NextSource Materials Secures Binding Agreement for US$30 Million Strategic Investment from Japan's Hanwa and JOGMEC to Advance its UAE Battery Anode Facility

NextSource Materials Inc. (NEXT) has executed a binding Share Subscription Agreement with Hanwa Co. Ltd., a major Japanese trading company listed on the Tokyo Stock Exchange, and JOGMEC, a Japanese government agency under the Ministry of Economy, Trade and Industry. Hanwa and JOGMEC will acquire a 15% equity interest in the UAE Battery Anode Facility (BAF) through a jointly owned investment vehicle, funded by a US$30 million strategic investment that includes their contribution to Phase 1 capital expenditures. NextSource retains 85% of the BAF project company, with the agreed ownership becoming effective upon closing of the subscription.

A Shareholders' Agreement is expected shortly after the SSA to govern rights, obligations, and the funding, development, construction, and operation framework. The proceeds are earmarked as a source of funding for the BAF project. The facility is currently advancing through pre-EPC mobilization, which includes property agreements and approvals, early-works contracts, environmental and permitting processes, long-lead procurement, and personnel hiring. The release frames this activity as staged funding gates following the May 12, 2026 Final Investment Decision.

Next steps include advanced discussions with additional strategic investors regarding a further 35% interest in the UAE BAF project company, as well as progress with potential debt providers following multiple expressions of interest. The release did not disclose the SHA or subscription closing, noting that conditions precedent remain. Information regarding the identity of the further 35% investors, any debt term sheet, updated project timelines for commissioning or production, or updated capital costs was also absent.

NextSource Materials Inc. (NEXT) has converted a previously announced, non-binding letter of intent dated February 3, 2026, into a binding sale and subscription agreement (SSA) on the same headline terms: up to US$30 million for up to 15% of the BAF. The market was already aware of the counterparties, the amount, and the stake. While the binding step de-risks the cornerstone equity, it represents an expected follow-up rather than genuinely new economics.

The elapsed time since the initial letter of intent presents a notable delay. The LOI set exclusivity to March 31, 2026, and management originally targeted a final investment decision (FID) by the end of the first quarter of 2026, with strategic-partner financing expected in early Q4 2026. The FID slipped to May 12, 2026, and the binding SSA landed on September 28, 2026, roughly eight months after the LOI and beyond the original Q1 FID window. Management has a pattern of announcing milestones ahead of the timeline on which they actually land; the Mitsubishi offtake timeline already had to be extended once to July 31, 2027.

Regarding size versus need, Phase 1 BAF capital expenditure was estimated at US$150.2 million in the October 2025 study. The US$30 million of project equity for 15% covers roughly 20% of Phase 1 capex and does not close the funding gap on its own.

Attributable-economics dilution is a significant factor. The October 2025 BAF study, which modeled post-tax NPV at approximately US$441.8 million and an IRR of 24.2%, was based on 100% ownership. With 15% now sold and a further 35% under discussion, NextSource could be left with approximately 50% of the BAF. This would halve the attributable NPV to roughly US$220 million on the study's own numbers, before any debt. While this remains meaningful versus a ~C$64 million market cap, shareholders should not be anchored to the 100%-ownership headline NPV.

The agreement serves as a positive but incomplete validation of the "non-China anode supply chain" thesis, as a binding cornerstone equity partner with Japanese government backing improves the odds of closing debt. However, the SSA itself is not the financing close. The shareholders' agreement (SHA) is still pending, debt remains in "discussions," and the further 35% is still in "advanced discussions."

There is no takeover, no M&A of the company, and no first-time strategic shareholder arriving without prior disclosure, as the Hanwa/JOGMEC relationship was telegraphed in February. There is no established change to market cap.

NextSource Materials Inc. (TSX:NEXT; OTCQB:NSRCF), a Toronto-based battery-materials company, is pursuing a vertically integrated strategy that combines graphite mining with downstream anode processing. Its flagship upstream asset is the Molo Graphite Mine in south-west Madagascar, which produces SuperFlake® concentrate. The mine is currently operating in campaign production mode with a nameplate capacity of approximately 11,000 tonnes per annum (tpa), featuring modular expansion potential to 150,000 tpa.

On the downstream side, the company is developing the UAE Battery Anode Facility (BAF) in the Industrial City of Abu Dhabi (ICAD). Phase 1 targets 14,000 tpa of anode active material (AAM), with a staged rollout planned to reach approximately 30,000 tpa, comprising 10,000 tpa of processed flake graphite (PFG), 16,000 tpa of spherical graphite (SPG), and 4,000 tpa of coated spherical graphite (CSPG). An October 2025 technical and economic study outlined financial metrics assuming 100% ownership, which is no longer the company's plan. The study projected total capital expenditure of US$291 million, with US$150.2 million allocated to Phase 1. It estimated a post-tax net present value (NPV) of approximately US$441.8 million, an internal rate of return (IRR) of roughly 24.2%, revenue of approximately US$195.5 million, and EBITDA of approximately US$75.6 million at full production.

Beyond its core graphite operations, NextSource holds non-core assets in Madagascar, including the Green Giant+ vanadium project and the Fotadrevo mineral sands project. The company has also secured several commercial agreements. These include a multi-year offtake agreement with Mitsubishi Chemical for approximately 9,000 tpa of AAM to a North American electric vehicle (EV) original equipment manufacturer (OEM), with the timeline extended to July 31, 2027. Additionally, NextSource has a 10-year sales agreement with thyssenkrupp Materials Trading for up to 35,000 tpa of SuperFlake®, as well as a further 10-year agreement with a Japanese trading partner for up to 20,000 tpa of SuperFlake®. In February 2026, the company signed a non-binding letter of intent with a second, unnamed major Japanese anode producer.