Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Northern Graphite (TSXV: NGC) reported on Thursday a 59% increase in production at its Lac des Iles (LDI) mine in Quebec during the second quarter of 2024, reaching 4,082 tonnes, up from 2,574 tonnes in the first quarter.
The boost in output, driven by the plant’s shift to a seven-day operation, resulted in C$5.5 million in revenue from the sale of 2,772 tonnes of graphite concentrate at an average price of C$1,972 per tonne.
Northern Graphite CEO Hugues Jacquemin stated, “We took decisive action to manage our cash position to ease the strain on our working capital and provide us with greater flexibility to pursue our growth catalysts.”
The company is working to extend the LDI mine’s life by approximately eight years, with plans to open a new pit by late 2024 or early 2025.
A recent resource estimate indicated 3 million tonnes of resources at an average grade of 6.4% graphitic carbon (Cg), containing around 213,000 tonnes of Cg. Inferred resources totalled 1.4 million tonnes at an average grade of 7.4% Cg.
Despite these operational successes, Northern Graphite faced financial challenges, failing to meet all agreements on its senior secured loan and royalty financing. This resulted in the reclassification of C$22.4 million from non-current to current liabilities. The lender and royalty holder waived all defaults, and discussions are ongoing to amend the loan terms.
Operationally, the miner reported C$100,000 in income from mine operations, an improvement from a loss of $500,000 in the first quarter. Cash costs were reduced to C$1,560 per tonne, despite operational inefficiencies and weather-related shutdowns.
The company continues to expand its market presence, engaging with global battery manufacturers to position itself as a key supplier in the electric vehicle market. However, a C$3.5 million non-cash impairment loss, due to lower anticipated graphite prices, contributed to a net loss of C$9.4 million for the quarter.
Northern Graphite is planning a new drilling program for fall 2024, aimed at further expanding resources and reducing the strip ratio. This program will be partly financed by a grant from Québec’s Ministère des Ressources Naturelles et des Forêts.
Northern Graphite is the only graphite producer in North America, and it has two more projects in the Bisset Creek area of Ontario and in Nambia.
