- With the Government of Canada planning to stockpile critical minerals, backed by a C$2 billion fund as part of Prime Minister Mark Carney’s first budget, to offset Chinese dominance in the sector, it is prime time for investors to run top Canadian miners through due diligence towards a potential allocation
- One of the first-movers to take advantage of the initiative is Nouveau Monde Graphite (TSX:NOU;NYSE:NMG), a small-cap graphite miner and near-term producer active in Quebec
- The graphite stock has added 89.93 per cent year-over-year
With the Government of Canada planning to stockpile critical minerals, backed by a C$2 billion fund as part of Prime Minister Mark Carney’s first budget, to offset Chinese dominance in the sector, it is prime time for investors to run top Canadian miners through due diligence towards a potential allocation.
One of the first-movers to take advantage of the initiative is Nouveau Monde Graphite (TSX:NOU;NYSE:NMG), market capitalization C$562.10 million, a miner and near-term producer developing a vertically integrated supply chain in Quebec with eyes on meeting graphite demand from the energy, defense, technology and manufacturing industries.
The company plans to break ground on its feasibility-stage Matawinie mine and Bécancour battery material plant near Montreal next year and reach production by 2028, yielding an expected 106,000 tons of graphite concentrate per year over a 25-year mine life.
Operations will draw on estimated reserves of 2.6 million tons and a resource of more than 6.5 million tons, representing more than US$13 billion in the ground at the base-case price of US$1,469 per ton of flake graphite.
The project, valued at US$1.05 billion after tax, benefits from a recently signed seven-year offtake agreement with the Government of Canada, which will see the company provide 30,000 tons of graphite concentrate per year for Canada and allied countries, supported by a floor price of about US$1,500 per ton of large flake graphite and about US$800 per ton of fine flake graphite, with the government agreeing to cover losses should market prices drop below these levels.
This is in addition to numerous other offtakes with the likes of Panasonic and Traxys, plus active negotiations with a major manufacturer for 30,000 tons of concentrate annually over a six-year period, all of which are bringing financiers to the table and rapidly advancing Nouveau Monde towards a final investment decision.
Greg Frame, senior communications adviser for Natural Resources Minister Tim Hodgson, mentioned at the G7 summit of energy ministers in Toronto last week that stockpiling Matawinie graphite is part of the government’s plan.
Investors have been optimistic about Nouveau Monde’s path to initial revenue as of late, lifting the graphite stock by 89.93 per cent year-over-year, though shares have given back 21.66 per cent since 2020, last trading at US$2.64, discounting the company’s broad-based support and billions in graphite in the ground.
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