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Graphite M&A: Flinders to take over Big North, acquire Mexican past-producer

by Greg Klein | September 2, 2014

Two companies focused on former graphite mines would become one under a binding letter agreement announced September 2. Flinders Resources TSXV:FDR, which last month began production at its Woxna mine in Sweden, intends to acquire Big North Graphite TSXV:NRT, which holds the El Tejon project in Mexico. Like Woxna, El Tejon is a past-producing flake graphite mine that was placed on care and maintenance.

Flinders to take over Big North, acquire Mexican past-producer

A mine and mill acquired last May brought
Big North to the attention of Flinders Resources.

Flinders is credited with first place in graphite’s race to production but was actually second to Big North, which has been test-mining and selling amorphous graphite from its 11-hectare, Nuevo San Pedro 50/50 joint venture in Mexico’s Sonora state. The company also holds graphite properties in Ontario and Quebec.

But Flinders has its eye on Big North’s El Tejon, a 500-hectare property with an open pit mine and mill in southern Mexico that’s been on care and maintenance since 2002. The mine has produced graphite in large, medium and fine flakes. An historic, non-43-101 report from 1990 attributed grades of 3.54% and 3.79% graphitic carbon (Cg) respectively to two deposits.

Big North closed that acquisition in May for US$1.7 million, 12.5 million shares and a 3% net profits interest. The company stated it expected the project to be fully permitted within six months. An estimated US$2.25 million would refurbish the mill’s first line, Big North added.

Flinders has an opening ceremony planned for its central Sweden project this month, after re-starting operations in early August. The open pit and mill had been on care and maintenance since 2001. The project has measured and indicated resources totalling 2.8 million tonnes averaging 10.7% Cg. Flinders hopes to increase those numbers by proving up historic resources.

The deal would swap one Flinders share for nine Big North shares. Among other conditions, the latter company’s outstanding debentures must be redeemed or converted to Big North shares. The parties plan to complete due diligence by October 6. Big North shareholders will vote by December 15. The company faces a $500,000 break fee if it pulls out under certain circumstances.

Should all go to plan Big North would become a wholly owned subsidiary of Flinders, anticipated to be run by the bigger fish’s management.

Read more about Flinders Resources.

Read about Tesla Motors’ prospects for graphite.

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