NextSource Materials signs LOI with Hanwa, JOGMEC

Executive Summary

• NextSource Materials has executed a non-binding Letter of Intent (LOI) with Hanwa Co. Ltd. and JOGMEC for a potential $30 million strategic equity investment in Phase 1 of its proposed Battery Anode Facility (BAF) in Abu Dhabi, UAE.
• The investment, structured through a joint special-purpose vehicle, would grant Hanwa and JOGMEC up to a 15% minority equity interest in the project company. The LOI includes an exclusivity period for Hanwa and JOGMEC until March 31, 2026, aligning with the company's target for Final Investment Decision (FID) by the end of Q1 2026.
• The agreement also outlines a broader strategic framework potentially including preferential offtake arrangements, logistics services by Hanwa, and a long-term supply agreement for graphite feedstock from NextSource's Molo mine.

Key Details

• Investment Structure: Hanwa and JOGMEC are jointly considering a project-level equity investment of up to $30 million (U.S.) through a special-purpose vehicle.
• Equity Stake: The investment is anticipated to represent up to 15% equity interest in the UAE BAF project company upon completion of the initial financing for Phase 1.
• Exclusivity: NextSource has agreed not to engage in discussions with other Japanese entities regarding similar investments in the BAF project until March 31, 2026.
• Production Capacity: Phase 1 of the planned UAE BAF is proposed to have an initial production capacity of approximately 14,000 tonnes per annum of natural graphite active anode material, part of a staged strategy targeting total capacity of approximately 30,000 tonnes per annum.
• Strategic Framework: The LOI includes shared interest in preferential Japanese offtake arrangements, distribution and logistics services provided by Hanwa, and a long-term supply agreement for graphite feedstock from the Molo graphite mine.
• Mitsubishi Offtake Agreement Status: NextSource entered a binding multiyear offtake agreement with Mitsubishi Chemical Corp. (MCC) on Aug. 5, 2025, to supply anode active material to a major OEM for the North American EV market.
• Mitsubishi Timeline Delays: Due to delays in securing financing for the UAE BAF, it is unlikely NextSource will meet the original conditions precedent timeline for the Mitsubishi agreement. The company is negotiating a revised timeline with MCC, expecting to reach an agreement within 30 to 45 days.
• Mitsubishi Termination Risk: If the timeline cannot be renegotiated or waived, MCC may terminate the agreement, leaving NextSource without a confirmed offtake partner for the BAF production.
• FID Progress: The company is advancing parallel workstreams, including front-end engineering and design (FEED) with Stantec, aiming for FID by the end of Q1 2026.

Notable Quotes

• "We are excited to advance our discussions on strategic partnership with Hanwa and JOGMEC, two esteemed Japanese organizations with deep expertise in global battery materials and energy security and global market access. This LOI highlights the strategic value of our UAE BAF project in supporting Japan's supply chain objectives and diversifying global anode production and represents a potential cornerstone investment toward securing the project's funding requirements." — Hanre Rossouw, President and CEO