NextSource Materials Announces Initiation of Civil Works and Shipment of Buildings to the Molo Graphite Mine Site in Madagascar and Filing of Updated PEA
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NextSource Materials Announces Initiation of Civil Works and Shipment
of Buildings to the Molo Graphite Mine Site in Madagascar and
Filing of Updated PEA
NEWS RELEASE – TORONTO, April 28, 2022
NextSource Materials Inc. (TSX:NEXT) (OTCQB:NSRCF) (“NextSource” or the “Company”) is
pleased to announce that its construction team is now setup at the Molo Graphite Mine site in
Madagascar and civil and earthworks have been initiated in preparation for the delivery and
installation of the processing plant. The offsite fabrication and construction of the auxiliary buildings
and structures has also been completed and these are in the process of being delivered to the mine
site.
President and CEO, Craig Scherba commented,
“With the mobilization of construction crews to the mine site and initiation of civils and earthworks,
we have reached yet another key milestone towards commissioning of the Molo Graphite mine later
this year.”
Work crews have begun civil construction and earthworks, utilizing heavy construction equipment
to prepare the ground for the delivery and installation of the processing plant and auxiliary buildings.
The work will involve:
• site stripping and leveling
• laying of foundations for buildings and structures
• excavation for utility installation
• road remediation
The Phase 1 processing plant was designed and built using an all-modular approach and is capable
of processing 240,000 tpa of ore and produc ing approximately 17,000 tpa of high -quality
SuperFlake® graphite concentrate. On February 28 , 2022, the Company announced the
processing plant, which was fully assembled at an offshore facility and had successfully passed
factory acceptance testing and final verification, had been dismantled, packaged, and is ready to
be shipped to the mine site. The processing plant is expected to be delivered to the mine site in Q2
2022, followed by installation and commissioning in Q3 2022.
The following auxiliary buildings and structures are expected to be delivered and installed at the
mine site during Q2 2022:
• Accommodation camp
• Water treatment plant
• Sewage treatment plant
• Plant offices
• Plant workshop
• Testing laboratory
• Plant ablutions
• Change house
Once Phase 1 of the Molo Graphite Mine is completed and commissioned as expected in Q3 2022,
it will become one of the few operating graphite mines outside of China.
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UPDATED PHASE 2 PEA TECHNICAL STUDY
The Company announces updated results for the Phase 2 Preliminary Economic Assessment (the
“PEA”) for an enhanced Phase 2 expansion of its 100%-owned Molo Graphite Mine Project. The
original results were press released on February 28, 2022.
The PEA considers an enhanced Phase 2 expansion consisting of a stand-alone processing plant
with a production capacity of 150,000 tonnes per annum (“tpa”) of graphite concentrate over a 26-
year life of mine (“LOM”). The PEA assumes the Phase 2 processing plant is built adjacent to the
Phase 1 processing plant currently under construction.
The PEA was updated to reflect changes to the processing plant power cost assumptions due to
recent increases in the market price of diesel fuel in Madagascar. The PEA estimated that Phase
2 capital costs will be US$155.8 million (no changes) resulting in a pre-tax NPV utilizing an 8%
discount rate of US$904.8 million (previously US$929.6 million) and a pre -tax IRR of 40.4%
(previously 41.1%), the details of which are set out in the PEA. The original press release included
an incorrect average stripping ratio, which is corrected in the table below with no impact on the
PEA results.
The following is a summary of the economic and operational highlights in the updated PEA that
takes into account the increase in the power cost assumptions , as compared to the previously
released results, and which supersedes the previously released results:
Phase 2 PEA Previous Results
Economic Highlights
Pre-tax Net Present Value (“NPV”) (8% discount rate) (1)(2)(4)(8) US$904.8 million US$929.6 million
Post-tax NPV (8% discount rate) (1)(2)(3)(4)(8) US$593.0 million US$612.6 million
Pre-tax Internal Rate of Return (“IRR”) (1)(2)(4)(8) 40.4% 41.1%
Post-tax IRR (1)(2)(3)(4)(8) 31.4% 32.0%
Life of Mine (“LoM”) 26 years 26 years
Pre-tax payback (1)(2)(4)(8) 3.18 years 3.10 years
Post-tax payback (1)(2)(3)(4)(8) 3.74 years 3.70 years
Capital costs ("CAPEX") including contingency of $31.96 million (2) US$155.8 million US$155.8 million
Operational Highlights
Graphite concentrate sale price (US$ per tonne of concentrate)(8) US$1,230.50 US$1,230.50
Average operating costs FOB (“Opex”)
(US$ per tonne of concentrate following ramp-up)(7) US$495.62 US$479.03
Average annual production of concentrate (5)(6) 150,000 tpa 150,000 tpa
Average ore mined per annum over LoM 2,532,345 tpa 2,532,345 tpa
Average head grade 6.16% 6.16%
Concentrate purity (Cg) of finished product 97% 97%
Average stripping ratio 0.53:1 0.8:1
Average carbon recovery 88.30% 88.30%
(1) Assumes Project is financed with 100% equity.
(2) Capex includes process equipment, civil and infrastructure, mining, buildings, electrical infrastructure, project and construction services.
(3) Assumes 2% government gross revenue royalty, 3% Vision Blue gross revenue royalty, 1.5% NSR royalty and corporate tax rate of 20%.
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(4) Assumes no inflationary adjustments in sales price, or operating costs.
(5) Assumes all mineralized material from the Company’s 2019 Feasibility Study, including ore from the Measured, Indicated and Inferred
Mineral Resource categories, are sent to the treatment plant.
(6) Assumes a cut-off grade of 4.5% carbon has been applied, with all material below this cut-off grade treated as waste.
(7) Assumes all concentrate will be sold on a FOB basis at the Port of Ehoala, Madagascar.
(8) Based on current market prices provided by UK-based commodity price reporting agencies Benchmark Minerals Intelligence and fast
markets.
Breakdown Phase 2 PEA Previous Results
Mining cost (US$ per tonne) US$145.88 US$145.88
Processing cost (US$ per tonne) US$206.75 US$190.15
Transport cost (US$ per tonne)(1) US$133.00 US$133.00
General and admin cost (US$ per tonne) US$10.00 US$10.00
Total operating costs US$495.62 US$479.03
(1) Assumes all concentrate will be sold on a FOB basis at the Port of Ehoala, Madagascar.
The PEA has been filed and is now available on SEDAR (www.sedar.com) and is also available on
NextSource's website at www.nextsourcematerials.com. The PEA was prepared by Erudite
Strategies (Pty) Ltd. (“Erudite”) of South Africa, an independent engineering and consulting firm
specializing in the mining and processing of commodities and battery materials.
The Company cautions that the PEA is preliminary in nature and includes inferred mineral
resources that are considered too speculative geologically to have economic considerations
applied to them that would enable them to be categorized as mineral reserves. Mineral resources
are not mineral reserves and do not have demonstrated economic viability and there is no certainty
that the PEA will be realized.
INITIATION OF PHASE 2 FEASIBILITY STUDY
The Company announces the initiation of a front-end engineering design (FEED) study and
Feasibility Study for the proposed Phase 2 expansion of 150,000 tpa of graphite concentrate that
was considered in the PEA. The Feasibility Study is expected to be completed by the end of 2022.
Upon completion, the Company will analyze the results of the Feasibility Study prior to making a
construction decision.
QUALIFIED PERSONS
The PEA was prepared in accordance with National Instrument 43 -101 standards by Mr. Johann
de Bruin, Pr.Eng, of Erudite Strategies (Pty) Ltd. Please refer to the PEA titled “ Molo Phase 2
Preliminary Economic Assessment ” dated April 27, 2022 filed on the Company’s profile at
www.SEDAR.com.
Mr. Craig Scherba, P.Geo., President and CEO of NextSource, is the qualified person who
reviewed and approved the technical information provided in this press release.
ABOUT NEXTSOURCE MATERIALS INC.
NextSource Materials Inc. is a strategic materials development company based in Toronto, Canada
that is intent on becoming a fully integrated, global supplier of crit ical battery and technology
materials needed to power the sustainable energy revolution.
The Company’s Molo graphite project in Madagascar is one of the largest known and highest -
quality graphite deposits globally, and the only one with SuperFlake® graph ite. Construction of
Phase 1 of the Molo Project is underway, with commissioning expected in Q3, 2022.
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NextSource Materials is listed on the Toronto Stock Exchange (TSX) under the symbol “NEXT” and
on the OTCQB under the symbol “NSRCF".
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”, or “should” occur. Forward -looking
statements include any statements regarding, among others , timing of on -site construction including
completion of the civil and earthworks, timing of the delivery of the processing plant and installation thereof,
delivery and installation of the auxiliary buildings and structures, shipping of all plant infrastructure to site, all
re-assembly and commissioning of the Molo Project, initiation of a Feasibility Study and timing of its
completion, production capacity, NPV, IRR and life of mine of the Molo mine , timing of the FEED Study and
Feasibility Study, 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 stateme nts, 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 t o
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.