TORONTO, Oct. 16, 2018 (GLOBE NEWSWIRE) --
HIGHLIGHTS
- Ten (10) year binding Offtake Agreement signed with a prominent Japanese Graphite Trading Company (“Japanese Partner”) to
purchase 20,000 tonnes per annum of Molo SuperFlake® graphite for use in battery anode applications for electrical vehicles
(“EV”).
- The Japanese Partner is a major supplier of flake graphite to Japan’s largest battery processor and manufacturer of graphite
anode material in lithium ion batteries (“LiB”) for electric vehicle applications. This battery anode manufacturer currently has
over 50 percent market share of premium-grade graphite anode production in Japan for electric vehicle battery applications. Its
EV automotive customers are global.
- Currently, the majority of the Japanese Partner’s flake graphite purchases are used to supply Japanese battery anode
producers for EV applications.
- The major Japanese electric vehicle anode producer has verified that NextSource’s SuperFlake® graphite concentrate achieved
superior test results compared to the current graphite material it sources for LiB in EV automotive applications.
- The Offtake Agreement represents more than the initial Phase 1 mine production plan of 17,000 tonnes per year. As such,
NextSource will begin internal discussions regarding moving straight to Phase 2 expansion tonnages.
- Further significant business opportunities remain between NextSource and its Japanese Partner. Both parties have agreed to
commence discussions regarding potential supply chain collaboration, including partnering on value-added, downstream products
using SuperFlake® graphite concentrate.
- Further opportunities remain available in the Asian and European markets, with NextSource having achieved very advanced
product qualification with other potential partners toward supply agreements.
OFFTAKE AGREEMENT
NextSource Materials Inc. (TSX:NEXT) (OTCQB:NSRCF) (“NextSource” or the “Company”) is pleased to announce the
signature of a binding Offtake Agreement for the supply of NextSource’s SuperFlake® graphite concentrate with a prominent Japanese
Trading Company that is a primary supplier of flake graphite to a major Japanese electric vehicle anode producer. To protect
certain confidential aspects of the Offtake Agreement, the Japanese Trading Company and the Japanese electric vehicle anode
producer have requested not to be identified at this time.
KEY TERMS
The Offtake Agreement is for a period of ten (10) years and activates on the commencement of commercial
production at the Molo project, with an automatic renewal for an additional five (5) years. The Japanese Partner will have the
exclusive right to import and sell SuperFlake® graphite concentrate in Japan. Provided that commercial production commences within
3 years, following the ramp up period, the Japanese Partner will purchase 20,000 tonnes of SuperFlake® graphite per annum. Product
prices will be negotiated on a per order basis between the parties and will be based on the floating market prices (FOB basis)
prevailing in the region.
INTEREST IN ADDITIONAL TONNAGE
The Company has been advised that the primary customer of the Japanese Partner is a major global battery anode
material manufacturer in Japan who has qualified Molo SuperFlake® graphite for battery requirements with its automotive customers.
Additionally, the Company has been advised that product testing by this battery anode material producer has verified that
NextSource’s SuperFlake® graphite concentrate achieved superior test results compared to the current graphite anode material it
sources for use in LiB for EV applications.
The Japanese partner has indicated that all 20,000 tonnes per annum of NextSource’s SuperFlake® graphite
concentrate will be used specifically for use in EV applications, and that the Japanese partner’s intention is to purchase
additional tonnage in various size fractions for specific high-end application markets, such as expanded graphite (graphite foils)
for the consumer electronics and fire retardant industries.
President and CEO, Craig Scherba P. Geo., said “This offtake partnership is a significant achievement for
NextSource and is the culmination of more than four years of extensive product testing of our SuperFlake® graphite with major
Japanese material manufacturers. This offtake agreement allows NextSource to gain an immediate foothold into the high-growth
markets for electric vehicles, as well as the burgeoning energy storage market that will be reliant on graphite anode material. Our
partnership with such an established trading partner positions NextSource to be a significant and dominant future supplier of
high-quality flake graphite to major battery anode and graphite foil customers globally.”
FURTHER PARTNERSHIP & VALUE-ADD OPPORTUNITIES
Separate from the Offtake Agreement, NextSource and the Japanese Partner have agreed to immediately commence
discussions regarding additional supply chain cooperation. Specifically, the parties have initiated discussions regarding a
potential partnership for the production of value-add, downstream products using SuperFlake® graphite concentrate. This would
include, but not be limited to, the processing of NextSource’s SuperFlake® graphite concentrate into spherical and purified
graphite (SPG), both uncoated and coated, and expanded graphite for use in graphite foils in a separate and dedicated facility in a
location that would best optimize the Japanese Partner’s customer base. NextSource and the Japanese Partner have begun organizing
logistics towards meetings this November in Asia.
NextSource has made significant progress qualifying its SuperFlake® graphite concentrate with other major
graphite end-users around the world, who have undertaken extensive product testing as part of their due diligence process for
offtake agreements. The Company looks forward to updating the market on the progress of developments with other potential customers
as soon as details are finalized.
STRONG DEMAND FOR GRAPHITE IN EV APPLICATIONS
Benchmark Minerals Intelligence has reported that natural flake graphite prices for all sizes fractions at 95
percent carbon purity and greater are nearing all-time highs. According to Roskill Information Services, a leading UK-based market
and metals research firm, demand for natural graphite in LiB is expected to grow at 28% per year until 2027. Current global
graphite anode consumption is estimated to be between 90,000 to 110,000 tonnes per year and predicted to reach 800,000 tonnes per
year by 2027.
The spheronizing process when producing graphite anode material is a very inefficient one, with average yields
of between 30 percent and 40 percent. Therefore, it takes approximately three tonnes of natural flake graphite to produce one tonne
of graphite anode material. Today, the largest consumption market for flake graphite is for its traditional use in refractories, a
crucial component in the steel making process. However, the flake graphite market is expected to double by 2025 based on the demand
for LiB in EVs alone, which represents a 40 percent to 45 percent consumption share of flake graphite globally.
ABOUT MOLO SUPERFLAKE® GRAPHITE
As detailed in the Company’s June 2017 Feasibility Study, NextSource’s SuperFlake® graphite concentrate can
achieve 98% carbon purity with standard mineral processing (flotation), has excellent thermal expansion, can be easily upgraded to
99.97% purity (battery grade) and contains no deleterious substances. The SuperFlake® graphite concentrate’s flake size
distribution is well above the global average, with 46.4 percent being classified as the premium-priced +80 (large), +65 (extra
large) and +48 (jumbo) mesh flake size. Specifically 23.6 percent of SuperFlake® graphite concentrate is +48 mesh and greater in
size.
As previously reported, significant independent testing of the pilot plant material already completed by various
key global offtakers and graphite end-users has confirmed that Molo SuperFlake® graphite concentrate meets or exceeds quality
requirements for all major end markets for natural flake graphite - anode material for lithium-ion batteries, refractories and
specialty graphite foils. Molo SuperFlake® has also been verified for graphene ink applications.
ABOUT NEXTSOURCE MATERIALS INC.
NextSource Materials Inc. is a mine development company based in Toronto, Canada, that is developing its
100%-owned Molo Graphite Project in southern Madagascar. The Molo Graphite Project is a feasibility-stage, shovel-ready project
that ranks as one of the largest-known and highest quality flake graphite deposits in the world and the only project with
SuperFlake® graphite.
For further information contact: +1.416.364.4911
Brent Nykoliation, SVP, Corporate Development at brent@nextsourcematerials.com or
Craig Scherba, President and CEO at craig@nextsourcematerials.com
Safe Harbour: This press release contains statements that may constitute “forward-looking statements” within
the meaning of applicable Canadian securities legislation. Readers are cautioned not to place undue reliance on such
forward-looking statements. Forward-looking statements include, but are not limited to, the terms of the Offtake
Agreement, results of the updated 2017 Feasibility Study, any and all product test results and product analysis, any statements
relating to the further partnership and value added opportunities, production at the Molo project, delivery of the material and
pricing terms. These are based on current expectations, estimates and assumptions, and although the Company believes the
expectations expressed in such forward-looking statements are based on reasonable assumptions, actual results or developments may
vary and, in some instances, 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 as a result of new information, future
events or otherwise, except as may be required by applicable securities laws.
