Northern Graphite Corp. [NGC-TSXV; NGPHF-OTCQB] and Al Obeikan Group for Investment Co. said they have signed a term sheet to jointly develop and operate a large-scale Battery Anode Material (BAM) facility in Yanbu Industrial City, Kingdom of Saudi Arabia through a joint venture company.

Northern Graphite shares advance on the news, rising 25.5% or $0.065 to 32 cents. The shares previously traded in a 52-week range of 30 cents and $0.08.

The term sheet outlines the development of an approximately US$200 million BAM facility with initial production of 25,000 tonnes per year, scalable over time to meet rapidly growing demand for graphite anode materials sourced outside China.  The facility will be located in Yanbu, a strategically-positioned industrial and logistics hub on the Red Sea with direct access to European, North American and Middle Eastern markets.

The joint venture company (JVCo) is to be majority-owned (51%) by Obeikan, a Kingdom of Saudi Arabia diversified industrial group engaged in packaging, printing, building glass, real estate and the digitalization of industrial operation processes in the Middle East and Africa, and 49% by Northern Graphite.

Construction of the facility is expected to start in 2026, with the first-phase production forecast to begin in 2028. The companies said the BAM facility will be funded at the JVCo level, with Obeikan leading the organization of local debt funding required to financing construction, development, and commissioning of the Yanbu plant. The remaining funding is to be provided as equity by the joint venture partners in proportion to their ownership interests and jointly through commercial banks.

Northern Graphite and JVCo are to conclude long-term offtake agreements for the purchase of up to 50,000 tonnes per year of graphite concentrate from the Canadian company’s Okanjande mine in Namibia. “Importantly, the joint venture materially accelerates the restart and potential expansion of the Okanjande mine, which has been on care and maintenance since 2018, and represents an opportunity to substantially increase the company’s graphite production at a lower cost and with a shorter time to market than most competing projects, the companies said in a press release.

A preliminary economic assessment for Okanjande was prepared in August, 2023. It contemplates 31,000 tonnes of annual production over a ten-year mine life. However, the project contains a substantial measured and indicated resource and the Northern Graphite intends to prepare a new technical report to evaluate the economics of producing at a higher rate based on the requirements of the JVCo.

Meanwhile, the companies said advanced discussions are underway with global battery manufacturers regarding long-term offtake agreements for the initial 25,000 tonnes per year of production. They said the project is aligned with Saudi Arabia’s Vision 20230 and accelerating demand for secure, non-Chinese graphite anode supply chains.