NextSource lands World Bank support for Molo graphite expansion

The Molo graphite mine is currently in Phase 1 operations. Credit: NextSource Materials

NextSource Materials (TSX: NEXT) announced Thursday it has signed a mandate letter with International Finance Corporation (IFC), the private sector investment arm of the World Bank Group, to lead a senior debt facility totaling $91 million.

The company expects to direct approximately half of the proceeds towards the expansion of its Molo graphite mine in southern Madagascar. The mine entered production a year ago and now produces NextSource’s trademarked SuperFlake graphite concentrate at a capacity of 17,000 tonnes per annum (tpa). The proposed expansion would increase that by nearly nine times to 150,000 tpa.

A December 2023 feasibility study estimated a capital cost of $161.7 million (including contingency) plus working capital of $25.2 million for the expansion. This would result in a post-tax net present value (using an 8% discount rate) of $370 million and an internal rate of return of 29%.

IFC’s mandate to provide the financing is subject to technical, social, legal and environmental due diligence, which NextSource says has already begun and is anticipated to be complete in Q1 2025.

With IFC’s support, NextSource CEO Craig Scherba said the company is now “poised to unlock Molo’s vast potential and further contribute to long term sustainable development in Madagascar.”

The project is host to one of the world’s largest graphite deposits, containing a measured resource of 23.6 million tonnes grading 6.32% carbon and indicated resource of 76.8 million grading 6.25%.

The company’s long-term aim is to use this resource as an anchor and become a vertically integrated global supplier of the EV battery material. This involves building battery anode facilities capable of large-scale production of coated, spheronized and purified graphite.

The first graphite plant is to be located in Mauritius, where it has already submitted an application and signed a lease agreement for the site.

NextSource Materials’ shares rose 10.3% to C$0.86 on the IFC partnership announcement. The company’s market capitalization stood at C$134 million ($94.5m).