NextSource Materials has signed a mandate letter with International Finance Corporation (IFC) to secure a funding worth $91m to finance the expansion of the Molo graphite mine in southern Madagascar.

The private sector investment arm of the World Bank will lead the senior debt facility for NextSource Materials.

IFC has outlined indicative financial terms to spearhead the coordination of the overall debt syndicate with selected commercial banks and development finance institutions.

The IFC debt facility is expected to finance nearly 50% of the capital costs and working capital requirements for the graphite mine’s expansion to 150,000 tonnes per annum (tpa).

NextSource Materials president and CEO Craig Scherba said: “We are delighted to announce the signing of a Mandate Letter with IFC, marking a significant milestone in our journey to expand the Molo Graphite Mine and support the diversification of global supply chains for critical battery materials.

“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.”

NextSource Materials announced the results of a technical feasibility study (FS) for the Molo graphite mine expansion in December 2023.

According to the FS, the graphite mine expansion would require a project capital expenditure (capex) of $161.7m.

The FS also showcased positive economics for the large-scale expansion of the Molo mine’s current production capacity of 17,000tpa to 150,000 tpa of SuperFlake graphite concentrate.

Besides, the study estimated a post-tax net present value (NPV) of $370m for the expansion of the graphite mine. It also projected an after-tax internal rate of return of 29% for the Molo mine expansion with a payback period of 3.1 years.

The mandate is contingent upon technical, social, legal and environmental due diligence, documentation as well as execution of acceptable terms, receipt of final credit and regulatory and board approvals.

NextSource Materials said that due diligence has begun and is expected to be completed in Q1 2025.