NMG Announces Offtake Agreement with GM for Canadian Graphite and US$150 Million Equity Investment
- NMG and GM signed a multiyear supply agreement for 18,000 tonnes per annum of active anode material.
- GM committed to a US$150 million investment to support NMG's Phase-2 operations.
- The collaboration aims to provide GM with a carbon-neutral source of active anode material for EV production.
- NMG is positioned to become the largest natural graphite producer in North America, fully integrated from ore to active anode material.
- The collaboration underscores NMG's sustainability efforts and commitment to responsible production practices.
- None.
Insights
The strategic collaboration between Nouveau Monde Graphite Inc. (NMG) and General Motors (GM) represents a significant development in the electric vehicle (EV) industry, particularly in the context of supply chain resilience and sustainability. The integration of a local graphite supply for anode material is crucial, as the anode represents over 95% of the material in lithium-ion batteries, which are essential for EVs. This move is in line with the broader industry trend of securing raw material sources closer to manufacturing hubs to mitigate geopolitical risks and reduce carbon footprint.
GM's investment in NMG not only secures a substantial portion of its anode material needs but also aligns with the Inflation Reduction Act's provisions, potentially offering tax benefits. Moreover, the investment could serve as a competitive advantage for GM by ensuring a stable and sustainable supply of a critical raw material. For NMG, the agreements provide financial support and market validation, which could enhance its prospects for additional financing and partnerships. The announcement may lead to positive investor sentiment for both companies due to the emphasis on ESG principles and forward-thinking supply chain management.
From a financial perspective, GM's phased investment of up to US$150 million in NMG is a strategic move that supports the advancement of NMG's operations while potentially offering GM a favorable position in future equity stakes. The supply agreement for 18,000 tonnes per annum of active anode material provides a clear revenue stream for NMG, which is significant for their Phase-2 production scale-up. The pricing mechanism linked to market prices and project financing ratios indicates a well-structured deal that aims to ensure profitability and supply stability.
Investors should note the potential for increased valuation of NMG shares due to GM's backing and the implied confidence in NMG's operational capabilities and ESG commitments. Additionally, the lock-up period and anti-dilution rights outlined in the Investor Rights Agreement suggest a long-term commitment from GM, which could be viewed favorably by the market. The strategic nature of this investment may influence the stock performance of both companies, with potential positive impacts on NMG's liquidity and GM's supply chain risk mitigation.
Environmental, Social and Governance (ESG) considerations are central to this partnership, with NMG's project poised to be carbon-neutral and ESG-driven. NMG's commitment to responsible production and community engagement, including partnerships with First Nations, enhances its ESG profile. GM's investment reflects a growing trend among corporations to align with suppliers that prioritize sustainability, which can improve their own ESG ratings and appeal to socially conscious investors.
The emphasis on a local, traceable and reliable source of graphite aligns with the objectives of the Inflation Reduction Act, potentially qualifying for consumer EV tax credits and promoting domestic production. NMG's recognition as 'Industry Leading' in the natural graphite sustainability index underscores the strategic importance of this partnership in setting industry benchmarks for responsible material sourcing in the EV supply chain.
NMG is Developing What is Projected to Be the First Fully Integrated Source of Natural Graphite Active Anode Material in
+ NMG and GM have agreed to sign a multiyear supply agreement for 18,000 tonnes per annum of active anode material, covering a significant portion of NMG’s expected Phase-2 integrated production, from graphite ore to battery materials.
+ GM commits to a
+ Announcement coincides with parallel offtake agreement with Panasonic Energy, which combined with GM’s Supply Agreement, covers approximately
+ GM’s Tranche 1 Investment and Supply Agreement support NMG’s execution plan for its Phase-2 Matawinie Mine and Bécancour Battery Material Plan, marking a significant milestone toward a subsequent tranche investment of up to an additional
+ Collaboration provides GM with a source of carbon-neutral active anode material to support its EV production, adding to GM’s progress in developing a more sustainable and resilient North American-focused EV supply chain.
+ Graphite is a key battery raw material, making up more than
+ Shareholders, analysts, and media are invited to attend an Investor Briefing today at 10:30 a.m. ET hosted by NMG’s Management Team via webcast.
GM’s all-electric Cadillac 2026 VISTIQ. (Photo: Business Wire)
GM will make an initial
Arne H Frandsen, Chair of NMG, declared: “We welcome GM as a shareholder, invested in our robust North American commercial plan as well as our ESG commitments to responsible production and partnered development with First Nations and communities. On behalf of the Board of Directors, I commend NMG's team for their outstanding work in defining what is set to become a thriving relationship providing certainty of supply for GM, a roadmap to value creation for stakeholders, and a robust foundation for growth for shareholders.”
Jeff Morrison, Vice President, Global Purchasing and Supply Chain at GM, stated: “Our collaboration with NMG is a milestone for the industry, and in our ongoing development of a more sustainable and resilient battery supply chain. From our assembly plants and battery cell plants in the
Eric Desaulniers, Founder, President, and CEO of NMG, reacted: “From neighbours in
More than
With a confirmed multiyear supply commitment from GM supplemented with the Tranche 1 Investment, NMG has now the means and technical parameters in hand to advance engineering of the Company’s Phase-2 Bécancour Battery Material Plant. This plant is planned to be built within the same industrial park as GM and POSCO Future M’s Cathode Active Material (“CAM”) processing facility, the CA
Today’s announcement also supports NMG’s engagement with potential lenders, strategic investors, and governments with greater visibility on bankability for the project financing linked to a positive FID decision for the Company’s integrated Phase-2 Matawinie Mine and Bécancour Battery Material Plant. Lenders' input has been provided throughout discussions with GM to facilitate a successful financing at FID.
Supply Agreement
The Supply Agreement provides for supply of a volume of 18,000 tpa, once NMG reaches full production, of active anode material by NMG to GM for an initial 6-year term from the commencement of the Company’s Phase-2 production. The sales will be based on an agreed upon price formula linked to future prevailing market prices as well as a pricing mechanism to satisfy project financing ratios and ensure stable procurement for GM. The Supply Agreement is subject to conditions precedent which are standard for a project of this nature. The Supply Agreement contains standard termination rights for an agreement of this nature.
Strategic Investment & Investor Rights Agreement
In connection with the Tranche 1 Investment, GM has agreed to subscribe for 12,500,000 common shares in the capital of NMG (the “Common Shares”) and 12,500,000 common share purchase warrants (the “Warrants”) for aggregate proceeds of
NMG will use the net proceeds from the Tranche 1 Investment for the development of the Phase-2 Matawinie Mine and Bécancour Battery Material Plant.
NMG and GM will also enter into an investor rights agreement (the “Investor Rights Agreement”) which includes registration rights at the closing of the Tranche 1 Investment. Pursuant to the Investor Rights Agreement, the GM securities will be subject to a “lock-up” for a period of 18 months from the date of the Tranche 1 Investment. The Investor Rights Agreement also provides GM with certain rights relating to its investment in NMG, including certain board nomination and anti-dilution rights. Copies of the Subscription Agreement, the Offtake Agreement, and the Investor Rights Agreement will be available on the Company’s page on SEDAR+ www.sedarplus.ca and on EDGAR at www.sec.gov, and the summary of the such agreements contained herein is qualified in its entirety by the reference to such documents.
NMG’s Active Anode Material
Thanks to active technical engagement between the parties, active anode material produced at NMG’s Phase-1 facilities has been supplied to and tested by GM’s battery manufacturer to confirm alignment with its distinct specifications and quality standards.
NMG’s fully integrated production in
NMG’s active anode material has demonstrated minimal environmental footprint in an ISO-compliant life cycle assessment thanks to the Company’s planned all-electric operations powered by renewable energy combined with clean processing technologies. NMG has also been identified as “Industry Leading” in Benchmark Mineral Intelligence’s natural graphite sustainability index, the only producer to have been qualified in the category following a comprehensive examination of ESG practices, transparency, and engagement.
Decarbonization efforts, trade regulations, and recent geopolitical developments reaffirm the importance of establishing of a local, resilient, and ESG-driven supply chain of graphite to support battery and EV production. NMG is targeted to become the largest natural graphite producer in
Complementary Information
NMG has also announced having entered a multiyear binding offtake agreement with Panasonic Energy Co., Ltd. and a private placement with Panasonic Holdings Corporation. Other strategic investors have also concurrently committed to an investment of
Shareholders, analysts, and members of the media are invited to attend a webcast Investor Briefing this morning, Thursday, February 15, 2024, at 10:30 a.m. ET. Hosted by President and CEO Eric Desaulniers with the participation of NMG’s Management Team, the briefing will entail a technical presentation followed by a question-and-answer session. Registration should be completed prior to the start of the briefing at: https://us06web.zoom.us/webinar/register/WN_VmhZvajOQJ2yICWrk9ySzQ.
A brief interview with Eric Desaulniers on this announcement is also available for viewing here: https://youtu.be/kRkK3pPbqn4. Members of the media may download high-resolution files at https://we.tl/t-t9Nwt9RiQR and make additional interview or information requests to Julie Paquet, Vice President, Communications & ESG Strategy at NMG.
Completion of the transaction remains subject to customary regulatory approvals, including approval of the TSX Venture Exchange and NYSE, shareholder approval in respect of the Tranche 2 Investment, and other customary closing conditions. Copies of the Subscription Agreement, the Offtake Agreement, and the Investor Rights Agreement will be available on the Company’s page on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov.
About Nouveau Monde Graphite
Nouveau Monde Graphite is striving to become a key contributor to the sustainable energy revolution. The Company is working towards developing a fully integrated source of carbon-neutral battery anode material in
About GM
General Motors (NYSE:GM) is a global company focused on advancing an all-electric future that is inclusive and accessible to all. At the heart of this strategy is the Ultium battery platform, which will power everything from mass-market to high-performance vehicles. General Motors, its subsidiaries and its joint venture entities sell vehicles under the Chevrolet, Buick, GMC, Cadillac, Baojun, and Wuling brands. More information on the company and its subsidiaries, including OnStar, a global leader in vehicle safety and security services, can be found at www.gm.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 closing of the Transaction, including Tranche 1 Investment and Tranche 2 Investment, a positive final investment decision and closing of project financing, closing of the potential total equity investments of
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, political and social acceptability risk, environmental regulation risk, currency and exchange rate risk, technological developments, the impacts of the global COVID-19 pandemic and the governments’ responses thereto, 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 23, 2023, 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 on SEDAR+ (www.sedarplus.ca), and for
View source version on businesswire.com: https://www.businesswire.com/news/home/20240214552719/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
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