Equipment delivery delays hold back Northern Graphite's Namibian operations

Northern Graphite Corporation says delays in the shipment of equipment from China caused by Covid-19 affected progress at the Okanjande mine and the Okorusu processing plant operations in Namibia.

The Canadian company acquired the mines near Otjiwarongo town in the Otjozondjupa region from the Imerys Group in April 2022.

As a result of the delays, Northern Graphite said in its third-quarter Interim Financial Statements and Management's Discussion and Analysis results on 30 November 2022 that it plans to slow down the retrofit at the two operations.

Northern Graphite said it would slow down the retrofit of its Namibian operations and not make any new commitments to match capital requirements with cash flows from the drawdown in liability-driven investments inventories and to secure offtake agreements.

However, the company said it would take the opportunity caused by the delays to evaluate a possible sustainable and economically attractive development scenario, such as installing the new mills in a plant built at the Okanjande mine.

 "While this would further delay the startup of operations and require additional capital, it would eliminate ore transportation costs and result in much better project economics. 

"It would also represent phase 1 of an ultimate plan to build 100,000-150,000 tonnes per annum of graphite production capacity adjacent to the Okanjande deposit to meet rapidly growing EV and battery demand," the company said.

Northern Graphite needs about US$1,5m capital injection to instal a new, two-stage grinding circuit, additional regrind equipment in the flotation plant, and a new tailings storage facility before operations start in the first quarter of 2023. 

There are also plans to build a new processing facility at Okanjande mine that would produce up to 150,000 tonnes per year to meet the battery/EV growing demand.

Once the installations are done, Northern Graphite said the mine would operate at the rate of 31,000 tonnes per year.

The Okanjande/Okorusu's measured and indicated resource is 6.1 million tonnes grading 4.7% graphitic carbon, and the inferred exposed resource is 1.2 million tonnes grading 3.9%.

Northern Graphite said it would need additional capital to restart operations in Namibia and advance the Bissett Creek and Mousseau West in Canada, as well as South Okak in New Foundland.

Northern Graphite's interim financial results show that the company had US$4,7m cash as at 30 September 2022 and US$9.1 million of current restricted cash.

The statements said its working capital was US$27.5 million, including US$18.4 million of inventory consisting of 6,648 tonnes of graphite concentrate and approximately 7,000 tonnes of recoverable graphite in the ore stockpiles. 

During the review period, Graphite operations produced 3,068 tonnes of graphite concentrate, recovering 89.3%. The concentrate's purity averaged 96.9%, and flake size distribution was 13.5% +50 mesh, 22.3% -50 by +80 mesh, 20.5% -80 by +150 mesh and 43.7% -150 mesh.

The company raised US$4,5 million from selling 2,184 tonnes, while income from mine operations was US$0.8 million. General & administrative expenses, project evaluation, acquisition and integration costs and a foreign exchange gain led to an operating loss of US$0,9 million. The net loss was US$4.8 million ($0.04 per share), including a non-cash, US$3.1 million in foreign exchange loss on financial instruments.

The company's total assets value was US$106.5 million as at 30 September 2022.

The chief executive officer Hugues Jacquemin said the Lac des Iles Mine 

is operating according to plan, and sales are successfully increasing in North America and Europe.

"We are now focused on developing more aggressive expansion strategies in Quebec and Namibia. Numerous active discussions are ongoing with potential strategic and offtake partners and various government agencies, and we expect to comment on these developments in the new year," Jacquemin said.