NextSource Materials Secures Partnership with Major Electric Vehicle Supply Chain to Build Battery Anode Facility (NSRCF)

NEWS RELEASE – TORONTO, April 12, 2021 

• Three-way partnership pairs NextSource with a leading processor and a supplier of battery  anode material within the Tesla supply chain. 

• Provides NextSource with a complete, turn-key facility that is a duplicate of the current facilities  that are processing spheronized and purified graphite (SPG) for lithium-ion batteries (“LiB”) by current suppliers to Tesla and other electric vehicle (“EV”) and hybrid vehicle (“HEV”)  manufacturers. 

• Enables NextSource to gain immediate access to leading and established spheroidization  technology intellectual property. As a result, the time required for final QA/QC of its  SuperFlake® graphite with other automotive manufacturers can be significantly reduced  

• Commissioning of the battery anode facility is targeted for Q4 2022. 

• Partnership is exclusive to NextSource and can provide automotive manufacturers a complete  and proven anode solution using non-Chinese sourced feedstock or value-added anode  material. 

• NextSource is well positioned to become a significant strategic supplier of battery anode  material for the electric vehicle revolution, providing a fully integrated graphite product from  “the mine to the car”.  

NextSource Materials Inc. (TSX:NEXT) (OTCQB:NSRCF) (“NextSource” or the “Company”) is  pleased to announce it has finalized a binding agreement (“the Partnership”) to construct and  operate a value-added, battery anode facility (“BAF”) to produce spheronized and purified graphite  (“SPG”) required in lithium-ion batteries for electric vehicle (“EV”) and hybrid vehicle (“HEV”)  applications. 

The Partnership is exclusive to NextSource and pairs the Company with two well-established and  leading companies that process and supply SPG to leading Japanese anode and battery makers,  who in turn supply the Tesla supply chain and other major automotive companies (“OEMs”).  

This three-way Partnership will provide NextSource with a complete, turn-key anode facility that is  an exact duplicate of the facility that is currently processing value-added spheronized and purified  graphite for lithium-ion batteries by one of current suppliers to Tesla and other international OEMs.  

Commissioning of the BAF is targeted for Q4 2022 and will be located proximal to key demand  markets for graphite anode material. South Africa, Europe and North America are the jurisdictions  currently being considered for the location of the facility. 

Sir Mick Davis, Chairman of NextSource commented,  

“This collaboration is part of NextSource’s downstream growth plan and partners the Company with  prominent and established processors and suppliers of graphite anode material to the Tesla supply  chain and other global automotive OEMs. NextSource is well positioned to be a significant strategic supplier of high-quality flake graphite to major battery anode customers globally, while 

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simultaneously gaining an immediate foothold into the high-growth markets for EVs, as well as the  burgeoning energy storage market that will be reliant on graphite anode material.” 

President and CEO, Craig Scherba P. Geo., commented,  

“With our Molo project fully financed and commissioning of the Molo mine expected in March of the  next year, this partnership fulfils our strategy of having upstream integration supporting the battery  anode facility at any scale the market may require. This gives NextSource the enviable “pole  position” in the battery race to have a fully commercial and vertically intergraded graphite  operation.” 

THE TESLA SUPPLY CHAIN PARTNERS 

The Partners consist of NextSource’s Japanese offtake partner (“Japanese Partner”) and the  Japanese Partner’s Chinese SPG processing partner (“Chinese Partner”).  

The Japanese Partner is a prominent Japanese trading company who is a major supplier of SPG  for anode material in lithium-ion batteries for EV and HEV applications. It currently supplies graphite  anode material to the majority of Japanese automotive OEMs and the Tesla supply chain.  

The Chinese Partner is a leading processor of SPG for the EV and HEV markets who owns and  operates graphite anode processing facilities in China. This Chinese Partner is regarded by OEM  anode producers to be a best-in-class processor and one of the highest quality suppliers of SPG  globally. 

The Japanese and Chinese Partners have had an alliance together for over 30 years and have  been processing battery-grade graphite for over 15 years. To protect certain confidential aspects  of the Partnership, the Partners have requested not to be identified at this time. 

Since 2018, all three parties have been in discussions regarding a potential supply chain  partnership to supply value-added graphite material using SuperFlake® graphite concentrate. As  announced in April 2020, Letter of Intent was signed by all parties to collaborate on the construction  of a battery anode facility that would mirror the Partners’ current SPG processing facility in China  in order to provide OEMs the growing desire for optionality in sourcing both graphite concentrate  feedstock and anode material from outside of China. 

COLLABORATION DETAILS  

• NextSource will be responsible for the sourcing of all funds needed to construct the BAF and  will wholly own and operate the facility. 

• The Chinese Partner will act as the technical partner and provide NextSource with a complete,  turn-key BAF operation that is a duplicate of the facilities it currently operates in China that is  producing SPG for the Tesla supply chain. It will price, design and source all required graphite  processing equipment, design and develop the process flowsheets, and provide all required  training and operational know how related to the production of anode material. It will receive a  3% licencing fee based on the total annual sales value of anode material sold. 

• The Japanese Partner will utilize its network with OEMs and act as NextSource’s exclusive  agent in the sales, marketing and trading of anode material to OEM anode suppliers and to  OEMs directly. It will receive a 5% sales commission based on the total annual sales value of  anode material sold. 

• Both the Japanese and Chinese Partners will participate in the development of 5-year business  plans related to the expansion of the BAF.

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The Company will finalize targeted initial production volumes for the BAF as well as plant designs,  equipment list and total capital costs for the BAF by the end of May 2021. The Company will then  initiate a technical study to determine the associated operating cost (“OPEX”) based on each of the  proposed locations. 

ABOUT SUPERFLAKE® GRAPHITE  

As announced in November 2015, independent testing by various third-party end users of flake  graphite confirmed that NextSource’s SuperFlake® graphite meets or exceeds quality  requirements for all major end-markets for natural flake graphite. The major end-markets are  refractories, anode material for lithium-ion batteries, specialty graphite foils used as essential  components in the chemical, aeronautical and fire-retardant industries, and graphene in high-end  ink and substrate applications.  

As detailed in the Molo 2019 Feasibility Study, SuperFlake® graphite concentrate can achieve 98%  carbon (C) purity with simple flotation, has excellent thermal expansion, can be easily upgraded to  99.97% purity (battery grade), contains no deleterious substances and has high crystallinity.  

SuperFlake® graphite concentrate has excellent flake size distribution that is well above the global  average, with 46.4 percent being classified as +80 (large), +65 (extra large) and +48 (jumbo) mesh  in flake size. Specifically, 23.6 percent of SuperFlake® graphite concentrate is +48 mesh and  greater in size. 

SuperFlake® is a registered trademark in the United States, Canada, Japan, South Korea, U.K.  and the European Union. These key jurisdictions represent the top demand markets for flake  graphite and the locations where NextSource intends to sell its SuperFlake® graphite and anode  material. 

ABOUT NEXTSOURCE MATERIALS INC. 

NextSource Materials Inc. is a battery materials development company based in Toronto, Canada that is intent on becoming a fully integrated, global supplier of critical battery and technology  materials needed to power the sustainable energy revolution.  

Targeting commercial production by April 2022, the Company’s Molo graphite project in  Madagascar is regarded as one of the largest and highest-quality graphite deposits globally and  the only project with SuperFlake® graphite. 

With expected low-cost operations and both its mining and environmental licenses in place,  NextSource Materials has forged strategic and exclusive partnerships with key supply chain  participants to provide graphite-based anode material to international OEMs for lithium-ion and fuel  cell applications, and graphite for high-end, value-added applications where graphite is an essential  material. 

The Company will enter into production in phases and utilize an all-modular build approach to  construct the Molo graphite mine. Initial production is expected to be approximately 17,000 tonnes  per annum (“tpa”) over the first two years of production, followed by a significant expansion in  production planned in year three to match market demand. 

NextSource Materials is listed on the Toronto Stock Exchange (TSX) under the symbol “NEXT” and  on the OTCQB under the symbol “NSRCF” 

Please see “Molo Feasibility Study, National Instrument 43-101 Technical Report on the Molo  Graphite Project located near the village of Fotadrevo in the Province of Toliara, Madagascar  Prepared by Erudite Strategies (Pty) Ltd” dated May 31, 2019 for certain other details and 

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assumptions relating to the parameters of the project, mineral resource and reserve estimates and  data verification procedures.  

Mr. Craig Scherba, P.Geo., President and CEO of NextSource, is the qualified person who  reviewed and approved the technical information provided in this press release. 

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 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 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 collaboration  agreements to build a value-added SPG (anode) facility, time to commissioning the BAF, the demand for EVs  and HEVs, the use of SuperFlake, , successful and on-budget construction of the Molo Graphite Project, SPG  plant and BAF, sourcing the funds needed to construct the BAF, expansion of the BAF, estimated future  production from the Molo Graphite Project, 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 Molo graphite mine is not built on the expected time and cost  estimates, that the mineral reserve and resource estimates for the Molo Graphite Project are incorrect, that  expected recoveries and costs to produce SPG are incorrect, and that permits and licences to operate the  Molo Graphite Project may not be renewed or may be revoked. 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.