NextSource Materials Provides Quarterly Update and Announces Progress on Molo Mine Expansion Study and Battery Anode Facility Strategy

Rhea-AI Summary

NextSource Materials (NSRCF) has provided a Q3 update on its Molo graphite mine operations in Madagascar and its Battery Anode Facility (BAF) strategy. The company's Phase 1 operations were impacted by severe weather in Q1 2025, with three cyclones affecting the site. A technical review revealed milling and flotation circuit inefficiencies, limiting plant capacity to ~11,000 tonnes annually. In response, NextSource has shifted to a campaign production strategy while preparing for Phase 2 expansion. The company has 2,500 tonnes of SuperFlake® graphite in inventory and has received orders for over 1,000 tonnes for qualification purposes. Regarding the BAF development, while the Mauritius facility faces EIA delays, NextSource is exploring Middle Eastern locations for a larger-scale facility. The company has ordered main process equipment worth US$12 million for its initial 3,600 tpa BAF capacity and is in negotiations with EV manufacturers for offtake agreements.

Positive

• Successfully completed first commercial shipments of SuperFlake® graphite to customers in Germany and USA
• Strong market demand with orders for over 1,000 tonnes of SuperFlake® graphite for qualification
• Confirmed ability to produce high-quality graphite concentrate with 94-97% fixed carbon content
• Strategic shift to larger-scale operations could benefit from better economies of scale
• Equipment worth US$12 million already secured for BAF development
• Advanced discussions with potential EV manufacturers for offtake agreements

Negative

• Phase 1 operations severely affected by weather conditions with 3 cyclones in Q1 2025
• Technical issues limiting plant capacity to only 11,000 tonnes per annum
• Mauritius BAF facing delays in EIA process, risking project viability
• Shift to campaign production strategy indicates operational challenges

TORONTO, ON / ACCESS Newswire / May 15, 2025 / NextSource Materials Inc. (TSX:NEXT)(OTCQB:NSRCF) ("NextSource" or "the Company") provides a third quarter activities update for nine months ending March 31, 2025 on its mine operations in Madagascar, and progress in the consideration of a larger-scale expansion of the Molo mine and the development of a Battery Anode Facility.

The Company's third quarter financials and Management's Discussion and Analysis (MD&A) are available to access on SEDAR+ and the NextSource corporate website by end of business on May 16, 2025.

Since announcing the initiation of the plant commissioning process on March 23, 2023, and first production of SuperFlake^® graphite concentrate in June 2023, NextSource has made steady progress ramping up its Molo Phase 1 ("Phase 1"). In October 2024, the Company successfully completed its first commercial shipments of SuperFlake^® graphite concentrate to customers in Germany and the United States of America under existing offtake agreements, with shipments having arrived at customer destinations since January 2025.

To date, the Company has received orders for over 1,000 tonnes of its SuperFlake^® graphite for qualification purposes, confirming the strong market demand for the Company's graphite products. These requests are with multiple end-users and for several applications, including battery anodes, refractory, and graphite foils for fire retardants and consumer electronics.

Molo Update and Feasibility Study Update

The Molo Phase 1 operation was severely affected during the first calendar quarter of 2025 by excessive rain, where the mine site experienced 3 cyclones passing in close proximity. This weather disruption significantly hindered the ramp-up process but was used as an opportunity for the Company to improve its operating procedures, with the site successfully weathering the storms with minimal incidents.

During the quarter, and in parallel with ramp-up efforts, the Company concluded a comprehensive technical and organizational review ("the Review") of Molo Phase 1 operations, which included a detailed technical and organizational assessment, and consolidation of the insights and learnings accumulated over the course of Phase 1 ramp-up.

The Review identified the remaining technical issues slowing the ramp-up, tracing them to inefficiencies in the milling and flotation circuits, which limit the plant capacity to c.11,000 tonnes per annum, and the improvements needed to correct them. Instead of incurring costs and resources to complete final fixes to the Phase 1 plant, where anticipated volume demands will quickly outgrow its volume capacity, the Company has updated its operational strategy to utilize Phase 1 for campaign production.

The Review also reinforced confidence in the quality and potential of the Molo mineral reserve estimates and its ability to produce a high-quality graphite concentrate with a fixed carbon content between 94-97%. Key insights and learnings from Phase 1 are being incorporated in the updated feasibility study (the "Updated Feasibility Study") to consider a revised development timeline and staged expansion approach for Molo Phase 2. The completion of the Updated Feasibility Study is expected by the third calendar quarter of 2025.

This shift in operational strategy enables the Company to preserve cash and divert limited resources towards preparations for an industry-scale Molo Phase 2 expansion, which is expected to benefit from larger economies of scale, while being able to continue qualifying its graphite products and servicing key customers through Phase 1.

The approximately 2,500 tonnes of SuperFlake^® graphite concentrate in inventory, together with continued campaign production, will continue to support the qualification requests of SuperFlake^® graphite products and the servicing of existing key customers. This will enable the Company to continue the build out of its sales channels as it prepares for Phase 2 expansion in a responsible manner, and in lockstep with market demand.

Battery Anode Facility ("BAF") Update

Battery Anode Facilities are value-added processing facilities that are capable of converting our smaller size fraction graphite concentrate into a high-value graphite anode product, which is a critical and major component to the battery anode material that is assembled along with cathode material into lithium-ion batteries used in electric vehicles ("EV").

Our Mauritius BAF is intended to have an initial production capacity of 3,600 tpa of graphite anode products with the main process equipment ordered and received during financial year 2025 to the value of approximately US$12 million. The initiation of construction activities is still subject to a delayed EIA process and brings some risk to the viability of the Mauritius BAF. If the Company fails to secure the necessary permits, the Company has the option to terminate the Port Louis industrial lease at no further cost. Under this scenario the delivered BAF equipment is transportable and can be assembled in any suitable location.

As such, the Company has also identified prospective BAF sites in the Middle East that offer an attractive opportunity for a larger-scale BAF with an accelerated development schedule. NextSource has made steady progress to advance discussions with potential EV manufacturers ("OEMs") to secure an offtake agreement, currently under negotiation. These negotiations are centered on meeting the specific requirements of OEMs supported by positive feedback from product qualification trials. The development of a large-scale BAF aligns with the Company's broader strategy, ensuring a robust and sustainable supply chain for its global customers.

NextSource is also actively advancing a financing workstream to evaluate potential strategic investors for a Middle Eastern-based BAF. This initiative aims to secure a local partnership in the establishment of a BAF in this jurisdiction, which will play a critical role in delivering battery anode materials globally.

Graphite Market Outlook

The market landscape continues to support NextSource's strategic direction, as global demand for critical minerals accelerates alongside the clean energy transition. EV adoption remains a major force behind graphite demand growth with a continued surge in global EV sales. The expansion of renewable energy storage is further reinforcing this trend as electrification directly impacts battery material demand. As the core component of all lithium-ion battery anodes, graphite remains the largest battery material in a battery by volume, making up more than 95% of a lithium-ion battery anode. As vehicle manufacturers prioritize securing raw materials closer to their production hubs, the need for stable, local supply chains has become increasingly urgent.

Global supply chain shifts are accelerating away from China, the world's largest producer and processor of graphite, due to heightened geopolitical tensions and trade policy changes. The International Energy Agency has flagged graphite as the most vulnerable battery mineral, citing high geographic concentration, tight supply margins, and growing export risks. Market participants are responding by actively looking for alternative sources of both natural graphite and battery anode materials, with NextSource well-positioned to benefit from this continued shift.

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 project in Madagascar is one of the largest known and highest-quality graphite resources globally, and the only one with SuperFlake^® graphite. The Molo mine has begun production through Phase 1 mine operations. 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, in a fully transparent and traceable manner.

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

For further information about NextSource, please visit our website at nextsourcematerials.com

Investors may contact: Brent Nykoliation, Executive Vice President +1.416.364.4911 brent@nextsourcematerials.com

Cautionary Note

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", or "should" occur. Forward-looking statements include any statements regarding, among others, the filing of an Updated Feasibility Study and the timing thereof; certain business and operational plans of the Company; the rollout of Battery Anode Facilities including the capabilities and the timing thereof; and the outlook in Graphite markets. 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.

View the original press release on ACCESS Newswire

FAQ

What caused the operational delays at NextSource Materials' (NSRCF) Molo mine in Q1 2025?

The Molo Phase 1 operation was severely affected by excessive rain and three cyclones during Q1 2025, which significantly hindered the ramp-up process.

What is the current production capacity of NextSource Materials' (NSRCF) Molo Phase 1 plant?

Technical review revealed inefficiencies in milling and flotation circuits limiting the plant capacity to approximately 11,000 tonnes per annum.

What is NextSource Materials' (NSRCF) plan for its Battery Anode Facility (BAF)?

The company plans a 3,600 tpa initial BAF capacity, has ordered US$12M in equipment, and is exploring Middle Eastern locations for a larger-scale facility due to Mauritius EIA delays.

How much SuperFlake® graphite inventory does NextSource Materials (NSRCF) currently hold?

NextSource Materials currently holds approximately 2,500 tonnes of SuperFlake® graphite concentrate in inventory.

What is the quality specification of NextSource Materials' (NSRCF) SuperFlake® graphite?

NextSource's SuperFlake® graphite concentrate has a fixed carbon content between 94-97%.