AMN - MADAGASCAR: Offtake agreement for Molo graphite

NextSource Materials has signed a binding offtake agreement for the supply of SuperFlake® graphite concentrate from the Molo project in Madagascar. The agreement is with a prominent Japanese trading company that is a primary supplier of flake graphite to a major Japanese electric vehicle anode producer.

To protect certain confidential aspects of the agreement, the Japanese company and the Japanese electric vehicle anode producer have requested not to be identified at this time.

The agreement is for a period of 10 years and activates on the commencement of commercial production at the Molo project, with an automatic renewal for an additional five years.

The Japanese partner will have the exclusive right to import and sell SuperFlake® graphite concentrate in Japan.

Provided that commercial production commences within three years, following the ramp-up period, the Japanese partner will purchase 20,000 tonnes of SuperFlake® graphite per annum. Product prices will be negotiated on a per order basis between the parties and will be based on the floating market prices (FOB basis) prevailing in the region.

NextSource has been advised that the primary customer of the Japanese partner is a major global battery anode material manufacturer in Japan who has qualified Molo SuperFlake® graphite for battery requirements with its automotive customers.

Additionally, the company has been advised that product testing by this battery anode material producer has verified that NextSource’s SuperFlake® graphite concentrate achieved superior test results compared to the current graphite anode material it sources for use in LiB for EV applications.

The Japanese partner has indicated that all 20,000 tonnes per annum of NextSource’s SuperFlake® graphite concentrate will be used specifically for use in EV applications, and that the Japanese partner’s intention is to purchase additional tonnage in various size fractions for specific high-end application markets, such as expanded graphite for the consumer electronics and fire retardant industries.

NextSource president and CEO Craig Scherba said, “This offtake partnership is a significant achievement for NextSource and is the culmination of more than four years of extensive product testing of our SuperFlake® graphite with major Japanese material manufacturers.

"This offtake agreement allows NextSource to gain an immediate foothold into the high-growth markets for electric vehicles, as well as the burgeoning energy storage market that will be reliant on graphite anode material.

"Our partnership with such an established trading partner positions NextSource to be a significant and dominant future supplier of high-quality flake graphite to major battery anode and graphite foil customers globally.”

Separate from the offtake agreement, NextSource and the Japanese partner have agreed to immediately commence discussions regarding additional supply chain cooperation.

Specifically, the parties have initiated discussions regarding a potential partnership for the production of value-add, downstream products using SuperFlake® graphite concentrate.

This would include, but not be limited to, the processing of NextSource’s SuperFlake® graphite concentrate into spherical and purified graphite (SPG), both uncoated and coated, and expanded graphite for use in graphite foils in a separate and dedicated facility in a location that would best optimise the Japanese partner’s customer base. NextSource and the Japanese partner have begun organising logistics towards meetings this November in Asia.

NextSource has made significant progress qualifying its SuperFlake® graphite concentrate with other major graphite end-users around the world, who have undertaken extensive product testing as part of their due diligence process for offtake agreements.

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