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NextSource shares jump on graphite off-take deal with Japanese trader

NextSource Materials Inc.'s stock surged by about 67% on Oct. 16 after it announced the signing of a graphite off-take agreement with a Japanese trading company.

The agreement will see the Japanese partner purchase 20,000 tonnes per year of SuperFlake graphite from NextSource's Molo project in Madagascar for the first 10 years of production, with an automatic five-year renewal.

The deal is subject to the mine achieving commercial production within three years following the ramp-up period. Prices will be negotiated per order and will be based on floating regional market prices.

NextSource said the trading company is a primary supplier of flake graphite to a major Japanese electric vehicle anode producer, and both requested anonymity regarding the deal.

The company plans to internally assess moving directly to phase-two expansion tonnages at Molo as the agreement represents more production than the 17,000 t/y anticipated in phase-one operations.

In mid-2017, an updated feasibility study on phase one of the Molo project generated an after-tax net present value of US$25.5 million, at an 8% discount rate, with a 21.6% internal rate of return.

The two companies also agreed to start discussions about additional supply chain cooperation, initially focusing on the potential production of value-add downstream products using the SuperFlake graphite concentrate product.