GBM to buy Lomiko, add Quebec graphite project

Global Battery Materials agreed to buy developer Lomiko Metals (TSXV: LMR; US-OTC: LMRMF) in an all-share deal valued at about $11 million (US$7.9 million) that will give the private company control of the La Loutre graphite project in Quebec. Lomiko shares soared.

The deal values Lomiko at 13¢ per share, a 71% premium to the stock’s 20-day volume weighted average trading price on the TSX Venture Exchange for the period ending Monday, GBM said Tuesday in a statement. It requires approval from Lomiko shareholders, court approval and customary regulatory clearances before closing, which is expected in the fourth quarter.

Closely held GBM is working to restart the Kearney graphite mine in Ontario, which is estimated to hold one of the largest flake graphite deposits outside of China, as soon as 2028. A preliminary economic assessment this month valued the project at US$183 million ($256 million) while pegging future cash flow at nine times the initial capital cost. 

March PEA

The transaction comes as governments and manufacturers in North America push for new domestic sources of critical minerals used in electric vehicles and energy storage. Natural graphite is the dominant material used in lithium-ion battery anodes, and supply chain security is being increasingly prioritized as demand for battery materials accelerates.

Lomiko’s main asset is the La Loutre graphite project, one of the biggest flake graphite deposits in North America. In March, the company released a preliminary feasibility study outlining an after-tax net present value of C$617.4 million, a 24.7% internal rate of return and a 3.2-year payback based on average graphite prices of US$1,524 per tonne. The initial capital cost was estimated at C$504.6 million. The project, which is located about 30 km from the city of Mont-Tremblant, has faced opposition from local communities over pollution concerns.

“This acquisition marks another decisive step in our strategy to consolidate the fragmented battery supply chain and build a fully integrated graphite platform spanning mine to anode,” Global Battery Materials CEO Eric Miller said.

“Lomiko brings a portfolio of natural graphite assets that strengthen our North American footprint and deliver the scale to support a rapidly growing anode materials market.”

Shares of Lomiko jumped 60% to 12¢ Tuesday in Toronto, valuing the company at about $9.6 million. The stock has traded between 6¢ and 22¢ in the past year.

Structured review

Once the acquisition is approved, GBM plans to engage local rights holders and stakeholders as part of a “structured review” of La Loutre to determine the next steps for development.

Beyond La Loutre, Lomiko controls a portfolio of early-stage graphite exploration properties in Quebec. These include the Ruisseau project, where recent field programs have identified multiple graphite-bearing trends that remain open for further drilling.

Lomiko’s board is unanimously recommending that shareholders vote in favour of the transaction, according to Tuesday’s statement. Security holders holding an aggregate 14.6 million shares, representing about 18% of the company’s equity, support the deal. They include all of Lomiko’s directors.

GBM has agreed to lend Lomiko up to $800,000 to assist with funding working capital requirements until the deal closes. If the transaction were to fall through, the maximum loan amount would rise to $1.2 million. The facility bears interest at a rate of 8% a year and matures no later than 18 months following the initial advance.