TORONTO (miningweekly.com) – Ontario-based project developer Northern Graphite on Friday said it had awarded a $3.5-million contract for the detailed engineering and design of the Bissett Creek graphite project to joint venture (JV) PES-BECMA, comprising Porcupine Engineering Services and BECMA.

The company said the decision followed a competitive bidding process involving five engineering firms. PES-BECMA would be responsible for the front-end engineering and design of the 2 500 t/d processing facility, and related infrastructure. The plant would produce about 20 000 t/y of large flake, high-purity graphite.

The detailed engineering and design phase is expected to take seven months to complete and is part of the estimated capital costs for the project of $102.9-million, which includes a $9.4-million contingency. The work will be financed out of the company's current cash.

“We are very pleased to be initiating the front-end engineering and design process which is the first step in implementing the bankable feasibility study. While the graphite market has softened in line with slower growth in China and weak economies in the US and Europe, the company is well positioned to benefit from a recovery with the commencement of production scheduled for late 2014," Northern Graphite CEO Gregory Bowes said.

Earlier this month, the company announced it had signed a financing agreement with Caterpillar Financial Services to buy up to $17.5-million in Cat mining and Cat power equipment, which would cover the cost of the mining fleet and buying and installing natural gas power generators.

China currently produces about 70% of the world’s graphite but in recent months an export tax and a licensing system had been instituted to restrict exports and encourage value-added processing in China. Recently, more legislation was introduced which would make it increasingly difficult to construct new graphite mines in China.


Existing Chinese production was also expected to decline, owing to the effects of many years of high grading, the consolidation or elimination of smaller producers and improvements in labour and environmental standards.

The company’s TSX-V-listed stock had risen by 20.18% in the past year, and on Friday climbed nearly 5% to C$1.37 apiece.