Slide 1: Molo Graphite Project, Madagascar
MOLO GRAPHITE PROJECT Madagascar 1 TSX : NEXT OTCQB : NSRC
Slide 2: Forward looking statements
Forward looking statements Safe Harbour: This presenta4on contains statements that may cons4tute “forward looking statements” within the meaning of applicable Canadian and United States securi4es legisla4on. Readers are cau4oned not to place undue reliance on such forward looking statements. Any sta
Slide 3: It's essential. It's complicated. It's a huge opportunity.
IT’S ESSENTIAL. IT’S COMPLICATED. IT’S A HUGE OPPORTUNITY. 3
Slide 4: Flake graphite market = ~500,000 tpa
Flake graphite market = ~500,000 tpa CONSUMER ELECTRONICS REFRACTORIES BATTERIES (GRAPHITE FOILS) #1 #2 #3 65% 16% 10% Majority of demand sIll Ied to tradiIonal steel market Experiencing largest growth Experiencing fastest growth 4
Slide 5: Evolution of graphite's use in lithium-ion batteries
Evolution of graphite’s use in lithium-ion batteries 2006 2016 2020 Li-ion baberies 16% Li-ion baberies 35% 0% 5
Slide 6: Natural graphite's use in Li-ion batteries rising
Natural graphite’s use in Li-ion batteries rising • Amount of natural graphite vs. synthe4c graphite steadily increasing in Li-ion baberies • Almost all synthe4c 10 years ago Source: 2014 Avicenne Energy Babery Report 6
Slide 7: Analyst graphite demand based on battery forecasts
Analyst graphite demand based on battery forecasts 2016 2020 500,000 EVs WOULD DOUBLE CURRENT BATTERY DEMAND FOR GRAPHITE. 0 100000 200000 300000 400000 500000 600000 700000 Tonnes 7
Slide 8: Robust electric vehicle projections
Robust electric vehicle projections Source: Bloomberg New Energy Finance 2017 8
Slide 9: Graphite the most required input for Gigafactories
Graphite the most required input for Gigafactories Tesla Gigafactory 1 in Nevada 42,000 tonnes of graphite anode material required every year at capacity The Gigafactory 1 is expected to require over 42,000 tonnes of graphite anode material, 28,000 tonnes of lithium hydroxide and 5,000 tonnes of cob
Slide 10: Graphite pricing
Graphite pricing The larger the flake size, and higher the purity, the higher the price. 10
Slide 11: Graphite prices (Benchmark Mineral Intelligence)
supplies coming online in Africa. BENCHMARK | DATA 0 ay n g t c b r n g t c b r n g t c b ay M Ju Au Oc De Fe Ap Ju Au Oc De Fe Ap Ju Au Oc De Fe M Although the opening of new operations in Mozambique and NamibiaXJMMdecrease supply GRAPHITE | MAY 2017 2014 REVIEW 2015 2016 2017 dependence on Chinese
Slide 12: Market reality check
MARKET REALITY CHECK The future demand for flake graphite for electric vehicles is very bright, but… • ~65% of graphite consump4on 4ed to tradi4onal steel market • Babery anodes s4ll a small market for natural graphite • Projects can not rely solely on a babery or graphene sales plan • Projects must
Slide 13: Molo Graphite Project, Fotadrevo, Madagascar
Molo Graphite Project Fotadrevo, Madagascar Africa • Ideally located in the southern, arid region of Madagascar • $Billion+ mining projects established in- country, codifying mining laws • Democra4c government views mining as key growth engine and one of the pillars of Madagascar's Ac4on Plan $+8 Bi
Slide 14: 2015 Feasibility Study
2015 Feasibility Study • Posi4ve results at the 4me, but market condi4ons have since changed 2015 Post-tax NPV: 10% discount US$389.8M IRR: 31.2% Payback: 4.84 years Annual Produc4on Graphite: 53,017 t/year 10% of market Life of mine: 26 years CAPEX (excluding Working Capital): $188M Difficult to rais
Slide 15: A brand new approach
A BRAND NEW APPROACH • 18 month value-engineering process undertaken • Iden4fied FULL MODULAR CONSTRUCTION with a 17,000 tpa ini4al produc4on as most cost-effec4ve solu4on • Proven methodology • Designed and built to EU standards • Lowest CAPEX of any junior graphite project : US$18.4M 15
Slide 16: Modular construction - game changer
Modular construction - GAME CHANGER 16
Slide 17: Updated Feasibility Study (2017) - Phase 1
Updated Feasibility Study (2017) - Phase 1 2017 Post-tax NPV: 8% discount US$25.5M IRR: 22% Payback: 4.8 years Annual Produc4on Graphite: 17,000 t/year 3% of market Life of mine: 30 years CAPEX (excluding Working Capital): $18.4M Drama4c reduc4on vs. 2015 FS OPEX (Ex-plant): $433/T OPEX (CIF): $688/
Slide 18: 2-phased approach to production
2-phased approach to production Phase 1: 17,000 tpa mine, 30 yr. mine life Phase 2: Planned expansion to 50,000 tpa using modular approach AccommodaIon AccommodaIon Primary Mill Larger Crushing Circuit Wet Tailings Primary FlotaIon Secondary Mills & FlotaIon Potable H2O Office Office Storage Storage Cla
Slide 19: CAPEX comparison
CAPEX comparison PHASE 2 ESTIMATED CAPEX TO BE 2017 UPDATED FEASIBILITY DETERMINED WITH 2015 FEASIBILITY STUDY STUDY FOR PHASE 1 MODULAR APPROACH US$188M US$18.4M US$?M for for for 53,000 tpa 17,000 tpa 50,000 tpa production capability production capability production capability • Average global pro
Slide 20: Molo differentiators
MOLO DIFFERENTIATORS What sets us apart from other projects. 20
Slide 21: Lowest CAPEX of any competing project
Lowest CAPEX of any competing project CAPEX ($USD) $300,000,000 Actual representaIon of the Molo mine $250,000,000 $200,000,000 $150,000,000 18.4 $100,000,000 $50,000,000 $ million (USD) $- MOLO Focus actual Mason Nouveau estimated Northern Kibaran Magnis Syrah Monde 21 Source: SEDAR.com and respec4
Slide 22: Low operating costs
Low operating costs • Lowest quar4le OPEX on an all-in, CIF basis • Compe44ve with Chinese flake pricing OPEX Port d'Ehola at Fort Dauphin PHASE 1 (detailed engineering) Ex-plant: $433/T CIF Rokerdam: $688/T 22 Source: 2017 Molo FS
Slide 23: Location
Location South Korea EU Japan China India MOLO IS LOCATED WITHIN THE HUB OF TOP PURCHASING AND PROCESSING MARKETS FOR FLAKE GRAPHITE. Molo Deposit Madagascar 23
Slide 24: Size: a very large resource
Size A very large resource. 100.37 million tonnes (MT) measured & indicated Combined Measured & Indicated resource @ 6.3% C, above a 2% C cut-off 40.91 MT inferred Inferred resource @ 5.8% C, above a 2% C cut-off RESOURCES; above a 2% C cut-off RESERVES; above a 4.5% C cut-off • 23.62 Mt) Measured @ 6.3
Slide 25: Scalability
Scalability • Over 300 line kms of con4nuous graphite iden4fied • Immediately at surface 20-40 km 12-15 km 5-10 km MOLO DEPOSIT • 300m x 1500m ADDITIONAL GRAPHITE TRENDS 40-60 km Japan Open along strike and at depth. Mineraliza4on consistent throughout. 40-60 km 25
Slide 26: Ease of extraction
Ease of extraction IMMEDIATELY AT SURFACE • Minimal overburden • Negligible waste-to-ore ra4o (0.81:1) • Very low environmental and social liabili4es Surface graphite visible from the air 26
Slide 27: SuperFlake: very high-quality flake graphite
SuperFlake™ Very high-quality flake graphite. Source: SGS Minerals • 97% - 98% carbon (C) purity achieved with simple flota4on • Excellent thermal expansion coefficient (>500x) for graphite foil applica4ons • Easily upgraded to 99.97% C (babery grade) 27
Slide 28: SuperFlake flake size distribution
SuperFlake™ Excellent flake size distribu4on and average puri4es well above the global average. large/jumbo flake Grade Mesh Size % Distribution % Carbon (t) 78.9% medium/large/jumbo flake +48 (jumbo flake) 23.6 96.9 +65 (coarse flake) 14.6 97.1 21.1% small/fine flake +80 (large flake) 8.2 97.0 +100 (med
Slide 29: SuperFlake verified by end users for all top demand markets
SuperFlake™ is verified by end users for ALL top demand markets 29
Slide 30: Engineering and technical expertise
Engineering and technical expertise Robin Borley Oliver Peters Senior Vice President, Mine Development Pr.Tech Eng Sr. Consultant, Process Engineering PrEng • Former Director of Mining Opera4ons for DRA Global • Head process engineer at SGS Minerals • 25+ years experience building and opera4ng mines
Slide 31: Fast-tracking to mine development: commissioning
Fast-tracking to mine development 2017 2018 Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Financing Procurement Fabrica4on Commissioning Assembly & FAT Transport Site Prepara4on Site Prepara4on Produc4on Timeline based on obtaining mine financing by Sept 1st. ACCELERAT
Slide 32: Fast-tracking to mine development: commissioning
Fast-tracking to mine development 2017 2018 2019 Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Phase 1 (17,000 T/yr) Financing Construc4on Commissioning Assembly & FAT Procurement Fabrica4on Transport Commercial Produc4on Site Prepara4on Ph
Slide 33: The Molo growth plan
The Molo growth plan 2018 2019-2020 Phase 1 Phase 2 60,000 Produc;on/Year (T) 17,000 tpa >50,000 tpa 50,000 40,000 30,000 20,000 10,000 - NS1 NS2 Mason Nouveau Monde Northern NS1 = Phase 1 NS2 = Phase 2 • Posi4ve economics under • Easy expansion as market current market condi4ons demand requires • F
Slide 34: Where we are going
NextSource’s growth plan Where we are going. As a materials company, we will apply our unique modular mine model across other projects and commodi4es. 34
Slide 35: Strong institutional shareholders
Strong institutional shareholders Dundee Resources 19% VR Capital Group 10% JP Morgan Asset Management 8% Investors Group/Mackenzie Financial 5% AGF Mutual Fund Group 3% DRA Global 1% Management 7% 35