After securing a commitment for a US$29.5-million investment from Mick Davis' Vision Blue Resources in February, NextSource Materials (TSX: NEXT) has awarded the EPCM contract to build the first phase of its Molo graphite project in Madagascar to Erudite Strategies of South Africa.
The initial mine will be capable of processing 240,000 t/y of ore to produce 17,000 t/y of high-quality “SuperFlake” graphite concentrate, and is scheduled to be commissioned next March, with full production beginning in the first half of the year.
NextSource is planning a modular approach to construction of the permitted project, with an expansion to 720,000 t/y producing 45,000 t/y of graphite concentrate (over a 30 year mine life) taking place in year three.
In mid-March, Vision Blue completed an initial US$6.1-million private placement of common shares in NextSource. Pending shareholder approval, a US$12.4-million private placement of units will follow, resulting in Vision Blue holding 37% of NextSource's issued and outstanding shares, or 49.4% on a partially diluted basis. The final piece of the financing is an US$11-million royalty financing.
The initial funding from Vision Blue will allow NextSource to fast-track completion of two technical studies to confirm the capital and operating costs for the next phase of mine expansion, and build a value-added graphite processing plant to produce SPG (spheronized, purified graphite) for lithium-ion batteries in electric vehicles. It also allows the company to order long-lead items for the plant.
The investment in NextSource by Vision Blue, a battery materials focused investment fund started by former Xstrata CEO Davis in December, is its first. Following the initial private placement, Davis has been appointed chair of NextSource.
“This investment in NextSource underlines our belief that the massive secular change in demand for critical battery material resources is not being met by an appropriate supply side response, largely as a result of capital constraints. Vision Blue’s investment into NextSource is aligned with our strategy to assemble a portfolio of strategically significant investments in high-quality, responsibly managed and proven battery material mining assets,” said Davis in February.
"We view NextSource’s Molo project as one of the best graphite assets globally and well-positioned for significant upside in growth and value due to the impressive strategic partnerships they have forged."
NextSource has trademarked its Molo SuperFlake graphite concentrate, which features an above-average flake size (46.4% is classified as premium-priced large, extra-large or jumbo sized flake).
Molo contains proven and probably reserves of 22.4 million tonnes grading 7.02% graphitic carbon.
An updated feasibility study on Molo, released in 2019, outlined the first phase of Molo would cost US$21 million to build, with the second phase costing US$39.1 million.
For more information, visit www.nextsourcematerials.com.