Former Xstrata boss Mick Davis’ newly founded battery metals investment firm Vision Blue Resources (VBR) has raised $60 million and invested almost half of it in Canada’s NextSource Materials (TSX:NEXT), which is building a graphite mine in Madagascar.
VBR was launched by Davis in December last year with the purpose of capitalizing on the structural change in battery mineral demand now under way globally, it said in a statement.
The company’s main strategy is acquiring a portfolio of key investments in assets linked to electric vehicles (EVs) and grid storage growth and NextSource Materials’ Molo graphite project is one of its first investments.
The southern Madagascar project is billed as “… one of the largest known and highest quality deposits” of flake graphite globally. In its first phase, Molo is slated to produce 17,000 tonnes a year of 98% purity graphite.
Expanding production to 720,000 t/y in a second phase will result in a total production of 45,000 t/y of graphite concentrate over 30 years.
The mine will enter production in mid-2022, NextSource has confirmed.
Davis said he was heartened by the financial support so far and promised additional financings later this year. “We have also received significant additional expressions of interest to invest in VBR’s future fundraisings and we expect to return to the market later in 2021,” he said.
Davis is a well-known name in the mining industry as he led Xstrata from a $500 million-business in the early part of the last decade to an operation so big that — at one point — it made a takeover offer for Anglo American (LON:AAL).
In 2012, he sold Xstrata to Glencore (LON:GLEN) and ventured into setting up X2 Resources, a mining fund that was unable to score any deals in the three years since launch.
Davis did not get discouraged by that failure. In 2019, he co-founded Niron Metals, an investment vehicle involved in bringing Guinea’s Zogota iron ore deposit into production.
He now wants to seize the opportunity presented by an increasing need of battery metals, which include a host of materials from vanadium through to copper and cobalt. Davis says supply of those materials is not keeping pace with demand growth, which will “dwarf anything the mining industry has ever seen before, including the commodity impact of China’s industrialization in the last 20 years”.
VBR is looking for assets that are either near production or late-stage exploration and where it can work with existing management teams and shareholders. The company said it will prioritize assets with phased-development growth potential, which can become increasingly significant in the market through incremental expansion.
Davis will become chairman of NextSource following the closure of the initial transaction, the company said in a separate statement. VBR will take a 16.7% stake in the Toronto-based miner and have the right to nominate a director.
