The IFC funding 50% of a large-scale expansion of the Molo mine and processing facility in Madagascar.
(Photo: NextSource)

In December 2023, the company published a feasibility study that confirmed the positive economics of a large-scale expansion of the Molo mine and processing facility from its current production capacity of 17,000 metric tons per year (mt/y) to 150,000 mt/y of SuperFlake graphite concentrate. It estimated a capital cost of $161.7 million (including contingency) plus working capital of $25.2 million, resulting in a pre-tax NPV8 (using an 8% discount rate) of $424.1 million and a pre-tax Internal Rate of Return (IRR) of 31.1%, and a NPV8 of $370 million and IRR of 29.0% on a post-tax basis.

IFC has provided indicative financial terms to lead the coordination of the overall debt syndicate with other select commercial banks and development finance institutions. The IFC Debt Facility would fund approximately 50% of the capital costs and working capital requirements for the mine expansion to 150,000 mt/y.

“This marks a significant milestone in our journey to expand the Molo mine and support the diversification of global supply chains for critical battery materials,” said NextSource CEO Craig Sherba, P.Geo. “This partnership underscores the confidence placed in NextSource’s Molo mine expansion by one of the world’s leading development finance institutions. With IFC’s support, we are poised to unlock Molo’s vast potential and further contribute to long-term sustainable development in Madagascar.”

IFC’s mandate to provide financing to NextSource is subject to satisfactory technical, social, legal and environmental due diligence, documentation and execution of acceptable terms, obtaining final credit, and regulatory and board approvals. Due diligence has commenced and is anticipated to be completed in Q1 2025.

The Molo mine is one of the largest known and highest-quality graphite resources globally, and the only one with SuperFlake graphite. It has started production, with Phase 1 mine operations currently undergoing ramp-up to reach its nameplate production capacity of 17,000 mt/y of graphite concentrate.

NextSource is also developing a significant downstream graphite value-add business through the staged rollout of battery anode facilities capable of largescale production of coated, spheronized and purified graphite for direct delivery to battery and automotive customers, outside of existing Asian supply chains, in a fully transparent and traceable manner. The company intends to build its first battery anode facility in Mauritius.