NextSource Materials Signs Graphite Offtake with Supplier to Battery Anode Manufacturer for EVs

NextSource Materials (TSX:NEXT) has signed an offtake deal with a “prominent” Japanese trading company that supplies flake graphite to a major Japanese electric vehicle anode producer.

The offtake agreement, announced on Tuesday (October 16), is set to last 10 years and will see the Japanese trading company purchase 20,000 tonnes of NextSource’s Molo SuperFlake® graphite per year.

The decade-long agreement will begin once commercial production starts at NextSource’s Molo project, with an automatic renewal for an additional five years. The agreement gives the unnamed Japanese partner exclusive rights to import and sell SuperFlake® graphite concentrate in Japan.

The Molo graphite project, located in Southern Madagascar, is a feasibility-stage project that hosts a combined graphite resource of 141.28 million tonnes (Mt) at 6.13 percent total graphitic carbon (C) with a contained ore reserve of 22.44 Mt at 7.02 percent C.

The project’s current timeline shows commissioning and production are targeted for the end of Q4 2019, though dates are subject to change based on funding, which the company is in the process of securing.

NextSource will take a two-phased approach to production at Molo, and Tuesday’s offtake agreement represents more than the initial Phase I mine production plan of 17,000 tonnes per year. As a result, the company will start internal discussions about moving straight to Phase 2 expansion tonnages.

“This offtake partnership is a significant achievement for NextSource and is the culmination of more than four years of extensive product testing of our SuperFlake® graphite with major Japanese material manufacturers,” NextSource President and CEO Craig Scherba said in a statement.

He continued, “[t]his offtake agreement allows NextSource to gain an immediate foothold into the high-growth markets for electric vehicles, as well as the burgeoning energy storage market that will be reliant on graphite anode material.”

According to NextSource, the Japanese battery anode manufacturer accounts for more than 50 percent of premium-grade graphite anode production in Japan for electric vehicle battery applications.

Its electric vehicle customers are located worldwide, and it has verified that NextSource’s SuperFlake® graphite concentrate achieved superior test results compared to the current graphite material it sources for lithium-ion batteries in electric vehicle automotive applications.

Scherba explained, “[o]ur partnership with such an established trading partner positions NextSource to be a significant and dominant future supplier of high-quality flake graphite to major battery anode and graphite foil customers globally.”

Aside from the current offtake agreement, NextSource and the Japanese company are in the process of discussing additional supply chain cooperation, which could see a partnership intended to produce value-add, downstream items using SuperFlake® graphite concentrate.

At close of day Tuesday, NextSource’s share price was up 40 percent on the TSX at C$0.105.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: NextSource Materials is a client of the Investing News Network. This article is not paid-for content.