NextSource Materials

Overview

Vision Blue Resources Ltd, a battery commodity/resource-focused investment company founded by Sir Mick Davis (former CEO of Xstrata Plc), made a significant strategic investment in NextSource Materials in 2021 to fully fund the construction of its Molo graphite mine in Madagascar. Production has begun, with Phase 1 mine operations currently undergoing ramp up to reach its nameplate production capacity of 17,000 tpa of graphite concentrate.

According to UK’s Benchmark Minerals Intelligence, battery demand for flake graphite is expected to grow between 5-7 fold by 2035. This dramatic spike in demand is due to graphite’s critical role as the anode material in lithium-ion batteries. Electric vehicle batteries contain between 60 to 90 kilograms of graphite per battery. By volume, graphite is the largest raw material in a lithium-ion battery. As the electric vehicle market continues to grow, investing in the companies that produce these valuable battery materials and have first-mover advantage can provide significant value-creation and exposure to this expanding market.

NextSource Materials Inc. is a battery materials development company based in Toronto, Canada that is intent on becoming a vertically integrated global supplier of battery materials through the mining and value-added processing of graphite and other minerals.

The Company’s Molo graphite project in Madagascar is one of the largest known and highest-quality graphite resources globally, and the only one with SuperFlake® graphite.

The Company is also developing a significant downstream graphite value-add business through the staged rollout of Battery Anode Facilities capable of large-scale production of coated, spheronized and purified graphite for direct delivery to battery and automotive customers, outside of existing Asian supply chains, in a fully transparent and traceable manner.

Graphite in Madagascar is renowned for its quality and flake size. For almost a century, Madagascar has been exporting flake graphite to the world but in limited quantities. Molo will catapult Madagascar to a top 5 graphite producing country. With its Green Giant vanadium project also within close proximity to the Molo project, NextSource Materials controls two very strategic sources of battery materials at one source.

NextSource’s 100 percent owned and fully permitted Molo graphite project drew investor attention for its large, high-quality flake graphite deposit and unique SuperFlake graphite concentrate. Sir Mick Davis’s strategic investment of US$29.5 million in NextSource in May 2021 provided the entire funding to bring the Molo Graphite mine into production.

“This investment in NextSource underlines our belief that the massive secular change in demand for critical battery material resources is not being met by an appropriate supply-side response, largely as a result of capital constraints,” Davis stated.

The company utilized an all-modular build approach to construct the Molo mine. Phase one production will be approximately 17,000 tonnes per annum over the first two years with further planned expansion in year three.

The company made its first bulk container shipment of SuperFlake® graphite in October 2023 to its downstream technical partner's battery anode facility to be processed into spheronized, purified graphite (SPG) that will then be further processed into coated SPG (CSPG) as part of large scale, multi-step verification tests being conducted by automotive EV supply chains in South Korea and Japan.

The company has completed its first commercial shipments of SuperFlake® graphite concentrate from its Molo Graphite Mine (the "Molo mine") in southern Madagascar. Full container loads of high-quality, coarse flake graphite concentrate were exported from the Port of Tulear, Madagascar to Germany and to the United States of America (USA) under existing offtake agreements. These initial container shipments of SuperFlake® graphite are destined for key demand markets for higher value graphite products, including refractory materials and graphite foils for consumer electronics and fire-retardant applications.

NextSource’s other highly prospective project, the Green Giant vanadium project in Madagascar, stands out for its sediment-hosted deposit profile, which is only seen in approximately 5 percent of total vanadium occurrences.

The company believes strongly in vanadium’s potential market growth with the popularization of VRBs as a leading technology for green energy applications. Since project acquisition in 2007, NextSource has spent over US$20 million on the exploration and development of the Green Giant.

NextSource’s management team and directors bring decades of professional mine development and capital markets expertise. NextSource has assembled an impressive team with a proven track record in mine operations and building shareholder value. This positions the company for significant growth and economic success as it strives to meet the world’s increasing demand for graphite.

Company Highlights

• The Molo graphite project in Madagascar is one of the largest known and highest-quality graphite resources globally, and the only one with SuperFlake® graphite. The Molo mine has begun production, with Phase 1 mine operations currently undergoing ramp up to reach its nameplate production capacity of 17,000 tpa of graphite concentrate.
• Vision Blue Resources, a fund headed up by Sir Mick Davis that invests in strategic battery materials, is NextSource’s largest shareholder.
• Sir Mick Davis is NextSource’s chairman and this mining heavyweight brings years of valuable experience in mine development and operations expertise.
• NextSource will complete a feasibility study in November 2023 for its Phase 2 expansion of an additional 150,000 tonnes in order to meet the significant forecasted demand for graphite. Timing for Phase 2 construction is expected to take 18 months to complete from a final investment decision and when funding is in place, which would be predicated on securing an OEM offtake.
• NextSource is one of extremely few graphite companies to have secured long term offtakes with reputable partners. The first is for the sale of 20,000 tonnes per annum with a prominent Japanese trader that supplies the Tesla and Toyota battery supply chains, and the second is with thyssenkrupp Materials Trading for the sale of 35,000 tonnes per annum of SuperFlake® graphite concentrate.
• The Company is also developing a significant downstream graphite value-add business through the staged rollout of Battery Anode Facilities (BAFs). These BAFs will be capable of large-scale production of spherical, purified graphite (SPG) and coated SPG (CSPG) using established processing expertise for direct delivery to battery and automotive customers, outside of existing Asian supply chains, in a fully transparent and traceable manner. Construction of its Phase 1 BAF in Mauritius is expected to be completed by the end of 2024.
• The Company also owns the Green Giant vanadium project, an advanced stage NI 43-101 resource that is one of the world’s largest known vanadium deposits. The sediment-hosted geophysical profile of this vanadium deposit is well-suited for vanadium redox batteries, which are a leading battery technology for large scale energy storage applications.
• NextSource has completed its first commercial shipments of SuperFlake® graphite concentrate from its Molo Graphite Mine in October 2024.
• NextSource Materials is listed on the Toronto Stock Exchange (TSX) under the symbol “NEXT” and on the OTCQB under the symbol “NSRCF".

Key Projects

Molo Graphite Mine and Project

The Molo graphite project ranks as one of the largest-known and highest-quality flake graphite deposits in the world. The property is over 62.5 hectares, sits in the Tulear region of Southwestern Madagascar and is located 11.5 kilometers east of the town of Fotadrevo.

The Molo mine has begun production, with Phase 1 mine operations currently undergoing ramp up to reach its nameplate production capacity of 17,000 tpa of graphite concentrate.

Total combined graphite resources at Molo are 141.28 million tonnes at 6.13 percent total graphitic carbon, with a contained ore reserve of 22.44 million tonnes at 7.02 percent graphitic carbon. The company has delineated over 300-line kilometers of continuous graphite mineralization at surface. NextSource has virtually an unlimited supply of graphite it can bring to the market in lockstep with demand.

NextSource has superior flake size distribution and well above the global average. The Molo asset is relatively unique for having almost 50 percent premium-priced large and jumbo flake graphite and can achieve up to 98 percent carbon purity with simple flotation alone. Molo SuperFlake® has been verified by end-users and meets or exceeds all criteria for the top demand markets for flake graphite; anode material for lithium-ion batteries, refractories, graphite foils and graphene inks.

NextSource has completed a series of feasibility studies on the project since 2015, with a planned updated feasibility study for phase two mine expansion.

For all details and assumptions relating to the parameters of the mineral resource, reserve estimates, and data verification procedures for phase one of the Molo Project, please refer to the company’s website at nextsourcematerials.com.

Green Giant Vanadium Project

The 100-percent-owned Green Giant vanadium project is an advanced-stage exploration project located in South-central Madagascar and is one of the world’s largest known vanadium deposits. The project leverages ideal mining conditions and is in close proximity to NextSource’s Molo graphite mine.

The Green Giant Project is a rare type of vanadium deposit because it is sediment-hosted. No magnetic metals are associated with Green Giant’s vanadium, making the project ideal for producing high-purity vanadium pentoxide, a key material in vanadium redox batteries.

The property’s NI 43-101 compliant resource measures an estimated 60 million tonnes of vanadium pentoxide at an average grade of almost 0.7 percent at a 0.5 percent cut-off.

Management Team

Hanré Rossouw — President and Chief Executive Officer

Hanré Rossouw joins NextSource from his role as executive director and chief financial officer of Sasol Limited with extensive experience in the global natural resources industry over the last 25 years. A British and South African national, Rossouw has held senior positions in leading global mining and investment companies where his roles involved business development, M&A, capital markets, asset management and growth optimization. Rossouw was chief financial officer and executive director of Royal Bafokeng Platinum between October 2018 and March 2022 having joined after 5 years as a portfolio manager at Investec Asset Management. He was latterly CFO of the Alloys Division having been part of the small head office team which completed numerous international transactions and associated fundraisings as part of a corporate development plan which grew the market capitalization fivefold during his tenure. Rossouw worked at both Accenture and as a project manager with De Beers Group having started in the mining industry as a metallurgist with Anglo American in 1998. He studied chemical engineering at Stellenbosch University and Economics at the University of South Africa as well as completing an MBA at the University of Oxford's Said Business School.

Brent Nykoliation — Executive Vice-president

Brent Nykoliation joined the senior management team at NextSource Materials as vice-president in 2007 and leads the development and implementation of strategic partnerships and offtakes with supply chain customers. In addition, Nykoliation oversees all communications with institutional investors and analysts for the company.

He brings over 20 years of senior management experience, having held marketing and strategic development positions with several Fortune 500 corporations in Canada, notably Nestlé, Home Depot and Whirlpool.

Nykoliation holds a Bachelor of Commerce with Honours degree from Queen’s University.

Marc Johnson — Chief Financial Officer

Marc Johnson is a bilingual senior executive with over 20 years of business experience, including ten years at public corporations as CFO, VP of corporate development and other financial management positions, and ten years in capital markets in investment banking and equity research. Johnson is a chartered financial analyst and a chartered professional accountant and joined as CFO in October 2015. He also holds a bachelor of commerce (finance) from the John Molson School of Business at Concordia University in Montreal.

Jonathan (Johnny) Velloza- Interim Chief Operating Officer

Jonathan Velloza has a wealth of technical and operating experience in the mining industry spanning 30 years during which he managed operational optimization processes and large capital expansions across a range of commodities and in many jurisdictions. Velloza was previously Deputy CEO and COO of Gem Diamonds and CEO of Chemaf. Prior to this, he was with BHP Western Australia Iron Ore where, from 2013 to 2015, he was general manager at the largest iron ore mine in the BHP portfolio, leading a number of successful operational efficiency programs. He also acted as a senior exploration manager in Zambia and in Chile for BHP from 2011-2013, operations manager at AngloGold Ashanti from 2009-2010 and held numerous managerial positions at De Beers from 2001-2009.

Velloza holds a Bachelor’s degree in Mining Engineering from The University of Johannesburg and a Bachelor’s degree in Business from The University of South Africa.

Danniel Stokes - VP, Special Projects

Daniel Stokes joined NextSource in 2022. During his career, he has been responsible for providing project management support across a diverse portfolio of projects in mining, infrastructure, and nuclear industries; developing tools, implementing best practices and mentoring apprentices. Stokes holds degrees in engineering and business and has a qualification in project management from the Association for Project Management.

Markus Reichardt - VP, Sustainability

Markus Reichardt joined NextSource in 2023 and brings a practical understanding of integrating ESG into all stages of the project cycle based on a 25 year track record in operational, senior corporate and advisory roles in the resources, agricultural and renewables sectors across the developing world.

Reichardt is responsible for driving the Group’s safety, health, environment, social, climate change and quality performance and initiatives.

Reichardt is a former corporate environmental manager of AngloGold and holds degrees in history and restoration ecology.

Wilhelm Reitz - General Manager, Molo Mine

Wilhelm Reitz is a mine management professional with 28 years of experience in the global mining sector, with the last 11 years focussed on critical minerals and in developing technologies through design, engineering, and research on graphite. Reitz held senior management roles with AfriGold in Senegal and West African Diamonds in Sierra Leone and Guinea. Prior to joining NextSource, he was involved in developing and managing graphite mines in Madagascar for Stratmin Global and Greenwing Resources. Reitz holds a BSB Diploma in Leadership and Management and studied with AIM in Australia, faculty of management.

Lydia Boarlaza - Country Manager, NextSource Materials

Lydia Boarlaza joined NextSource as Country Manager in January 2021 and has had extensive management experience in the Madagascar mining sector over her career. She has served in general manager and resident manager roles for various companies including Madagascar Consolidated Mining S.A., Madagascar Oil S.A., Avana Group, Hunt Oil Madagascar, and Shell Exploration & Development Madagascar BV. She is a member of the board of directors of Madagascar Chamber of Mines, member of the National Committee within the EITI Madagascar, and member of the Women in Mining and Resources Association in Madagascar.

Board of Directors

Sir Mick Davis — Chairman

Sir Mick Davis is the CEO of Vision Blue Resources and a highly successful mining executive accredited with building Xstrata plc into one of the largest mining companies in the world before its acquisition by Glencore plc. Before listing Xstrata on the LSE as CEO he was CFO of Billiton plc and Chairman of Billiton Coal which he joined from the position of Eskom CFO. During his career in mining, he has raised over US$40bn from global capital markets and successfully completed over US$120bn of corporate transactions, including the creation of the Ingwe Coal Corporation in South Africa; the listing of Billiton on the LSE; the merger of BHP and Billiton; as well as numerous transactions at Xstrata culminating in the sale to Glencore plc. Sir Mick Davis is a chartered accountant by profession and holds an honours degree in commerce from Rhodes University, South Africa and an honorary doctorate from Bar Ilan University, Israel.

Ian Pearce – Director

Ian Pearce is the former CEO of Xstrata Nickel, and was the former COO of Falconbridge Limited, which was acquired by Xstrata Plc in 2006. Xstrata Plc’s acquisition of Falconbridge was one of the largest mining takeovers globally and one of the largest takeover bids in Canadian history. Pearce was also a founding partner of X2 Resources who, along with Sir Mick Davis, made up the team of six ex-Xstrata executives who formed the mid-tier diversified mining and metals company. He currently serves as a director for several global companies in the mining and metals, energy, and sustainability industries. Pearce previously served as chair of the Mining Association of Canada and chair of the Nickel Institute. He holds a BSc from the University of the Witwatersrand, South Africa and an HNDT in Mineral Processing from the University of Johannesburg, South Africa.

Craig Scherba — Director and Chief Development Officer

Craig Scherba was appointed president and CEO in September 2012 and has been a director since January 2010. Previously, Scherba served as vice president of exploration of the company, since January 2010. Scherba was a managing partner for six years with Taiga Consultants, a mining exploration consulting company. He has been a professional geologist since 2000, and his expertise includes supervising large Canadian and international exploration programs. Scherba was an integral member of the exploration team that developed Nevsun Resources’ high-grade gold, copper and zinc Bisha project in Eritrea. He served as the company’s country and exploration manager in Madagascar during its initial exploration stage, discovering both the Molo Graphite and the Green Giant Vanadium deposits.

Brett Whalen — Director

Brett Whalen has over 20 years of investment banking and M&A expertise, spending over 16 of those years at Dundee Corporation. During his tenure at Dundee, Whalen was directly involved in completing approximately $2 billion in M&A deals and helped raise over $10 billion in capital for resource sector companies. While a vice president and portfolio manager of Goodman & Co., he oversaw the investment of $6 million into NextSource, enabling the company to achieve key technical milestones, notably the completion of its July 2017 Phase One Feasibility Study and the concept and design of the whole modular build approach NextSource will be utilized for construction of both Phase One and Phase Two of the Molo mine. Whalen has extensive knowledge of both graphite and vanadium and the general battery materials industry.

Whalen has held board seats of several TSX-listed and privately held companies and holds a BA (Honours) degree in Economics and Finance from Wilfrid Laurier University.

Christopher Kruba — Director

Christopher Kruba is vice-president and legal counsel to Nostrum Capital Corporation and several related corporations that are part of the Toldo Group. The Toldo Group is headquartered in Windsor, Ontario and is composed of several privately held corporations in Canada and the United States, some of which have large manufacturing operations in diversified sectors and others that are involved in active and passive investments across capital markets throughout North America, Europe and Africa. In addition to his responsibilities as counsel to the Toldo Group, Kruba serves as corporate secretary to all the companies, is a member of the group’s investment committee and serves on the board of directors of many of the companies.