Global Battery Materials has agreed to acquire developer Lomiko Metals (TSXV: LMR; US-OTC: LMRMF) in an all-share transaction valued at about $11 million (US$7.9 million), giving the private company control of the La Loutre graphite project in Quebec. Lomiko shares surged on the news.

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

Closely held GBM is also working to restart the Kearney graphite mine in Ontario, which is estimated to host one of the largest flake graphite deposits outside China, as soon as 2028. A preliminary economic assessment released this month valued the project at US$183 million ($256 million) and estimated future cash flow at nine times the initial capital cost, underscoring why graphite assets with defined studies are drawing attention from buyers focused on battery materials supply.

March PEA

The transaction comes as governments and manufacturers in North America seek 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 becoming a higher priority as demand for battery materials increases.

Lomiko’s main asset is the La Loutre graphite project, which is described as one of the largest flake graphite deposits in North America. In March, the company released a preliminary feasibility study that outlined an after-tax net present value of C$617.4 million, an internal rate of return of 24.7% and a 3.2-year payback, based on average graphite prices of US$1,524 per tonne. Initial capital costs were estimated at C$504.6 million. The project, located about 30 km from 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.”

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

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.

In addition to La Loutre, Lomiko holds a portfolio of early-stage graphite exploration properties in Quebec. These include the Ruisseau project, where recent field programs 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 representing an aggregate 14.6 million shares, or about 18% of the company’s equity, support the deal, including all of Lomiko’s directors.

GBM has agreed to lend Lomiko up to $800,000 to help fund working capital requirements until the deal closes. If the transaction does not proceed, the maximum loan amount would rise to $1.2 million. The facility carries interest at 8% annually and matures no later than 18 months after the initial advance.