NextSource Materials Inc. (TSX:NEXT, OTCQB:NSRCF) has provided investors with an update on its global anode expansion strategy, including positive results of a technical and economic study for a proposed battery anode facility in the Kingdom of Saudi Arabia.
The company partnered with engineering service provider Stantec (TSX:STN) who has completed a conceptual design and an AACE Class 5 evaluation to develop battery anode facilities (BAFs) at selected sites in the Kingdom of Saudi Arabia.
The study found that a BFA in the Kingdom of Saudi Arabia with a production capacity of 20,000 tons per year of coated spheronized purified graphite (CSPG) would be able to achieve full production in 16 months from the initiation of construction.
It has a post-tax net present value with an 8% discount of US$677 million plus an internal rate of return of 20.3%, forecast to generate annual revenues of $230.1 million and earnings before interest, taxes, deprecation and amortization (EBITDA) of $128.5 million.
Capital costs of US$280 million plus working capital of US$12 million are funded through equity.
NextSource has already completed site visits within the Kingdom of Saudi Arabia as part of the selection process for the BAF, noting that the country offers “very attractive” funding and operating incentives to locate value-added processing facilities in-country with an accelerated permitting and development timeframe.
It has not yet made a final construction decision or completed final site selection for the Kingdom of Saudi Arabia BAF. Next steps are for the company to complete site selection and prepare a Feasibility Study, which will incorporate the front-end engineering and design and the environmental and social impact assessment permitting.
It is in active discussion with several debt and equity financiers in the Middle East that have expressed interest in funding the construction of the BAF and has also begun the process of applying for funding from various private and government funding institutions in the Middle East.
Further, the company announced that it has launched a strategic partner process to consider expressions of interest received for funding BAFs in the Middle East and globally.
It announced in February 2023 that it plans to construct multiple BAFs in key jurisdictions capable of commercial-scale production of graphite anode active material for lithium-ion batteries in EV applications.
The key jurisdictions being evaluated are Madagascar, the Kingdom of Saudi Arabia, the United Arab Emirates, and North America.
“We are examining a number of potential locations to develop BAFs as part of our global expansion strategy, leveraging our exclusive access to established technology to create a diversified supply of anode active materials for EVs,” NextSource CEO Craig Scherba said.
“Developing a BAF in Saudi Arabia would position us to capitalize on the Kingdom's robust infrastructure, strategic location along shipping routes, and highly supportive business environment. By aligning with Saudi Arabia's ambitious Vision 2030 plan, we can contribute meaningfully to the country's development while delivering value to our shareholders and stakeholders.”
The company’s update was positively received, with its shares up almost 5% in early trade at C$0.87.