Great Lakes Graphite Inc. is selling a 95% stake in the Lochaber graphite deposit in Quebec to Saint Jean Carbon Inc.

Saint Jean will issue 3.0 million common shares, pay a 1.75% operating royalty on production and pay C$425,000 over four years.

Great Lakes will have the first right of refusal on up to 10,000 tonnes of graphite concentrate during the mine's production life, according to the Feb. 22 release.

The companies will also form a partnership focused on the supply of battery-grade graphite material to the North American market for electric vehicles and battery storage systems.

Under the proposed term sheet, the companies will work together on specific material applications for the energy markets and collaborate on projects that require high purity crystalline natural flake graphite.

A definitive agreement, to be signed after 10 days of due diligence, will include the costs and revenues associated with the new applications.

Early this year, Saint Jean completed the design build of the research and development facility in Oakville, Ontario, which will process raw material to produce graphite.