Northern Graphite Provides Update on Lac des Iles Restart Plans
Northern Graphite Corporation has delayed the restart of its Lac des Iles (LDI) mine in Quebec, originally targeted for the third quarter of 2026. The delay stems from a regulatory dispute with the Quebec Ministry of Natural Resources and Forests (MRNF) regarding a mining lease suspension, compounded by financial constraints and weaker-than-expected market demand for natural graphite.
On July 9, 2026, Northern received authorization from the Ministry of Energy, Natural Resources and the Territories (MELCCFP) to begin mining activities for a staged pit expansion. The amended Certificate of Authorization permits the expansion of the current pit to the west by 48,000 square metres, mining down to the 209-metre elevation, and excavating up to 2.2 million tonnes of waste rock through April 9, 2027. The company is currently conducting additional kinetic studies to support authorization to mine beyond April 9, 2027, with the aim of producing up to 44,000 tonnes of graphite flake over a three-year Phase I mining plan.
However, on August 10, 2026, Northern received a notice from the MRNF suspending the LDI mining lease due to an outstanding payment related to an increased financial guarantee for site restoration. The total financial guarantee was increased by approximately $1.8 million, from approximately $8.2 million to approximately $10.1 million, following an updated restoration plan approved in November 2025. The MRNF requested 50% of the additional security, amounting to $0.9 million, as a cash deposit by February 28, 2026, with further payments of $0.45 million due in November 2026 and November 2027.
Northern disagrees with the MRNF's interpretation of the calculation and deadlines under the Mining Act (Quebec). The company believes it is not in default, noting that the MRNF already holds a surety bond of $8,232,941, which covers more than 80% of the guarantee, and that the final portion of $1,829,635 is not due until November 28, 2027. Northern has 30 days to contest the decision, with a deadline of September 9, 2026, and intends to file an appeal in the Quebec Court. The suspension is stayed pending the court's final determination.
The LDI mine and mill were placed into temporary care and maintenance in November 2025 to accelerate critical maintenance, development, and plant upgrades designed to support 24/7 operations and a nameplate capacity of 25,000 tonnes per year. The restart is now unlikely to occur in Q3 2026. Northern plans to temporarily reduce its LDI workforce to control costs, with the extent and timing subject to consultation processes. The company cites financial constraints due to the longer-than-anticipated shutdown and insufficient working capital. Additionally, market demand for natural graphite has not developed at the expected pace, creating uncertainty regarding the ability to absorb the production levels required to operate the new pit economically, which has a higher strip ratio.
"We recognize and take seriously our responsibility to provide financial security for the future restoration of Lac des Iles, and Northern already has provided $8.2 million in security toward those obligations," said Northern Chief Executive Officer Hugues Jacquemin. "However, we do not agree with the interpretation the MRNF has provided in this matter and consider, on the basis of our legal adviser's analysis, that we are not in default, because the final portion of the guarantee should not be payable until November 28, 2027. We intend to contest this decision while continuing to pursue a practical arrangement that protects the environment and preserves the future of the operation."
"Receiving the authorization to expand the pit is an important milestone for LDI, but regulatory authorization alone is not sufficient to support a successful restart," said Mr. Jacquemin. "The extended shutdown has depleted financial resources and we will need to secure sufficient working capital or financing while also having confidence that the market can absorb the level of production required to operate the new pit economically. In the interim, we must make difficult decisions to reduce costs as we work to preserve the operation and establish a sustainable path forward."