Northern Graphite

TSX-V: NGC

Northern’s principal asset is the Bissett Creek graphite project located in southern Canada with easy access to labor, natural gas, equipment and supplies, and ports and markets. Bissett Creek is a very advanced stage project as an NI 43-101 bankable final Feasibility Study has been completed and the major mining permit obtained. Additional operational permits and species-at-risk permitting are required to commence operations and all are expected to be received in 2020. Northern anticipates that it will be in a position to begin construction of the mine by late 2020, subject to the availability of financing.

The Company believes that Bissett Creek has the best location/infrastructure, highest margin and highest percentage of large flake production of any new graphite project. The project will be developed in two phases, starting at 25,000tpy of production and then doubling when market conditions warrant. This results in a reasonable capital cost, which reduces financial risk, and a realistic production level that minimizes marketing risk.

Graphite prices have been depressed in recent years due to the slowdown in China and a lack of economic growth in the west. However, the steel industry is recovering, new applications such as lithium-ion batteries (LiBs”) are creating significant, incremental demand growth and the major producer, China, is experiencing production problems.

LiBs were a small part of graphite demand five or 10 years ago but have been growing at over 20 per cent per year due to the proliferation of cell phones, cameras, lap tops, power tools and many other devices. They now account for about 25 per cent of demand and major markets such as electric vehicles and grid storage are still in their infancy. Even modest adoption rates of EVs will require multiple new graphite mines.

China produces over 70% of the world’s graphite but production is declining in its traditional mining areas due to ore depletion and environmental restrictions. This is creating a shortage of large and extra large flake concentrates. New Chinese mining areas mainly produce small flake and almost all will be directed into the battery market as China is substantially increasing its LiB manufacturing capacity. Also, China prefers to sell the rest of the world batteries or EVs rather than raw materials. This creates serious security of supply concerns for the west. The European Union and the USA have both named graphite a supply critical mineral.

The world needs new, secure western sources of graphite supply particularly for large flake and the Company is well positioned to benefit. Northern intends to focus on higher value industrial markets where these larger grades are used and has the flexibility to switch to the LiB market when economics warrant. Unlike many of its peers, almost all Bissett Creek production will be “battery grade”.