Northern Graphite secures royalty financing on Bissett Creek Project

According to MENAFN, Canadian Northern Graphite Corporation (TSXV: NGC) (OTCQB: NGPHF ) announced last week that it has agreed to sell a one per cent gross revenue royalty on its Bissett Creek Project to Electric Royalties Ltd. for $500,000 in cash and two million common shares of Electric Royalties Ltd. (ERL).

The transaction is subject to, among other things, regulatory approval, the completion of due diligence by ERL and ERL completing its going public transaction which will involve a financing of not less than $3.5 million. Under the terms of the agreement ERL also has a two-year option to acquire an additional half of one per cent GRR by paying $750,000, of which 25 per cent can be paid in ERL shares. Northern has the option to buy back half of one per cent of the initial GRR at any time after 12 months by returning the Consideration Shares or paying $1.5 million in cash.

Gregory Bowes, CEO of Northern, commented that: “Bissett Creek is a high margin project and the sale of a small royalty has very little effect on its economics. The proceeds will provide a non-dilutive source of liquidity that will enable the Company to continue waiting for a turnaround in graphite prices which it believes will come even if automobile manufacturers are only modestly successful at achieving their stated fleet electrification goals.” He added that: “We are happy to support ERL in bringing more attention to the electric metals/minerals space by selling a royalty on what we believe is one of the world’s highest quality, undeveloped graphite projects.”

Benchmark Mineral Intelligence estimates that major automobile makers have committed over US$300 billion to developing electric vehicles (“EVs”) and that there are over 100 lithium ion battery (“LiB”) mega-factories in the pipeline. This will require annual world graphite production to more than double. Volkswagen has committed US$91 billion to electrifying its fleet and in doing so, its battery demand alone will increase to 300 gWh which will require an estimated 40 per cent increase in world graphite production. Daimler (Mercedes) has committed US$34 billion to developing EVs and securing its battery requirements which have been estimated at 200 gWh. China wants 25 per cent of new vehicles sold to be electric by 2025 which requires more than 300 gWh of batteries. The outlook for graphite demand is very robust while at the same time, there are no new graphite mines currently under construction.

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