NextSource Materials Signs Mandate Letter for US$91 Million Debt Facility with International Finance Corporation

Rhea-AI Summary

NextSource Materials has signed a Mandate Letter with the International Finance (IFC) for a US$91 million debt facility. This facility will fund the expansion of the Molo Graphite Mine in Madagascar, increasing its production capacity from 17,000 tpa to 150,000 tpa of SuperFlake® graphite concentrate. A December 2023 Technical Feasibility Study estimated the expansion's capital cost at US$161.7 million plus US$25.2 million in working capital, yielding a pre-tax NPV8 of US$424.1 million and a pre-tax IRR of 31.1%. The IFC will lead in coordinating the debt syndicate with other financial institutions. Due diligence is expected to complete by Q1 2025.

Positive

• Signed Mandate Letter with IFC for US$91 million debt facility.
• Expansion of Molo Graphite Mine to increase capacity from 17,000 tpa to 150,000 tpa.
• Technical Feasibility Study shows positive economics with a pre-tax NPV8 of US$424.1 million and IRR of 31.1%.
• IFC's involvement underscores confidence in the Molo mine expansion.
• Potential for long-term sustainable development in Madagascar.

Negative

• Total capital cost estimated at US$161.7 million plus US$25.2 million in working capital.
• Financing is subject to satisfactory due diligence, regulatory, and board approvals.
• Due diligence to be completed by Q1 2025, indicating potential delays.

TORONTO, ON / ACCESSWIRE / June 13, 2024 / NextSource Materials Inc. (TSX:NEXT)(OTCQB:NSRCF) ("NextSource" or "the Company") is pleased to announce the signing of a Mandate Letter with International Finance Corporation ("IFC"), the private sector investment arm of the World Bank Group, to lead a senior debt facility totaling US$91 million (the "IFC Debt Facility") to fund an expansion of the Molo Graphite Mine (the "Molo mine") in southern Madagascar.

In December 2023, the Company released the results of a Technical Feasibility Study (the "FS") that confirmed the positive economics of a large-scale expansion of the Molo mine and processing facility from its current production capacity of 17,000 tonnes per annum (tpa) to 150,000 tpa of SuperFlake® graphite concentrate. The FS estimated a capital cost of US$161.7 million (including contingency) plus working capital of US$25.2 million, resulting in a pre-tax NPV₈ (using an 8% discount rate) of US$424.1 million and a pre-tax Internal Rate of Return (IRR) of 31.1%, and a NPV₈ of US$370.0 and IRR of 29.0% on a post-tax basis.

IFC has provided indicative financial terms to lead the coordination of the overall debt syndicate with other select commercial banks and development finance institutions. The IFC Debt Facility would fund approximately 50% of the capital costs and working capital requirements for the mine expansion to 150,000 tpa.

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

"We are delighted to announce the signing of a Mandate Letter with IFC, marking a significant milestone in our journey to expand the Molo Graphite Mine and support the diversification of global supply chains for critical battery materials. This partnership underscores the confidence placed in NextSource's Molo mine expansion by one of the world's leading development finance institutions. With IFC's support, we are poised to unlock Molo's vast potential and further contribute to long term sustainable development in Madagascar."

IFC's mandate to provide financing to NextSource is subject to satisfactory technical, social, legal and environmental due diligence, documentation and execution of acceptable terms, obtaining final credit, and regulatory and board approvals. Due diligence has commenced and is anticipated to complete in Q1 2025.

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. The Company intends to build its first Battery Anode Facility in Mauritius.

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

The FS was filed on under the Company's profile on SEDAR+ at www.sedarplus.ca and was posted on NextSource's website at www.nextsourcematerials.com.

The FS has an effective date of September 1, 2023 and was prepared by Erudite Strategies Ltd. ("Erudite") of South Africa, an independent engineering and consulting firm specializing in the mining and processing of commodities and battery materials and authored by the following "qualified persons" as defined under NI 43- 101: Johann De Bruin, (Pr. Eng) (ECSA), Hector Mapheto, Pr.Eng. (ECSA), Schalk Pienaar, Pr.Eng. (ECSA) and Hercu Smit, Pr.Eng. (ECSA) (Erudite Strategies Ltd.), Philip John Hancox, PhD, Pr.Sci.Nat. and Desmond Subramani, Pr.Sci.Nat. (Caracle Creek International Consulting (Pty.) Ltd.), Oliver Peters, P.Eng. (PEO) (Metpro Management Inc.), Eugène de Villiers, Pr.Eng. (ECSA) (ECMA Consulting (Pty.) Ltd.), Nico Hamman, Pr.Tech.Eng. (ECSA) (Eco Elementum), Alkie Marais, M.Sc. (Geohydrology) (Geostratum Water Management Consulting), and Ruan Daffue, M.Sc.Eng. (Practara (Pty.) Ltd).

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.

CAUTIONARY NOTE

This news 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", or "should" occur. Forward-looking statements include any statements regarding, among others: timing on the completion of commissioning, achieving nameplate capacity, commercial sales of graphite concentrate, anticipated results of the FS including in respect of financial metrics, capital and operating costs, mineral resource and mineral reserve estimates, metallurgy, and pricing; intended expansion and construction plans; demand for CSPG; discussion of the FS results with potential strategic partners; debt or equity investments by potential strategic parties or investors, purchase preferences of off-takers; the staged rollout of Battery Anode Facilities; 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 news 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 as a result. 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. 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 latest information, future events or otherwise, except as may be required by applicable securities laws. These forward-looking statements are expressly qualified in their entirety by this cautionary statement.

SOURCE: NextSource Materials Inc.

View the original press release on accesswire.com

FAQ

What is the purpose of the US$91 million debt facility for NextSource Materials?

The US$91 million debt facility will fund the expansion of the Molo Graphite Mine from 17,000 tpa to 150,000 tpa.

When was the Mandate Letter with IFC signed by NextSource Materials?

The Mandate Letter was signed on June 13, 2024.

What are the estimated costs for the expansion of the Molo Graphite Mine?

The expansion's capital cost is estimated at US$161.7 million plus US$25.2 million in working capital.

What are the financial projections from the Technical Feasibility Study for the Molo Mine?

The study projects a pre-tax NPV8 of US$424.1 million and IRR of 31.1%.

What conditions are required for the IFC debt facility to be finalized?

The debt facility is subject to satisfactory due diligence, regulatory, and board approvals, expected to complete by Q1 2025.