NextSource Materials Announces Global Anode Expansion Strategy Update, Economic Results of Proposed Battery Anode Facility in Saudi Arabia, and Strategic Partner Process

NextSource Materials Inc. (TSX:NEXT)(OTCQB:NSRCF) ("NextSource" or the "Company") is pleased to announce an update on its global anode expansion strategy, including positive results of a technical and economic study (the "Study") for the construction of a proposed battery anode facility (BAF) located in the Kingdom of Saudi Arabia (KSA). The Company further announces it has launched a strategic partner process to consider expressions of interest it has received for funding the battery anode facilities both in the Middle East and globally

As announced in February 2023, NextSource plans to construct, in stages, multiple BAFs globally in key jurisdictions that would be capable of producing commercial scale graphite anode active material for lithium-ion batteries used in electric vehicle (EV) applications. This planned series of BAFs will leverage exclusive access to well-established proprietary anode processing technology currently supplying anode active material to major EV automotive companies (OEMs).

The key jurisdictions being evaluated for potential BAF expansions are Madagascar, the KSA, the United Arab Emirates, and North America.

Anode active material comprises a range of value-added graphite products including spheronized purified graphite (SPG) and coated SPG (CSPG).

Study Results for BAF in Kingdom of Saudi Arabia

Stantec, a global engineering service provider and partner firm with NextSource, has completed a conceptual design and an AACE Class 5 evaluation to develop Battery Anode Facilities in selected sites in the KSA. The KSA BAF will be capable of producing natural graphite anode active material for lithium-ion batteries used in EV applications.

Stantec has worked in conjunction with NextSource's technology partners to develop a Middle East compliant plant design, using proven process technology to reduce future qualification times. The Study included an assessment of the process design and equipment, an application of relevant design standards and codes, an analysis of future operational requirements, and an environmental permitting analysis.

The highlights of the Study are as follows:

• KSA BAF with a production capacity of 20,000 tonnes per annum (tpa) of CSPG:
  • Full production achievable in 16 months from initiation of construction
  • Post-tax NPV_8% of US$677.0 million and an IRR of 20.3%
  • Capital costs of US$280 million plus working capital of US$12 million funded through equity
  • Annual forecasted revenues of $230.1 million with an EBITDA of $128.5 million
  • Potential to improve the economics with debt funding and/or joint venture
• The KSA BAF design will be based on NextSource's technology partner's proprietary anode processing technology that is currently supplying SPG and CSPG material to major EV automotive companies (OEMs), including Toyota and Tesla.
• Sites visits within the KSA have already been completed by the Company as part of the selection process for the proposed location for the KSA BAF.
• NextSource plans to develop an anode processing hub over the next five years, with a total production capacity of 100,000 tpa of CSPG.

The KSA has identified graphite and anode processing as a top priority critical battery material as part of Saudi Arabia's "Vision 2030" - a comprehensive blueprint for the country's economic and social transformation, aiming to reduce its dependence on oil revenue and diversify its economy.

The KSA offers very attractive funding and operating incentives to locate value-added processing facilities in-country with an accelerated permitting and development timeframe.

President and CEO, Craig Scherba, commented,

"NextSource's vision is to become a global supplier of critical battery materials. We are examining a number of potential locations to develop BAFs as part of our global expansion strategy, leveraging our exclusive access to established technology to create a diversified supply of anode active materials for EVs. Developing a BAF in Saudi Arabia would position us to capitalize on the Kingdom's robust infrastructure, strategic location along shipping routes, and highly supportive business environment. By aligning with Saudi Arabia's ambitious Vision 2030 plan, we can contribute meaningfully to the country's development while delivering value to our shareholders and stakeholders."

Battery Anode Facility Expansion Strategy

The construction of a proposed BAF in the KSA is part of the Company's global expansion strategy to construct BAFs in key geographic locations, each with modular production capacities, that can be expanded in lockstep with OEM demand. The Company has not made a final construction decision nor completed final site selection for the KSA BAF. The timing of a construction decision and determination of the production capacity of the KSA BAF will depend on completing site selection, executing binding offtakes for anode active material, securing project funding, and obtaining the necessary permits to initiate construction.

As previously announced, NextSource has exclusive partnership and technology licensing agreements (the "BAF Partnerships") to construct and operate value-added BAFs capable of producing natural graphite anode active material for use in EV lithium-ion batteries. NextSource's technology partners operate production facilities that produce anode active material for major EV battery manufacturers that supply international OEMs, such as Toyota and Tesla.

Saudi Arabia's Vision 2030

In 2016, the KSA launched Vision 2030 as a long-term three-pillar development plan to modernize its economy and society by transforming the country into a global investment powerhouse, and as an international processing and manufacturing hub connecting three continents: Africa, Asia, and Europe.

Vision 2030 spans multiple sectors but with a special emphasis on the mining sector, which is the third pillar in the strategic roadmap. The KSA has ambitions to create growth diversify from oil and gas by establishing itself as a global hub for battery material processing. Notably, the KSA has prioritized graphite and anode material as key components of this ambitious plan.

KSA Battery Anode Facility

Based on advanced discussions with major battery manufacturers and OEMs, the Company is evaluating the accelerated construction of a large-scale BAF in the KSA capable of producing 20,000 tpa of CSPG for international OEM customers as well as OEM's already operating in the KSA, which includes Lucid Motors, Ceer Motors and Hyundai Motors.

The Company has commenced design work for the KSA BAF and is in the process of completing site selection in the Industrial City of Yanbu, strategically situated along major international shipping routes and supported by extensive infrastructure, including a deep-water port, industrial parks, and commercial zones. Sites under consideration are already home to a wide range of industries, including petrochemicals, refining, manufacturing, and logistics and its location offers easy access to raw materials, markets, and transportation networks, making them attractive locations for the Company to service domestic and international customers.

The KSA benefits from several strategic and economic advantages that include:

• Project funding of up to 75% of the capital cost at very low interest rates
• Strategic position as a major transport and processing hub connecting Africa, Asia, and Europe
• Competitive land and utility prices (e.g. electricity rate of $0.032/kWh)
• Accelerated permitting process
• Wide availability of large industrial sites each capable of supporting future expansions
• Modern infrastructure, highly educated workforce, and a highly supportive business environment
• Favourable tax incentives, customs duties exemptions and an attractive corporate income tax rate
• Recognized as a leading G20 nation - 2^nd largest GDP per capita among the G20

The next steps for the Company are to complete site selection and prepare a Feasibility Study, which will incorporate the front-end engineering and design (FEED) and the environmental and social impact assessment ("ESIA") permitting.

As part of the strategic partner process, the Company is in active discussions with offtake partners and several debt and equity financiers in the Middle East that have expressed interest in funding the construction of the KSA BAF. The Company has also begun the process to apply for various forms of funding available from various private and government funding institutions in the Middle East.

Subject to obtaining the necessary funding and completion of the ESIA process, the Company could conceivably achieve commercial production in 16 months from initiation of construction.

KSA BAF Study Economic Results

The Company has completed a technical study for a BAF plant located in the KSA with a production capacity of 20,000 tpa. Based on this work, Stantec estimatesthat capital costs and working capital investments at US$292.0 million. The post-tax economic results demonstrated an NPV of US$677.0 million using an 8% discount rate and an IRR of 20.3%. At full capacity, the KSA BAF annual revenues are estimated at $230.1 million with an EBITDA of $128.5 million.

The following presents the economic results of the KSA BAF with a production capacity of 20,000 tpa.

1. Assumes Project is financed with 100% equity.
2. CAPEX includes process equipment, ancillary civil & infrastructure, electrical and utilities, project and construction services, and contingency of $67.4 million.
3. Working capital for first 3 months of operation and raw materials inventory.
4. As measured from start of operation and assumes no inflationary adjustments in sales price or operating costs.
5. Average over the life of the operation and excludes royalties, taxes, depreciation, and amortization.
6. Assumes all opex allocated to CSPG production without deduction for by-product revenues and excludes taxes, fees, depreciation, and amortization.
7. Based on Benchmark Minerals Intelligence forecasts issued in Q1 2024

Note: Unless otherwise noted, all monetary figures presented throughout this press release are expressed in US dollars (USD). Capital cost estimates were prepared by Stantec Inc. to a confidence level of +/- 20% to 50% and are preliminary in nature. These results should not be relied upon for investment decisions. The BAF Study is not a technical report for the purposes of National Instrument 43-101 but rather is a technical study relating to the design, construction, and operation of the KSA BAF.

The Company is designing the plant with the expectation of construction of an initial 20,000 tpa capacity followed by two expansions, resulting in a total production capacity of 100,000 tpa of CSPG material.

At a total nameplate capacity of 100,000 tpa and assuming sequential construction, the combined post-tax economic results estimated an NPV of US$3,322.6 million using an 8% discount rate and an IRR of 23.7% with a payback within 6.3 years. At full capacity, the annual revenues were estimated at US$1,085.3 million with an EBITDA of US$509.0 million. The incremental capital costs to reach 100,000 tpa is estimated to be $864.8 million.

About Stantec

Stantec is headquartered in Edmonton, AB, Canada and is a publicly traded engineering and design consultancy. With over 30,000 employees in 450 offices and across 6 continents, Stantec delivers sustainable and innovative design solutions for their customers. For more information visit www.stantec.com.

About NextSource Materials Inc.

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 Mine in Madagascar is one of the largest known and highest-quality graphite resources globally, and the only one with SuperFlake® graphite. The Molo Graphite 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.

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.

NextSource Materials is listed on the Toronto Stock Exchange under the symbol "NEXT" and on the OTCQB under the symbol "NSRCF".

For further information about NextSource Materials, please visit our website at www.nextsourcematerials.com or contact us at +1.416.364.4911 or email Brent Nykoliation, Executive Vice President at brent@nextsourcematerials.com, Craig Scherba, President and CEO at craig@nextsourcematerials.com, or Aura Financial at nextsource@aura-financial.com.

Safe Harbour: This press release contains statements that may constitute "forward-looking information" or "forward-looking statements" within the meaning of applicable Canadian and United States securities legislation. Readers are cautioned not to place undue reliance on forward-looking information or statements. Forward looking statements and information are frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "potential", "possible" and other similar words, or statements that certain events or conditions "may", "will", "could", "expected" or "should" occur. Forward-looking statements include any statements regarding, among others, timing of construction and completion of the BAF and proposed timing of future locations of additional BAFs, timing and completion of front-end engineering and design and ESIA permitting, the economic results of the BAF Technical Study including capital costs estimates, operating costs estimates, payback, NPV, IRR, production, sales pricing and working capital estimates, the construction and potential expansion of the BAFs, expansion plans , as well as the Company's intent on becoming a fully integrated global supplier of critical battery and technology materials. These statements are based on current expectations, estimates and assumptions that involve a number of risks, which could cause actual results to vary and, in some instances, to differ materially from those anticipated by the Company and described in the forward-looking statements contained in this press release. No assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur or, if any of them do so, what benefits the Company will derive there from. The forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the forward-looking statements, whether because of new information, future events or otherwise, except as may be required by applicable securities laws. Although the forward-looking statements contained in this news release are based on what management believes are reasonable assumptions, the Company cannot assure investors that actual results will be consistent with them. These forward-looking statements are made as of the date of this news release and are expressly qualified in their entirety by this cautionary statement. Subject to applicable securities laws, the Company does not assume any obligation to update or revise the forward-looking statements contained herein to reflect events or circumstances occurring after the date of this news release.

SOURCE: NextSource Materials Inc.