NextSource Materials Announces Robust Feasibility Study Results for Molo Mine Expansion to 150,000 Tonnes per Annum of SuperFlake(R) Graphite Concentrate

Highlights

• Feasibility Study confirms highly attractive economics for a large-scale expansion of the Molo Mine and processing facility to a steady-state production rate of 150,000 tpa of graphite concentrate
• Estimated capital cost of US$161.7 million (including contingency), with pre-tax NPV₈ of US$424.1 million and a pre-tax IRR of 31.1%
• Expansion significantly de-risked through application of NextSource's all-modular construction approach and sharing of infrastructure with existing operations
• Discussions with OEMs and battery manufacturers indicate robust demand for the Company's product

TORONTO, ON / ACCESSWIRE / December 12, 2023 / NextSource Materials Inc. (TSX:NEXT)(OTCQB:NSRCF) ("NextSource" or "the Company") is pleased to announce the results of a Feasibility Study (the "FS") for a mine expansion of its 100%-owned Molo Graphite Mine in southern Madagascar.

The FS considers an expansion to the Molo Graphite Mine's current Phase 1 production capacity of 17,000 tonnes per annum ("tpa") through the construction of an additional and standalone processing plant that increases the steady-state production rate to 150,000 tpa of SuperFlake® graphite concentrate over a 25-year life of mine ("LOM"). The FS projects a capital cost of US$161.7 million resulting in a pre-tax NPV using an 8% discount rate of US$424.1 million and a pre-tax IRR of 31.1%.

The FS assumes the additional processing plant will be built adjacent to the current Phase 1 processing plant, presently in the ramp-up stage of production. The expansion will utilize the Company's unique, fully modular build approach used to construct its Phase 1 processing plant, which greatly reduced build time and associated costs in relation to conventional mine construction.

Craig Scherba, P.Geo., President, and CEO of NextSource commented:

"We are very pleased the FS confirms the strong financial potential of a larger scale operation and significant scalability of our Molo Graphite Mine to meet the robust market demand for flake graphite for use in electric vehicle batteries. This is especially timely given the recent announcement of export restrictions on flake graphite and graphite anode material from China. An expansion of this magnitude will position NextSource as a major global supplier and underpins our vertical integration strategy to offer an ample and secure supply of graphite flake for our planned battery anode facility, enabling direct supply to the electric vehicle battery market."

The production capacity of 150,000 tpa was established based on ongoing discussions with automotive manufacturers ("OEMs") and battery anode offtake partners, and on the expected demand forecasts for flake graphite that will need to be converted into spheronized and purified graphite ("SPG") and then into coated SPG ("CSPG") over the mid-term. CSPG is the final form of natural graphite required by OEMs to manufacture lithium-ion batteries for electric vehicles.

Ongoing discussions with numerous OEMs and battery anode offtake partners indicate market demand for CSPG over the long-term is expected to experience significant growth and could support additional expansions of the Molo's mine processing capacity.

The Company has not yet made a construction decision in respect to the expansion and will discuss the FS results with its strategic partners to determine the optimal timing and assess the funding options that are available with respect to this potential mine expansion.

RESULTS SUMMARY

The following summary highlights the financial metrics provided in the FS. All capital and operating costs estimates are prepared in line with a Class 3 estimate as per the American Association of Cost Engineers classification and are accurate to +/- 15 to 25%.

Notes:

1. Assumes Molo Graphite Mine is financed with 100% equity. Unless otherwise noted, all monetary figures presented throughout this news release are expressed in real US dollars (US$) as of 1 September 2023. No above-inflationary cost escalations have been applied.
2. Based on cumulative undiscounted free cash flows associated with the expansion as measured from the date of first concentrate production.
3. Project Capex includes process equipment, civil & infrastructure, mining, buildings, electrical infrastructure, project & construction services. Includes capitalised operating costs. Excludes working capital, sustaining capital and closure costs.
4. Assumes all concentrate will be sold on a FOB basis at the Port of Tulear, Madagascar.
5. Based on the weighted average prices of the various size fractions of Superflake® concentrate, as informed by Benchmark Mineral Intelligence and includes a premium associated with an above 94%-95% concentrate grade as advised by Fastmarkets.
6. The LOM measured in terms of actual operating years, where the mined produces 240ktpa of ROM for ~3 years, which increases by 2.64Mtpa of ROM for a further ~22 years.
7. Assumes a mineral reserve cut-off grade of 3% Cg has been applied, with all material below this cut-off grade treated as waste. Over the LOM, 2,520 kt (4.5% of the total tonnes in the ROM production schedule) of inferred mineral resource material above this cut-off has been included in the LOM production schedule. The sensitivity analysis section of the FS considers the impact of excluding the inferred mineral resource from the LOM production schedule. Mineral resources are not mineral reserves and do not have demonstrated economic viability.
8. Steady-state is defined as the period during which the comminution circuits are fed at a combined ROM throughput rate of 2.64Mtpa (19 years).

CAPITAL COST SUMMARY

Note: Excludes working capital, sustaining capital and closure costs.

OPERATING COST SUMMARY

Based on discussions with our off-take customers, their preference is to purchase Molo graphite concentrate at the local Madagascar port at freight on board ("FOB") China prices. As such, operating costs ("OPEX") include the all-in FOB cost to deliver the graphite concentrate to the local port of Tulear.

MINERAL RESOURCE AND MINERAL RESERVE STATEMENTS

The FS includes the following mineral resource estimates for the Molo Graphite Mine, which remains open along strike and to depth:

Notes:

1. Mineral resources have been classified using the 2014 CIM Definition Standards.
2. Mineral resources are reported inclusive of mineral reserves.
3. "Low Grade" mineral resources are resources in a low-grade zone and stated at a cut-off grade of 2% Cg with no upper limit.
4. "High Grade" mineral resources are resources in a high-grade zone and stated at a cut-off grade of 4% Cg with no upper limit.
5. Eastern and western high-grade assays are capped at 15% Cg.
6. A relative density of 2.36 tonnes per cubic meter (t/m3) was assigned to the mineralized zones for the mineral resource tonnage estimation.
7. Totals may not represent the sum of the parts due to rounding.
8. Mineral resources are defined as surface mineable only.
9. Mineral resources are not mineral reserves and do not have demonstrated economic viability. There is no certainty that any mineral resource will be converted into a mineral reserve.
10. % Cg = percentage Carbon Graphite.
11. The mineral resource estimates may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.

The FS includes the following mineral reserve estimates for the Molo Graphite Mine: