Nouveau Monde Graphite scores $460M funding deal

Nouveau Monde Graphite (NYSE: NMG, TSX: NOU) has secured almost enough financing for the next stage of its Matawinie project, which Ottawa has already referred to its Major Projects Office for fast-tracking. 

Export Development Canada (EDC) and the Canada Infrastructure Bank (CIB) jointly committed $335 million (C$459 million) in senior debt to fund the project through its construction, development and commissioning, they said on Tuesday.

The project has an estimated capital cost of $421 million, according to a feasibility study issued last year, and the company plans to raise money through equity. The financing is “a defining milestone” as the company targets a final investment decision this year, NMG founder and CEO Eric Desaulniers said in a release.

“This commitment from EDC and CIB reflects the depth of Canadian public-finance expertise behind large, strategic infrastructure and critical minerals developments,” Desaulniers said. “And it validates the bankability of our project.” 

Shares of Nouveau Monde Graphite shot up 6.8% to close on Tuesday at $2.35 apiece in New York, sending its market capitalization back above $484 million. For the year, the stock remains down 9.6%.

‘Largest’ of G7

Located in Saint-Michel-des-Saints, 150 km north of Montreal, the Matawinie project comprises a large open-pit mine and a concentrator that could produce up to 106,000 tonnes of natural graphite concentrate annually over 25 years.

The project is currently in its first stage, focused on establishing the mine’s initial infrastructure and producing graphite on a pilot scale for customer qualification. For stage two, Nouveau Monde is aiming to start commercial operations, backed by agreements with the Canadian government, Panasonic and commodity trader Traxys for three-quarters of its future production.

Stage two is expected to make Matawinie the largest graphite mine in all of the G7 nations, serving a key role in the energy, advanced technology and manufacturing sectors.

In November, the government referred Matawinie to the federal Major Projects Office for expedited review but it has not yet received formal “national interest” designation under the Building Canada Act. The project is currently shovel-ready and has passed all development milestones.

Bécancour plant

In addition to the mine, NMG is also developing a graphite-processing plant in Bécancour, 160 km northeast of Montreal, to produce active anode materials used in electric vehicle batteries. Initially, the plant would have an annual capacity of 13,000 tonnes.

“Graphite underpins battery supply chains, advanced manufacturing, and the technologies that shape the modern economy,” Tim Hodgson, Minister of Energy and Natural Resources, said in the same release.

Canada is currently the only G7 country producing the mineral commercially, Hodgson added. Titan Mining (TSX: TI; NYSE-A: TII) has begun producing graphite concentrate at a small demonstration plant in New York, marking the first U.S. output in decades, but large-scale commercial supply remains years away.

Investment decision

The debt facilities provide the company with a “clear path” to a final investment decision, Nouveau Monde said. Upon completing certain conditions, it expects to proceed to financial close and begin drawdowns under the term loan facility in accordance with the project schedule.

The project has an after-tax net present value of $238 million (at 8% discount) and an internal rate of return of 16%, according to last year’s feasibility study.

In the meantime, the company says it’s in talks with investors for the equity component of the project financing.