantage over other African graphite projects. Northern's ultimate plan is to build a large new processing establish next to the Okanjande deposit to produce 100-150,000tpa of graphite concentrate to meet quickly growing EV and bombardment demand.
The Okanjande/Okorusu performance is based on a weathered, measured and indicated resource of half-dozen.1 million tonnes ("Mt") grading iv.7% graphitic carbon. There is as well an inferred weathered resource of ane.2Mt grading iii.ix% and a number of "weathered" exploration targets exterior the main eolith. The weathered resource overlie fresh rock, measured and indicated resources of 28.8Mt grading 5.3% (1.5Mt of independent graphite) and fresh rock inferred resources of 24.3Mt grading 4.5% (ane.1Mt of contained graphite). All resources were calculated with a 3% cutting off course and have not nonetheless been airtight off by drilling.
While Okanjande resources have been reviewed by an Independent Qualified Person equally part of the Company's due diligence, the Company is treating them as historical in nature every bit an Independent Qualified Person has non washed sufficient work to fully verify them and therefore they should non be relied upon. Northern intends to file a technical report with respect to Okanjande in accordance with National Instrument 43-101 within 45 days of the appointment hereof.
Northern's Bissett Creek project is an advanced stage projection with a full Feasibility Study. It is located in the southern part of Canada between the cities of North Bay and Ottawa and shut to the Trans-Canada highway providing gear up access to labour, supplies, equipment, natural gas and markets. An independent written report estimates that Bissett Creek will accept the highest margin of whatsoever existing or proposed graphite deposit due to information technology having the highest quality concentrates, a very favorable location and simple metallurgy. Measured and indicated resource include one.74 million tonnes of contained graphite (almost 600,000 tonnes of which are proven and probable reserves) and inferred resources contain an additional 0.four meg tonnes of graphite. The Visitor plans to start production at 25,000tpy and to expand production to 80-100,000tpy equally the EV/battery markets abound (based on measured and indicated resources simply).
Financing Summary
The consummation and execution of Northern's business programme will require approximately US$55 million in financing for payment of the Transaction purchase cost and expenses, upper-case letter expenditures related to the restart of operations in Namibia, reclamation bonding and working capital. The Transaction will be funded through a combination of debt, sale of a royalty and stream on the assets being acquired and other back up from Imerys. Northern has signed a term sheet with Sprott for US$xl million in financing consisting of a U.s.$xv million senior secured debenture, US$5 million for a royalty on LDI and a U.s.a.$20 million stream financing on the Namibian project, every bit follows:
Debenture: Senior secured debenture of Northern in the principal amount of US$fifteen million issued at a 2% discount and maturing 48 months from issuance. The debenture volition bear interest at ix% plus the greater of USD 3-month LIBOR or 1%, interest volition be payable and compounded semi-annually except that at Northern's choice interest payable during the initial 12 months can be capitalized and added to the principal of the debenture. The debenture will be a senior secured obligation of the Visitor secured against the LDI avails and the Namibian project. As partial consideration for entering into the debenture, the Company will event Sprott warrants to purchase six meg common shares of Northern at an practise toll equal to a 35% premium to the share price for the disinterestedness financing as described below for a period of 2 years.
Royalty Financing: US$5 million for purchase of a ix% royalty on graphite concentrate sales acquirement from LDI. The royalty will exist secured on championship to the project and Sprott will be granted a right of kickoff refusal with respect to any proposed grant of a stream, royalty or similar transaction on the Company'southward Bissett Creek project. As partial consideration for entering into the royalty, the Company volition effect Sprott warrants to purchase 1.5 meg common shares of Northern at an exercise price equal to a 35% premium to the toll for the equity financing as described below for a period of two years.
Streaming Financing: Upfront advance of The states$20 meg on a commodity buy agreement for eleven.25% of the graphite produced by the Namibian projection until 350,000 tonnes of independent graphite in concentrate have been produced and delivered, at which time the stream will convert to a one% royalty for the remaining life of the Okanjande deposit. The stream volition be secured by the same security package as the debenture and Sprott volition be granted a correct of first refusal with respect to any proposed grant of a stream, royalty or similar transaction on the Okanjande deposit. As partial consideration for entering into the stream, the Company will event Sprott warrants to buy 4.5 one thousand thousand common shares of Northern at an exercise price equal to a 35% premium to the share price for the equity financing every bit described below for a menstruation of 2 years. The Company will take the option, subject to any consents or approvals required under the debenture, to reduce the stream percentage by up to 50% upon payment of US$15.25 million in 2024 or Us$17.5 million in 2025. This option will be exercisable in whole or in part on a pro rata basis.
These financings will exist completed in connection with the endmost of the Transaction, subject to completion of due diligence, definitive documentation and other customary closing conditions, including the approving of the TSX-V.
Equity Financing
The Company plans to conduct a brokered private placement of subscription receipts for proceeds of up to United states of america$15 1000000. The Sprott grouping intends to participate in the offering with a total investment of Usa$3 meg and Imerys will receive US$iii one thousand thousand in equity, on the same terms every bit the offer, as partial payment of the purchase price. Pricing and other terms for the private placement will exist determined in the context of the market. It is expected that the proceeds will be placed into escrow and released on closing of the Transaction.
A finder's fee is payable in connection with the Transaction to NINE58 Advisors, an arm's length investment advisory business firm based in London, U.k., in the amount of 1.5% of the acquisition toll.
Almost Northern Graphite
Northern Graphite is a Canadian company, listed on the TSX Venture Exchange, that is focussed on becoming a globe leading producer of natural graphite and on the upgrade of mine concentrates into high value products disquisitional to the green energy revolution including electric vehicles, lithium-ion batteries, fuel cells and graphene, as well as advanced industrial technologies.
About Imerys Group
Imerys is the world leader in mineral-based specialty solutions for industry, with €three.8 billion in 2020 revenues and 16,400 employees, Imerys delivers loftier value-added, functional solutions to a diversified set of industrial sectors, from processing industries to consumer goods. The Group draws on its knowledge of applications, technological expertise and its material science know-how to deliver solutions based on beneficiation of its mineral resources, synthetic minerals and formulations. These contribute essential properties to customers' products and performance, including refractoriness, hardness, conductivity, opacity, durability, purity, lightness, filtration, absorption and repellency. Imerys is determined to develop responsibly, in particular by fostering the emergence of environmentally-friendly products and processes.
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'due south 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.
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This news release contains certain "forwards-looking statements" within the meaning of applicative Canadian securities laws. Forward-looking statements and information are frequently characterized by words such as "plan", "expect", "projection", "intend", "believe", "conceptualize", "estimate", "potential", "possible" and other similar words, or statements that certain events or conditions "may", "volition", "could", or "should" occur. Forward-looking statements in this release include statements regarding, among others; economical and technical studies, graphite prices, project economics, permitting, the development timeline and the graphite market. All such forward-looking statements are based on assumptions and analyses made by management based on their feel and perception of historical trends, electric current conditions and expected future developments, likewise as other factors they believe are advisable in the circumstances. However, these statements are subject to a diversity of risks and uncertainties and other factors that could crusade 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 regime; the failure of other parties to perform equally 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 connected studies, development or operations. Readers are cautioned not to identify undue reliance on frontwards-looking information or statements.
Although the forrard-looking statements contained in this news release are based on what management believes are reasonable assumptions, the Visitor cannot assure investors that actual results volition be consequent with them. These forward-looking statements are fabricated as of the date of this news release and are expressly qualified in their entirety by this cautionary statement. Subject field to applicable securities laws, the Company does non assume any obligation to update or revise the forward-looking statements independent 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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