NextSource Materials Announces Global Anode Expansion Strategy Update, Economic Results of Proposed Battery Anode Facility in Saudi Arabia, and Strategic Partner Process
NextSource Materials Announces Global Anode Expansion Strategy Update,
Economic Results of Proposed Battery Anode Facility in Saudi Arabia, and
Strategic Partner Process
NEWS RELEASE – TORONTO, June 27, 2024
NextSource Materials Inc. (TSX:NEXT) (OTCQB:NSRCF) ( “NextSource” or the “Company”) is pleased to
announce an update on its global anode expansion strategy , including positive results of a technical and
economic study (the “Study”) for the construction of a proposed battery anode facility (BAF) located in the
Kingdom of Saudi Arabia (KSA). The Company further announces it has launched a strategic partner process
to consider expressions of interest it has received for funding the battery anode facilities both in the Middle
East and globally.
As announced in February 2023, NextSource plans to construct, in stages, multiple BAFs globally in key
jurisdictions that would be capable of producing commercial scale graphite anode active material for
lithium-ion batteries used in electric vehicle (EV) applications. This planned series of BAFs will leverage
exclusive access to well-established proprietary anode processing technology currently supplying anode
active material to major EV automotive companies (OEMs).
The key jurisdictions being evaluated for potential BAF expansions are Madagascar, the KSA, the United
Arab Emirates, and North America.
Anode active material comprises a range of value-added graphite products including spheronized purified
graphite (SPG) and coated SPG (CSPG).
Study Results for BAF in Kingdom of Saudi Arabia
Stantec, a global engineering service provider and partner firm with NextSource, has completed a conceptual
design and an AACE Class 5 evaluation to develop Battery Anode Facilities in selected sites in the KSA. The
KSA BAF will be capable of producing natural graphite anode active material for lithium-ion batteries used in
EV applications.
Stantec has worked in conjunction with NextSource’s technology partners to develop a Middle East compliant
plant design, using proven process technology to reduce future qualification times. The Study included an
assessment of the process design and equipment, an application of relevant design standards and codes,
an analysis of future operational requirements, and an environmental permitting analysis.
The highlights of the Study are as follows:
• KSA BAF with a production capacity of 20,000 tonnes per annum (tpa) of CSPG:
o Full production achievable in 16 months from initiation of construction
o Post-tax NPV8% of US$677.0 million and an IRR of 20.3%
o Capital costs of US$280 million plus working capital of US$12 million funded through equity
o Annual forecasted revenues of $230.1 million with an EBITDA of $128.5 million
o Potential to improve the economics with debt funding and/or joint venture
• The KSA BAF design will be based on NextSource’s technology partner’s proprietary anode processing
technology that is currently suppl ying SPG and CSPG material to major EV automotive companies
(OEMs), including Toyota and Tesla.
• Sites visits within the KSA have already been completed by the Company as part of the selection process
for the proposed location for the KSA BAF.
• NextSource plans to develop an anode processing hub over the next five years, with a total production
capacity of 100,000 tpa of CSPG.
The KSA has identified graphite and anode processing as a top priorit y critical battery material as part of
Saudi Arabia’s “Vision 2030 ” - a comprehensive blueprint for the country's economic and social
transformation, aiming to reduce its dependence on oil revenue and diversify its economy.
The KSA offers very attractive funding and operating incentives to locate value -added processing facilities
in-country with an accelerated permitting and development timeframe.
Rendering of a 20,000 tpa Natural Graphite Battery Anode Material Processing Facility
President and CEO, Craig Scherba, commented,
“NextSource's vision is to become a global supplier of critical battery materials. We are examining a number
of potential locations to develop BAFs as part of our global expansion strategy, leveraging our exclusive
access to established technology to create a diversified supply of anode active materials for EVs. Developing
a BAF in Saudi Arabia would position us to capitalize on the Kingdom's robust infrastructure, strategic location
along shipping routes, and highly supportive business environment. By aligning with Saudi Arabia's ambitious
Vision 2030 plan, we can contribute meaningfully to the country's development while delivering value to our
shareholders and stakeholders."
Battery Anode Facility Expansion Strategy
The construction of a proposed BAF in the KSA is part of the Company ’s global expansion strategy to
construct BAFs in key geographic locations, each with modular production capacities, that can be expanded
in lockstep with OEM demand. The Company has not made a final construction decision nor completed final
site selection for the KSA BAF. The timing of a construction decision and determination of the production
capacity of the KSA BAF will depend on completing site selection, executing binding offtakes for anode active
material, securing project funding, and obtaining the necessary permits to initiate construction.
As previously announced, NextSource has exclusive partnership and technology licensing agreement s (the
“BAF Partnerships”) to construct and operate value-added BAFs capable of producing natural graphite anode
active material for use in EV lithium -ion batteries . NextSource’s technology partners operate production
facilities that produce anode active material for major EV battery manufacturers that supply international
OEMs, such as Toyota and Tesla.
Saudi Arabia’s Vision 2030
In 2016, the KSA launched Vision 2030 as a long -term three-pillar development plan t o modernize its
economy and society by transforming the country into a global investment powerhouse , and as an
international processing and manufacturing hub connecting three continents: Africa, Asia, and Europe.
Vision 2030 spans multiple sectors but with a special emphasis on the mining sector, which is the third pillar
in the strategic roadmap. The KSA has ambitions to create growth diversify from oil and gas by establishing
itself as a global hub for battery material processing . Notably, the KSA has prioritized graphite and anode
material as key components of this ambitious plan.
KSA Battery Anode Facility
Based on advanced discussions with major battery manufacturers and OEMs , the Company is evaluating
the accelerated construction of a large-scale BAF in the KSA capable of producing 20,000 tpa of CSPG for
international OEM customers as well as OEM’s already operating in the KSA, which includes Lucid Motors,
Ceer Motors and Hyundai Motors.
The Company has commenced design work for the KSA BAF and is in the process of completing site
selection in the Industrial City of Yanbu, strategically situated along major international shipping routes and
supported by extensive infrastructure, including a deep -water port, industrial parks, and commercial zones.
Sites under consideration are already home to a wide range of industries, including petrochemicals, refining,
manufacturing, and logistics and its location offers easy access to raw materials, markets, and transportation
networks, making them attractive locations for the Company to service domestic and international customers.
The KSA benefits from several strategic and economic advantages that include:
• Project funding of up to 75% of the capital cost at very low interest rates
• Strategic position as a major transport and processing hub connecting Africa, Asia, and Europe
• Competitive land and utility prices (e.g. electricity rate of $0.032/kWh)
• Accelerated permitting process
• Wide availability of large industrial sites each capable of supporting future expansions
• Modern infrastructure, highly educated workforce, and a highly supportive business environment
• Favourable tax incentives, customs duties exemptions and an attractive corporate income tax rate
• Recognized as a leading G20 nation – 2nd largest GDP per capita among the G20
The next steps for the Company are to complete site selection and prepare a Feasibility Study, which will
incorporate the front-end engineering and design (FEED) and the environmental and social impact
assessment (“ESIA”) permitting.
As part of the strategic partner process, t he Company is in active discussions w ith offtake partners and
several debt and equity financiers in the Middle East that have expressed interest in funding the construction
of the KSA BAF. The Company has also begun the process to apply for various forms of funding available
from various private and government funding institutions in the Middle East.
Subject to obtaining the necessary funding and completion of the ESIA process, the Company could
conceivably achieve commercial production in 16 months from initiation of construction.
While the Company believes that synergies exist by developing an integrated business model with the Molo
Graphite Mine, BAFs in the Middle East will be capable of processing flake graphite from third parties . As
such, the Company may purchase feedstock from 3 rd parties and/or could consider toll manufacturing
arrangements.
KSA BAF Study Economic Results
The Company has completed a technical study for a BAF plant located in the KSA with a production capacity
of 20,000 tpa. Based on this work, Stantec estimates that capital costs and working capital investments at
US$292.0 million. The post-tax economic results demonstrated an NPV of US$ 677.0 million using an 8%
discount rate and an IRR of 20.3%. At full capacity, the KSA BAF annual revenues are estimated at $230.1
million with an EBITDA of $128.5 million.
The following presents the economic results of the KSA BAF with a production capacity of 20,000 tpa.
Economic Highlights Post-Tax Results (US$)
Net Present Value (“NPV”) (8% discount rate) (1)(2)(3)(4) 677.0 million
Initial Capital Costs (2) 280.0 million
Initial Working Capital (3) 12.0 million
Sustaining and Rehabilitation Costs 195.0 million
Life of Operation (LoO) 30 years
Internal Rate of Return (“IRR”) (1)(4) 20.3%
Payback (1)(4) 6.4 years
Annual Revenues (5) 230.1 million
EBITDA (5) 128.5 million
Economic Operational Highlights
Average Annual Production
Anode material (C/SPG) 20,000 tpa
By-products (fines) 23,851 tpa
Average Sales Price Assumption (per tonne)
Anode material (7) US$10,905
By-products (fines) US$574
Average Operating Costs (per tonne of CSPG) (4)(6) US$4,571
(1) Assumes Project is financed with 100% equity.
(2) CAPEX includes process equipment, ancillary civil & infrastructure, electrical and utilities, project and construction servic es, and contingency of $67.4 million.
(3) Working capital for first 3 months of operation and raw materials inventory.
(4) As measured from start of operation and assumes no inflationary adjustments in sales price or operating costs.
(5) Average over the life of the operation and excludes royalties, taxes, depreciation, and amortization.
(6) Assumes all opex allocated to CSPG production without deduction for by-product revenues and excludes taxes, fees, depreciation, and amortization.
(7) Based on Benchmark Minerals Intelligence forecasts issued in Q1 2024
Note: Unless otherwise noted, all monetary figures presented throughout this press release are expressed in US dollars (USD). Capital cost estimates were prepared
by Stantec Inc. to a confidence level of +/- 20% to 50% and are preliminary in nature. These results should not be relied upon for investment decisions. The BAF Study
is not a technical report for the purposes of National Instrument 43-101 but rather is a technical study relating to the design, construction , and operation of the KSA
BAF.
The Company is designing the plant with the expectation of construction of an initial 20,000 tpa capacity
followed by two expansions, resulting in a total production capacity of 100,000 tpa of CSPG material.
At a total nameplate capacity of 100,000 tpa and assuming sequential construction, the combined post-tax
economic results estimated an NPV of US$3,322.6 million using an 8% discount rate and an IRR of 23.7%
with a payback within 6.3 years. At full capacity, the annual revenues were estimated at US$1,085.3 million
with an EBITDA of US$509.0 million. The incremental capital costs to reach 100,000 tpa is estimated to be
$864.8 million.
ABOUT STANTEC
Stantec is headquartered in Edmonton, AB, Canada and is a publicly traded engineering and design
consultancy. With over 30 ,000 employees in 450 offices and across 6 continents, Stantec delivers
sustainable and innovative design solutions for their customers. For more information visit www.stantec.com.
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 aut omotive customers, outside of existing Asian supply chains, in
a fully transparent and traceable manner.
NextSource Materials is listed on the Toronto Stock Exchange under the symbol “NEXT” and on the OTCQB
under the symbol “NSRCF".
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 [email protected], Craig Scherba, President and CEO at
[email protected], or Aura Financial at [email protected].
Safe Harbour: 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 othe r similar words, or statements that certain events or conditions “may”, “will”,
“could”, “expected” or “should” occur. Forward -looking statements include any statements regarding, among others ,
timing of construction and completion of the BAF and proposed timing of future locations of additional BAFs, timing and
completion of front-end engineering and design and E SIA permitting, the economic results of the BAF Technical Stud y
including capital costs estimates, operating costs estimates, payback, NPV, IRR, production, sales pricing and working
capital estimates, the construction and potential expansion of the BAFs, expansion plans , 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 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 can not 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.