NextSource Materials (NEXT.TO) is gearing up for the next phase in its existence as the company has just appointed Brett Whalen as its exclusive M&A advisor. Whalen comes over from Dundee Corporation where he was Vice President and Portfolio manager and assisted companies in raising C$10B in capital while advising on C$2B worth of mergers and acquisitions. It’s probably also not a coincidence Dundee Corp. is NextSource’s largest institutional investor right now.
The appointment of a M&A advisor comes right after NextSource secured a binding offtake agreement for its graphite products that will be mined at its Madagascar-based mine. However, as Whalen has experience in both graphite and vanadium (he was the chairman of American Vanadium which used to own the Gibellini project in Nevada when the vanadium prices were just a fraction of where they are at today), and we think his appointment is mainly related to the Green Giant vanadium project, also in Madagascar.
NextSource hasn’t done much work on Green Giant in the recent past (as the vanadium price was too low) but now the V2O5 price has reached a high of in excess of $30/pound, we would be surprised if the Green Giant project wouldn’t have attracted any interest from potential buyers and/or joint venture partners. The current resource contains almost 50 million tonnes at 0.693% V2O5 in the indicated category while there’s an additional 9.7 million tonnes in the inferred resource category at an average grade of 0.632% V2O5 for a total of 891 million pounds of Vanadium Pentoxide. Note both resources were based on a cutoff grade of 0.5% V2O5 but now the vanadium price is trading much higher, we would expect the cutoff grade to decrease (as a 0.5% grade corresponds to a gross rock value of in excess of $300/t) resulting in a higher tonnage at a lower grade.
Interesting times for NextSource Materials, and it looks like the market is finally starting to understand NextSource is more than just a one-trick (graphite) pony.