NextSource, Japanese anode material producer enter LOI

Executive Summary

• NextSource Materials Inc. has executed a non-binding Letter of Intent (LOI) with a major, unnamed Japanese anode material producer to supply anode active materials (AAM) for electric vehicle batteries.
• The LOI establishes a framework for two concurrent, multi-year supply agreements starting in 2027, covering multiple grades of AAM produced at NextSource’s proposed facility in Abu Dhabi, UAE.
• Combined with an existing binding offtake agreement with Mitsubishi Chemical Corp. for 9,000 tonnes per annum (tpa), these potential agreements would fully utilize and exceed the Phase 1 production capacity of 14,000 tpa of the UAE Battery Anode Facility (BAF).

Key Details

• Counterparty: A prominent, well-established Japanese chemical company with global operations in advanced battery materials (identity confidential due to confidentiality requirements).
• Product: Anode Active Materials (AAM) for electric vehicle batteries.
• Facility: Production to occur at NextSource’s proposed battery anode facility in Abu Dhabi, United Arab Emirates.
• Timeline: Supply agreements are expected to start in 2027.
• Volume/Capacity Impact:
  • Existing binding agreement with Mitsubishi Chemical Corp.: 9,000 tpa.
  • Potential new agreements under LOI: Combined with Mitsubishi, these would utilize and exceed the Phase 1 capacity of 14,000 tpa.
• Pricing Structure: Market-linked mechanism; final specifications and terms to be defined in definitive agreements.
• Status: The LOI is non-binding and subject to successful completion of final technical qualification and execution of definitive term sheets.
• Context: This follows a lengthy technical evaluation and qualification process where NextSource's products were assessed for suitability in the producer's supply chain. It follows a previous announcement of a binding multi-year offtake with Mitsubishi Chemical Corp.

Notable Quotes

• "This LOI represents another important step in building a portfolio of long-term commercial relationships with globally recognized battery materials players, and is another significant endorsement from the Japanese battery supply chain, which is recognized for its stringent quality standards. Following the successful validation of our anode products, this offtake partnership further derisks our UAE battery anode facility and demonstrates the clear market demand for our sustainably produced, vertically integrated graphite products." — Hanre Rossouw, President and CEO