NMG Provides a Quarterly Update: Disciplined Execution Backed by Strong Integrated Team, Commercial Agreements with Anchor Customers and Favorable Market Conditions

Rhea-AI Summary

Nouveau Monde Graphite Inc. (NMG) reports progress on its Phase-2 Matawinie Mine and Bécancour Battery Material Plant projects, moving towards a final investment decision (FID). Key developments include:

- Accelerated engineering of Phase-2 facilities to update the integrated ore-to-anode-material feasibility study
- Preliminary work at the Phase-2 Bécancour Battery Material Plant site
- Progress on zero-emission equipment development for the Matawinie Mine with Caterpillar
- Approval of the powerline path for the Matawinie Mine
- $500,000 research grant awarded for next-generation active anode materials
- Continued commercial engagement for remaining Phase-2 production capacity
- Improving market conditions with rising natural graphite prices and EV sales growth
- Period-end cash position of $73.9 million

The company's multiyear offtake agreements with Panasonic Energy and General Motors, combined with favorable market dynamics, provide a solid foundation for scaling up operations.

Positive

• Multiyear offtake agreements secured with Panasonic Energy and General Motors
• $500,000 research grant awarded for next-generation active anode materials development
• 9.9% year-to-date increase in natural graphite prices
• 20% growth in global EV sales in the first half of 2024
• Strong cash position of $73.9 million at period-end
• Progress on zero-emission equipment development for the Matawinie Mine with Caterpillar
• Approval of the powerline path for the Matawinie Mine, enabling full electrification

Negative

• Final investment decision (FID) for Phase-2 projects still pending
• Ongoing need for additional financing to reach minimum funding for project launch

Insights

Financial Analyst

NMG's Q2 update reveals a mixed financial picture. While the company's $73.9 million cash position provides a solid foundation, the lack of revenue highlights its pre-commercial status. The $500,000 research grant is a positive, albeit minor, financial boost.

The company's focus on CAPEX optimization and leveraging tax credits (up to 30% on eligible expenditures) could significantly improve its financial outlook. However, the need for substantial capital to reach commercial production remains a key challenge.

Market conditions appear favorable, with a 9.9% YTD increase in natural graphite prices and projected growth in anode material demand. This could positively impact NMG's future revenue potential, but investors should note that profitability is still some way off.

Battery Technology Expert

NMG's progress in developing zero-emission mining equipment with Caterpillar is a significant technological advancement. This initiative aligns with the growing demand for sustainable mining practices and could give NMG a competitive edge in the market.

The company's focus on next-generation active anode materials through the recent research grant is crucial. As battery technology evolves, staying at the forefront of material innovation is vital for long-term competitiveness.

The integrated ore-to-anode-material approach is a strategic advantage, potentially allowing NMG to control quality and costs throughout the supply chain. However, executing this complex integration successfully will be challenging and requires careful management.

Market Research Analyst

The anode material market is showing strong growth signals, with demand projected to reach 1.37 million tonnes in 2024, a 32% increase from 2023. This trend, coupled with the 20% growth in global EV sales, paints a positive picture for NMG's market potential.

The 25% US tariff on Chinese graphite imports starting in 2026 could significantly boost NMG's competitiveness in the North American market. However, this advantage may be partially offset by potential retaliatory measures or market adjustments.

NMG's strategic agreements with Panasonic Energy and GM provide a solid foundation for future sales. The company's efforts to secure additional offtake agreements for the remaining 15% of Phase-2 production will be important to watch.

• Accelerated engineering of Phase-2 facilities to update the results of the Company’s integrated ore-to-anode-material feasibility study in view of the specific requirements from Panasonic Energy and GM, CAPEX optimization, and other project planning developments, in preparation for FID.
• Preliminary work is ongoing at the Phase-2 Bécancour Battery Material Plant site in preparation for the launch of construction.
• Progress on the development of zero-emission equipment for the Matawinie Mine by Caterpillar as a result of direct involvement from respective technical and mining teams informing an integrated solution tailored to NMG’s site.
• Approval by the regulatory body of the powerline path set to connect the Matawinie Mine to the hydropower network.
• NMG was awarded a $500,000 research grant to advance the development of versatile next-generation active anode materials.
• Continued commercial engagement with tier-1 battery and EVs manufacturers for the balance (approximately 15%) of the Phase-2 Bécancour Battery Material Plant active anode material production.
• Improving market conditions exemplified by 9.9% year-to-date increase in natural graphite prices (Benchmark Mineral Intelligence, June 2024), increasing demand for anode materials in the Western World, announced 25% US tariff on Chinese imports, and sustained growth (20%) in global EV sales (Rho Motion, July 2024).
• Reappointment of the Directors and adoption of all resolutions submitted at the Company’s Annual General and Special Meeting of Shareholders.
• Period-end cash position of $73.9 million.

MONTRÉAL--(BUSINESS WIRE)-- Nouveau Monde Graphite Inc. (“NMG“ or the “Company”) (NYSE: NMG, TSX.V: NOU) reports on its progress to bring the Phase-2 Matawinie Mine and Bécancour Battery Material Plant toward a final investment decision (“FID”), while planning a Phase-3 expansion via its Uatnan Mining Project and complementary value-added processing facilities. The Company’s multiyear offtake agreements with Anchor Customers Panasonic Energy Co., Ltd. (“Panasonic Energy”), a wholly owned subsidiary of Panasonic Holdings Corporation (“Panasonic”) (TYO: 6752), and General Motors Holdings LLC, a wholly owned subsidiary of General Motors Co. (collectively, “GM”) (NYSE:GM) (GM and Panasonic being collectively the “Anchor Customers”), combined with improved market dynamics and attractive long-term perspectives provide solid underpinnings for scaling up operations from its Phase-1 facilities to construction and commercial production.

NMG’s site for the Phase-2 Bécancour Battery Material Plant during preliminary work covering tree clearing, site leveling and construction of an onsite road. (Photo: Business Wire)

Arne H Frandsen, Chair of NMG, declared: “The fundamentals of NMG’s business model continue to be reaffirmed by governments and manufacturers’ quest to secure resilient, local, and dependable supply chains for energy autonomy, national security, and decarbonization plans. NMG’s efforts are centered on crystallizing our position as North America’s first and largest fully integrated producer of natural graphite anode material and creating value for our shareholders and stakeholders at every stage.”

Eric Desaulniers, Founder, President, and CEO of NMG, stated: “Backing from our Anchor Customers, trade restriction from Western governments promoting onshoring and friendshoring of battery materials, plus a clear demand/supply deficit for anode material looming in North America create sustained tailwinds as we near FID for our Phase 2 and start assessing sites for our Phase-3 processing expansion. With nearly $75 million of cash position, Team Nouveau Monde is focused on the disciplined execution of our business strategy through updating of operational parameters of our integrated feasibility study, optimizing CAPEX and procurement, as well as adjusting our project financing structure to leverage tax credits, grants and debt/equity instruments.”

Path to Commercial Production: Phase 2

Using an integrated project team (“IPT”) model, the Company is preparing for the launch of the Phase-2 Matawinie Mine and Bécancour Battery Material Plant once minimum financing is reached. NMG's in-house team and strategic consultants specializing in engineering, procurement, construction management, and project controls are working collaboratively to advance engineering, and finalize pre-construction deliverables (comprehensive construction sequence, schedule, contracting strategy, programs for health, safety, environment, and quality).

Updated cost projections reflecting the advancement in engineering, cost optimization, and construction planning are being prepared for the updated integrated feasibility study underway. Outputs will support project financing in view of FID. NMG continues to engage with governmental agencies, strategic investors, and lenders to secure a robust capital structure. Additionally, an external tax specialist firm has been tasked with optimizing the Phase-2 CAPEX eligibility for the new Canadian Investment Tax Credit for Clean Technology Manufacturing, which offers a refundable tax credit of up to 30% of eligible capital expenditures.

At the Phase-2 Bécancour Battery Material Plant site, preliminary works were carried out in recent months to complete tree clearing and the construction of an on-site road.

The Company is reporting progress on the development of zero-emission equipment for the Matawinie Mine on the basis of strategic agreements with Caterpillar Inc. (“Caterpillar”). Site visits, prototypes demonstrations and modeling solutions inform dynamically NMG’s electrification plans and the development of an integrated tailored solution for the Matawinie Mine covering the fleet, charging infrastructure and operating site management. In addition, the final path for the dedicated powerline set to connect the mining site to Hydro-Québec’s hydropower network for enabling the full electrification of the Matawinie Mine was reviewed and approved by the regulatory body.

Business Development & Market Perspectives

In addition to offtake agreements signed with Panasonic Energy and GM, NMG is actively engaged with other tier-1 potential customers for offtake agreement(s) on the balance of its Phase-2 active anode material production accompanied by strategic investments. The Company’s Phase-1 operations support technical marketing and product qualification efforts with said manufacturers.

NMG is also preparing the following commercial phase with its targeted Phase-3 expansion. In preparation for the Uatnan Mining Project development, an initial technical and economic planning study covering camp and logistics requirements is currently being carried out by a local engineering firm to inform next steps. The Company has also initiated the assessment of industrial sites for the establishment of battery material plants to refine the future Uatnan graphite concentrate production, including in Québec, Europe, Middle East and the U.S., close to its potential customer base.

Following a period of pressured market conditions, Q2-2024 generated a 9.9% year-to-date increase in natural graphite pricing according to Benchmark Mineral Intelligence’s index (June 2024). The anode material market is experiencing a steady rise in demand, matched by incremental expansions in production capacities, especially outside of China. Long-term growth is bolstered by investments in ex-China natural anode material capacity and recently announced reinstatement of a 25% U.S. tariff on Chinese natural graphite imports starting in 2026.

Looking ahead, a sustained deficit in active anode material supply is anticipated to drive price higher, with the market expected to enter a prolonged deficit phase from 2029 onward. Demand for active anode materials is projected to reach approximately 1.37 million tonnes in 2024, a 32% increase from 2023 (Benchmark Mineral Intelligence, July 2024). The market is largely driven by EVs, and secondarily by energy storage systems and portable electronics.

Despite signs of a potential slowdown in EV adoption, the industry, particularly for major automakers like Hyundai/Kia, Toyota and Ford, showed robust growth with sales surging between 56% and 86% year-over-year (Bloomberg, May 2024). In the first half of 2024, global EV sales reached 7 million units, marking a 20% increase in comparison with the same period last year (Rho Motion, July 2024).

Market conditions remain favorable to NMG’s business strategy, especially with long-term incentives and trade instruments from Western governments targeting onshoring and friendshoring of battery materials.

Corporate Matters

In June 2024, NMG was awarded a $500,000 research grant from the Québec Ministry of Natural Resources to develop a versatile next-generation active anode material that meets the highest performance standards without sacrificing production yield. This grant directly supports NMG’s research and development portfolio to refine its line of specialty products targeting innovation, reduced environmental footprint, and increased competitiveness.

At the Company’s Annual General and Special Meeting of Shareholders, shareholders reappointed each of the eight nominees as Directors and adopted all other resolutions submitted for their approval. The meeting was complemented with a corporate presentation by NMG’s executive team providing an update on the Company’s key projects, commercial engagement, and growth plan.

For the twelve-month rolling period ended June 30, 2024, NMG reported a total recordable injury frequency rate of 2.57 and severity rate of 0 at the Company’s facilities. There were no environmental incidents during this period. The period-end cash position is $73.9 million.

About Nouveau Monde Graphite

Nouveau Monde Graphite is an integrated company developing responsible mining and advanced manufacturing operations to supply the global economy with carbon-neutral active anode material to power EV and renewable energy storage systems. The Company is developing a fully integrated ore-to-battery-material source of graphite-based active anode material in Québec, Canada. With enviable ESG standards and structuring partnerships with anchor customers, NMG is set to become a strategic supplier to the world’s leading lithium-ion battery and EV manufacturers, providing high-performing and reliable advanced materials while promoting sustainability and supply chain traceability. www.NMG.com

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Cautionary Note

All statements, other than statements of historical fact, contained in this press release including, but not limited to those describing the update of the feasibility study for its Phase 2 reflecting the technological advancements, specific requirements of the Anchor Customers, budget optimization, and other project planning developments, to support project financing, and the discussions with various governmental agencies, strategic investors, and lenders, as well as the advantages of its project execution model to ensure greater control over the project’s direction and reduction project management and engineering costs, the active discussions and positive outcome with other tier-1 potential customers for the balance of its Phase-2 active anode material production, strategic investments and the potential of the Phase 3 Uatnan project to meet the western market growth, the assessment of industrial sites for the establishment of production plants for such production, and the intended results of the initiatives described in this press release and those statements which are discussed under the “About Nouveau Monde” paragraph and elsewhere in the press release which essentially describe the Company’s outlook and objectives, constitute “forward-looking information” or “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of Canadian and United States securities laws, and are based on expectations, estimates and projections as of the time of this press release. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Company as of the time of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. These estimates and assumptions may prove to be incorrect. Moreover, these forward-looking statements were based upon various underlying factors and assumptions, including the current technological trends, the business relationship between the Company and its stakeholders, the ability to obtain sufficient financing for the development of the Matawinie Mine and the Bécancour Battery Material Plant, the Company’s ability to provide high-performing and reliable advanced materials while promoting sustainability and supply chain traceability, the consumers demand for components in lithium-ion batteries for EVs and energy storage solutions, the ability to operate in a safe and effective manner, the timely delivery and installation at estimated prices of the equipment supporting the production, assumed sale prices for graphite concentrate, the accuracy of any Mineral Resource estimates, future currency exchange rates and interest rates, political and regulatory stability, prices of commodity and production costs, the receipt of governmental, regulatory and third party approvals, licenses and permits on favorable terms, sustained labor stability, stability in financial and capital markets, availability of equipment and critical supplies, spare parts and consumables, the various tax assumptions, CAPEX and OPEX estimates, all economic and operational projections relating to the project, local infrastructures, the Company’s business prospects and opportunities and estimates of the operational performance of the equipment, and are not guarantees of future performance.

Forward-looking statements are subject to known or unknown risks and uncertainties that may cause actual results to differ materially from those anticipated or implied in the forward-looking statements. Risk factors that could cause actual results or events to differ materially from current expectations include, among others, those risks, delays in the scheduled delivery times of the equipment, the ability of the Company to successfully implement its strategic initiatives and whether such strategic initiatives will yield the expected benefits, the availability of financing or financing on favorable terms for the Company, the dependence on commodity prices, the impact of inflation on costs, the risks of obtaining the necessary permits, the operating performance of the Company’s assets and businesses, competitive factors in the graphite mining and production industry, changes in laws and regulations affecting the Company’s businesses, including the changes in China’s policy regarding restrictions on Chinese graphite materials exportations, political and social acceptability risk, environmental regulation risk, currency and exchange rate risk, technological developments, and general economic conditions, as well as earnings, capital expenditure, cash flow and capital structure risks and general business risks. A further description of risks and uncertainties can be found in NMG’s Annual Information Form dated March 27, 2024, including in the section thereof captioned “Risk Factors”, which is available on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov. Unpredictable or unknown factors not discussed in this Cautionary Note could also have material adverse effects on forward-looking statements.

Many of these uncertainties and contingencies can directly or indirectly affect, and could cause, actual results to differ materially from those expressed or implied in any forward-looking statements. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Forward-looking statements are provided for the purpose of providing information about management’s expectations and plans relating to the future. The Company disclaims any intention or obligation to update or revise any forward-looking statements or to explain any material difference between subsequent actual events and such forward-looking statements, except to the extent required by applicable law.

The market and industry data contained in this press release is based upon information from independent industry publications, market research, analyst reports and surveys and other publicly available sources. Although the Company believes these sources to be generally reliable, market and industry data is subject to interpretation and cannot be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data-gathering process and other limitations and uncertainties inherent in any survey. The Company has not independently verified any of the data from third-party sources referred to in this press release and accordingly, the accuracy and completeness of such data is not guaranteed.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Further information regarding the Company is available in the SEDAR+ database (www.sedarplus.ca), and for United States readers on EDGAR (www.sec.gov), and on the Company’s website at: www.NMG.com

View source version on businesswire.com: https://www.businesswire.com/news/home/20240815600388/en/

MEDIA

Julie Paquet

VP Communications & ESG Strategy

+1-450-757-8905 #140

jpaquet@nmg.com

INVESTORS

Marc Jasmin

Director, Investor Relations

+1-450-757-8905 #993

mjasmin@nmg.com

Source: Nouveau Monde Graphite Inc.

FAQ

What is the current status of NMG's Phase-2 Matawinie Mine and Bécancour Battery Material Plant projects?

NMG is preparing for the launch of these Phase-2 projects, with accelerated engineering, preliminary site work, and updates to the integrated feasibility study. The company is working towards a final investment decision (FID) and securing necessary financing.

Has NMG secured any major customers for its graphite production?

Yes, NMG has signed multiyear offtake agreements with Panasonic Energy and General Motors as Anchor Customers. The company is also engaged in discussions with other tier-1 potential customers for the remaining production capacity.

What is NMG's current cash position as of the latest report?

NMG reported a period-end cash position of $73.9 million.

How are market conditions affecting NMG's business prospects?

Market conditions are favorable, with a 9.9% year-to-date increase in natural graphite prices, 20% growth in global EV sales, and increasing demand for anode materials in the Western World. Additionally, a 25% US tariff on Chinese imports has been announced.

What recent developments has NMG achieved in its Phase-2 projects?

Recent developments include preliminary work at the Bécancour Battery Material Plant site, progress on zero-emission equipment with Caterpillar for the Matawinie Mine, and approval of the powerline path for the mine's connection to the hydropower network.