NextSource Materials Secures Strategic Investment Led by Sir Mick Davis to Fully Fund Construction of Molo Mine in Madagascar
NextSource Materials Secures Strategic Investment Led by Sir Mick Davis to Fully
Fund Construction of Molo Mine in Madagascar
HIGHLIGHTS
• Vision Blue Resources Ltd, a newly created battery commodity/resource-focused
investment company founded by Sir Mick Davis (former CEO of Xstrata Plc), has
committed to a strategic investment in NextSource Materials to fully fund the
construction of its Molo graphite mine in Madagascar
• Financing Package for total gross proceeds of US$29.5M as follows:
o US$6.1M equity private placement to close prior to end of February
o US$12.4M equity private placement to close following shareholder approval
o US$11.0M in non-dilutive royalty financing
• Proceeds to be used to bring the Molo mine into production with targeted completion in
first half of 2022
• Proceeds to be further used to fast-track completion of two technical studies to confirm
the capital and operating costs for the next phase of mine expansion, and construct a
value-added graphite processing plant to produce SPG (spheronized, purified graphite)
for lithium-ion batteries in electric vehicles
• Construction of the Molo mine to commence imminently following the closing of the
first private placement with ordering of the longer lead items for the mine processing
plant
• Vision Blue granted a "Right of First Refusal" to provide financing for the expansion
plan of the Molo mine
• Sir Mick Davis to be appointed Chairman of NextSource Materials upon Closing of the
initial private placement
TORONTO, ON / ACCESSWIRE / February 8, 2021 / NextSource Materials Inc.
(TSX:NEXT)(OTCQB:NSRCF) ("NextSource" or the "Company") is pleased to announce that it
has entered into a binding agreement with Vision Blue Resources ("Vision Blue"), a private
investment company created and led by Sir Mick Davis, former CEO of Xstrata Plc, to provide a
financing package (the "Financing Package") for total gross proceeds of US$29.5M. The
proceeds of the Financing Package will be used to bring the Company's Molo graphite mine in
Madagascar into full production, with targeted completion in the first half of 2022.
Sir Mick Davis commented,
"This investment in NextSource underlines our belief that the massive secular change in demand
for critical battery material resources is not being met by an appropriate supply side response,
largely as a result of capital constraints. Vision Blue's investment into NextSource is aligned
with our strategy to assemble a portfolio of strategically significant investments in high-quality,
responsibly managed and proven battery material mining assets.
We view NextSource's Molo project as one of the best graphite assets globally and well-
positioned for significant upside in growth and value due to the impressive strategic partnerships
they have forged.
Our initial investment is just the first in unlocking Molo's potential and it is our intention to help
create a major battery materials producer on a global scale. We are pleased to support its
growth to realise its value for all investors and stakeholders."
Craig Scherba, President and CEO of NextSource commented,
"We are delighted that Sir Mick has chosen NextSource and our Molo project as Vision Blue's
flagship graphite asset. Vision Blue's investment will enable us to move toward full production
by mid-2022, and to accelerate our strategic battery anode development plans with our industry-
leading partners. Vision Blue's involvement as our major strategic shareholder, coupled with the
potential of our Molo graphite project, firmly positions NextSource to quickly become a
significant market disruptor in the burgeoning battery materials market."
About Sir Mick Davis
Sir Mick Davis has extensive capital markets and corporate transactions experience. During his
career, he has raised almost US$40 billion from global capital markets and completed over
US$120 billion of corporate transactions.
• Former CEO and founder of Xstrata Plc, an Anglo-Swiss multinational mining company
until its merger with Glencore Plc in 2013
• Former CFO of Billiton Plc and Chairman of Billiton Coal
• Founder and former partner at X2 Resources, a $5.6 billion mining investment fund
• Former Executive Director of South Africa's electricity utility Eskom
• Extensive capital markets and corporate transactions experience
• Raised almost US$40 billion from global capital markets and completed over US$120
billion of corporate transactions, including the creation of the Ingwe Coal Corporation in
South Africa; the listing of Billiton on the LSE; the merger of BHP and Billiton; as well
as numerous transactions at Xstrata culminating in the sale to Glencore
• 40+ years of experience in the Mining, Industrial and Natural Resources sectors and
engagement at governmental and operational levels
The Initial Private Placement
The US$29.5 million Financing Package will fully fund construction of the Molo Graphite mine
and will be completed in two tranches. The first tranche comprises an initial non-brokered,
private placement equity investment of US$6.1 million (C$7.8 million) (the "Initial Private
Placement") through the issuance of 120,000,000 common shares of the Company at a price of
C$0.065 per share representing an approximate 16.7% equity ownership into NextSource.
Completion of the Initial Private Placement is subject to customary conditions. In connection
with the Initial Private Placement, the Company has granted Vision Blue certain rights, subject to
maintaining certain shareholding thresholds, including the right to appoint two directors to the
Board of the Company, inclusive of Sir Mick Davis, who will be appointed Chairman of the
Board at the time of closing of the Initial Private Placement. In addition, Vision Blue has been
granted a right of first refusal to finance the expansion of the Molo Project as well as a right to
participate in future equity financings on the same terms as such financing in order to maintain
its ownership percentage in the Company.
Construction to Commence Imminently with Fast Tracking of Expansion Studies
The proceeds of the Initial Private Placement of approximately US$6.1 million will allow the
Company to immediately commence the construction phase of the Molo mine through the
ordering of longer lead items for the processing plant and to fast track the completion of two
technical studies. The studies will be commissioned in order to confirm the capital and operating
costs for the next phase of mine expansion, and to construct a stand-alone, value-added graphite
plant to produce spherical and purified graphite ("SPG") for lithium-ion batteries in electric
vehicles ("EVs").
The Company expects that the Initial Private Placement will close prior to the end of February
2021.
Second Private Placement
The second tranche of the Financing Package will be completed through an additional private
placement (the "Second Private Placement") of 232,142,857 units of the Company (the "Units")
for additional gross proceeds of US$12.4 million. Each Unit will be issued a price of C$0.07 per
Unit (subject to adjustment based on the US exchange rate) and will be comprised of one
common share of the Company and one common share purchase warrant (a "Warrant"). Each
Warrant will entitle Vision Blue to purchase one additional common share of the Company at a
price of C$0.10 per share for a period of two years following the closing of Second Private
Placement. On completion of the Second Private Placement, Vision Blue will own approximately
37.0% of the issued and outstanding common shares of NextSource, or approximately 49.4% on
a partially diluted basis, based on the current issued and outstanding common shares.
The securities acquired by Vision Blue will be subject to a 1-year lock-up from the closing of the
Initial Private Placement with a periodic release schedule, which lock-up will terminate if the
Second Private Placement does not occur for any reason. In addition, each of the Directors and
Officers of the Company have agreed to similar lock-up periods for the securities that they hold.
The Second Private Placement is subject to the approval of a majority of the shareholders of the
Company in accordance with the policies of the Toronto Stock Exchange at a special shareholder
meeting (the "Special Meeting"). The Officers and Directors of the Company have entered into
voting undertaking agreements pursuant to which each have agreed to vote in favour of the
resolution at the Special Meeting. The Company will schedule the Special Meeting shortly and
will issue a further news release announcing the details of the Special Meeting once finalized.
Completion of the Initial Private Placement and the Second Private Placement is subject to
receipt of all necessary regulatory approvals including the approval of the Toronto Stock
Exchange.
The Royalty
The parties have also entered into a secured royalty agreement (the "Royalty Agreement")
pursuant to which Vision Blue will advance, subject to the satisfaction of certain conditions, a
total of US$11 million in exchange for a royalty in respect of sales of SuperFlake® graphite
concentrate from the Molo Graphite Project.
Under the term of the Royalty Agreement, the Company will pay to Vision Blue the greater of:
(i) US$1.65 million or (ii) 3% of the gross revenues from SuperFlake® sales (the "GSR"). Once
Vision Blue has received a cumulative royalty payment of US$16.5 million, the GSR will be
calculated as 3% of the gross revenues from the Company's SuperFlake® sales. NextSource will
have the option at any time to reduce the GSR to 2.25% upon payment to Vision Blue of US$20
million.
In addition, NextSource will pay to Vision Blue 1.0% of the gross revenues from sales of
vanadium pentoxide ("V2O5") for a period of 15 years following commencement of production
of V2O5.
Vision Blue will receive a 5% (US$1.5 million) financing fee on the total US$29.5 million
investment, equating to US$28 million in total net proceeds to NextSource. The financing fee
will be payable only when the royalty financing is provided by Vision Blue.
About Vision Blue Resources
Vision Blue was founded in December 2020 by Sir Mick Davis to identify and capture
opportunities in battery and technology minerals linked to EV & Grid Storage growth.
Vision Blue targets companies in established mining jurisdictions, with well-advanced and best-
in-class battery material assets that are scalable and can be brought into production rapidly.
Vision Blue aims to work with existing management teams to provide critical growth capital,
technical support, experience in securing future finance, and ultimately the delivery of an exit
strategy. Where possible, Vision Blue utilises a phased development approach based upon self-
financed expansion to achieve large scale revenue and cash flows across the entire battery
materials vertical supply chain. For further information about Vision Blue visit their website at
www.vision-blue.com.
About NextSource Materials Inc.
NextSource Materials Inc. is a battery materials development company based in Toronto, Canada
that is preparing to begin construction of its 100%-owned Molo Graphite Project in southern
Madagascar. The Molo Graphite Project is a fully permitted and funded project that hold a large
high quality flake graphite deposit and is the only project with SuperFlake® graphite.
The Company will utilise an all-modular build approach to constructing the Molo mine. Initial
production is expected to be 17,000 tonnes per annum ("tpa") over the first two years of
production followed by mine expansion in Year three. Offtakes are in place for more than 100%
of initial production.
For further information about NextSource visit our website at www.nextsourcematerials.com or
contact us a +1.416.364.4911 or email Brent Nykoliation, Executive Vice President, Corporate
Development at [email protected] or email Craig Scherba, President and CEO at
Safe Harbour: This press release contains statements that may constitute "forward-looking
information" or "forward-looking statements" ("forward-looking statements") within the
meaning of applicable Canadian and United States securities legislation. Readers are cautioned
not to place undue reliance on such forward-looking statements. Forward-looking statements in
this release include statements regarding the funding of the Molo Project, closing of the various
tranches of the Financing Package, draw down on the Royalty Agreement, shareholder approval
in respect of the Second Private Placement, construction of the Molo project and SPG plant,
completion of the technical studies and expansion of the Molo Graphite Project. 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, including the risk that the conditions to the Second Private
Placement are not met, including as a result of the failure to get shareholder approval. 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 as a result of new information, future events or
otherwise, except as may be required by applicable securities laws.
SOURCE: NextSource Materials Inc.