NextSource Materials

Developing the World’s Next Source of High Quality Flake Graphite

This NextSource Materials Inc. profile is part of a paid investor education campaign.*

NextSource Materials: Construction of Molo Graphite Mine is Fully Funded; Production in Q2 2022

Overview

Vision Blue Resources Ltd, a newly created battery commodity/resource-focused investment company founded by Sir Mick Davis (former CEO of Xstrata Plc), has made a significant strategic investment in NextSource Materials to fully fund the construction of its Molo graphite mine in Madagascar. Production is scheduled in Q2 2022.

According to UK’s Roskill Research, battery demand for raw material graphite is expected to grow by approximately 23 per year-over-year for the next decade. 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 40 to 60 kilograms of graphite. 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 preparing to begin construction of its 100%-owned Molo Graphite Project in southern Madagascar. The Molo Graphite Project is a fully permitted and funded project that hold a large high quality flake graphite deposit and is the only project with SuperFlake® graphite.

The Company will utilise an all-modular build approach to constructing the Molo mine. Initial production is expected to be 17,000 tonnes per annum (“tpa”) over the first two years of production followed by mine expansion in Year three. Offtakes are in place for more than 100% of initial production.

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 only in small quantities. Molo, as well as its Green Giant vanadium project within close proximity, leverage mining-friendly conditions and resource-rich mineralization to prime the company for economic growth and production success.

For further information about NextSource visit our website at www.nextsourcematerials.com or contact us a +1.416.364.4911 or email Brent Nykoliation, Executive Vice President, Corporate Development at brent@nextsourcematerials.com or email Craig Scherba, President and CEO at craig@nextsourcematerials.com.

NextSource Trench

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. The company recently announced that former Xstrata CEO Sir Mick Davis committed a strategic investment of US$29.5 million in NextSource mining operations. This investment offers valuable full funding for the entire build of the Molo graphite mine.

Vision Blue Resources, the firm that Davis founded in December 2020 to invest in battery and technology minerals, selected the Molo graphite project as its flagship investment, noting that the graphite market has been underinvested considering the increasing demand in recent years. “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 intends on utilizing an all-modular build approach to constructing the Molo mine. With full funding, initial production could reach approximately 17,000 tonnes per annum over the first two years of production and mine expansion in later years.

NextSource SuperFlakeR Pitch

Proceeds could also fund the fast-tracked completion of two technical studies to confirm the viability of mine expansion and construct a value-added graphite processing plant to produce spheronized, purified graphite (SPG).

In April 2021, the company finalized an exclusive partnership with two well-established and leading companies that process and supply SPG to leading Japanese anode and battery makers, who in turn supply the Tesla supply chain and other major automotive companies (“OEMs”). The company also recently executed an offtake commercial agreement with thyssenkrupp Materials Trading GmbH, an international trading and services company headquartered in Essen, Germany, for the sale of 35,000 tonnes per annum (tpa) of the SuperFlake® graphite products.

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$14 million on the exploration and development of Green Giant.

NextSource’s management team brings years of professional and field experience in the resource, mining and financial sectors. Together, the deeply connected team primes the company for significant economic success and the drive to meet the world’s increasingly high demand for graphite.

NextSource Materials’ Company Highlights

  • The Molo graphite project is a fully funded asset with rich resources and high-quality graphite. The deposit ranks as one of the largest-known and highest quality flake graphite deposits in the world.
  • Vision Blue Resources committed a strategic investment into the Molo graphite project. Vision CEO Mick Davis invested approximately US$29.5 million over two private placement equities and a non-dilutive royalty agreement.
  • The company’s Green Giant vanadium project is an advanced stage exploration project that is one of the world’s largest known vanadium deposits. The sediment-hosted geophysical profile presents NextSource with unique development and exploration potential.
  • Mick Davis joined NextSource as chairman upon closing the first initial private placement. The mining heavyweight brings years of valuable experience in project development and financing expertise.
  • NextSource secured US$29.5 million to fully fund Phase1 of the Molo Graphite Mine and fast track key technical studies.
  • The Company has initiated the construction of Phase One of the mine. Construction will take approximately 12 months and mine commissioning is expected to begin in April 2022
  • NextSource also secured a partnership with companies within the Tesla supply chain to build a battery anode facility and entered into a commercial partnership and offtake agreement with thyssenkrupp Materials Trading for the sale of 35,000 tonnes per annum of SuperFlake® graphite concentrate.
  • On July 22, 2021, Nextsource has been accepted as a member of both the European Battery Alliance (EBA) and the European Raw Materials Alliance (ERMA).

NextSource Materials’ Key Projects

Molo Graphite Project

The Molo graphite project is a wholly owned feasibility-stage asset that 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 South-western Madagascar and is located 11.5 kilometers east of the town of Fotadrevo.

Total combined graphite resources are measured at 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. After resource delineation, drilling and trenching campaigns conducted in 2012, the company discovered Molo hosted surface-level mineralization, ideal for low-cost, open-pit mining. This could significantly advance production timelines and fast-track predicted milestones and potential discovery.

superflake

This asset is also unique for its almost 50 percent premium-priced large and jumbo flake graphite profile. Widespread jumbo flake occurrences have primed the project for significant high-quality yield with SuperFlake® concentrates inferred between 97 percent to 98 percent carbon purity with simple flotation alone.

The project’s exploration and development include completed Feasibility Studies from 2015, 2017 and 2019, Mining and Environmental permitting and full funding. In Q2 2021, the company will commence construction of the modular plant.

For all details and assumptions relating to the parameters of the Molo project, mineral resource and reserve estimates and data verification procedures, please see “Molo Feasibility Study, National Instrument 43-101 Technical Report on the Molo Graphite Project located near the village of Fotadrevo in the Province of Toliara, Madagascar Prepared by Erudite Strategies (Pty) Ltd” dated May 31, 2019.
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 good mining conditions and convenient close proximity to NextSource’s flagship Molo graphite project.

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 National Instrument 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.

Since 2008, Green Giant has seen extensive diamond drilling campaigns, soil sampling, airborne and ground geophysics and EM surveying. NextSource intends to continue developing the property’s three main zones, which are referred to as the Jaky, Manga and Mainty deposits.

NextSource Materials’ Management Team

Craig Scherba, P.Geo. — President and CEO
Craig Scherba was appointed president and CEO in September 2012 and has been a director since January 2010. Previously, Scherba served as vice president, Exploration of the company, since January 2010. Prior, Scherba was a managing partner for six years with Taiga Consultants Ltd., 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.

Robin Borley, Pr. Tech Eng — Senior Vice President, Mine Development
Robin Borley is a Graduate mining engineering professional and a certified mine manager with more than 25 years of international mining experience building and operating mining ventures. He has held senior management positions both Internationally and within the South African mining industry. He has most recently served as mining director for DRA Mineral Projects and was instrumental as the COO of Red Island Minerals in developing a Madagascar coal venture.

His diverse career has spanned resource project management, evaluation, exploration and mine development. Robin has completed several mine evaluations, including operational and financial assessment of new and existing operations across various resource sectors. He has experience in managing underground and surface mining operations from both the contractor and owner-miner environments.

Brent Nykoliation, BCom (Hons) — Executive Vice President, Corporate Development
Brent Nykoliation joined the senior management team at NextSource Materials as vice president, Corporate Development. In 2007, he oversaw all communication with analysts, institutional investors and strategic offtake partners for the company. He brings over 20 years of management experience, having held senior 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, CFA, CPA — CFO
Marc Johnson is a bilingual senior executive with over 20 years of business experience, including ten years at public corporations as CFO, VP 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.

NextSource Materials’ 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 prior to 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.

Brett Whalen — Director (Non-executive)
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 Corp., Whalen was directly involved in completing approximately $2 billion in M&A deals and helped raise over $10 billion in the 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.

Ian Pearce – Director

Mr. Ian Pearce is the former CEO of Xstrata Nickel, and prior to that 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. Mr. 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:

Mr. 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.

Christopher Kruba — QC
Mr. Kruba is Vice-President and Legal Counsel to Nostrum Capital Corporation and a number of 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 which 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, Mr. Kruba serves as corporate secretary to all the companies, is a member of group’s investment committee and he serves on the board of directors of many of the companies.

Mr. Kruba has extensive manufacturing and capital markets experience and has lead merges and acquisitions and participated in the management and strategic planning for numerous companies, including venture capital corporations in which the group has invested.

Nostrum Capital Corporation and Mr. Kruba personally have been investors in NextSource Materials Inc. since 2011.

Dr. David McNeely — Consultant
Dr. McNeely has over 25 years of practise in Anesthesia and Critical Care, and has vast expertise in humanitarian and social responsibility best practices. He has worked extensively in causes which have underscored the critical relationships between health and responsible environmental stewardship, with a particular focus and a passion on implementing clean energy initiatives and mining practices.

He has participated in medical mission to Inuvik, NWT and Mongolia, where environmental conditions have had devastating health consequences. He was a Founding Member of Galliano Greenhouses, which supplied trees for urban reforestation projects in the GVRD and is a member of Canadian Association of Physicians for the Environment (CAPE). He has been a UBC Associate Clinical Instructor since 2008 and involved in medical student and resident teaching and has experience in working effectively and collaboratively with health authorities and the government.

Dr. McNeely has been a major shareholder of NextSource Materials since 2014.

Dr. McNeely received his BSc.Hons. from St. Francis Xavier University(84), a medical degree from McGill (89) and Anesthesia Fellowship from UBC(94). Along with his clinical practice at Surrey Memorial Hospital, he has had numerous executive positions in department leadership, patient safety and advocacy, program implementation and review, quality improvement, professional practice oversight, healthcare and professional promotion, and physician/government contract negotiations.

 


 

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