NextSource Materials Inc 6-K, filed Mar 4, 2021
NextSource Materials Inc. (NSRCF)
6-K
2021-03-04
For: 2019-09-27
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Added on
April 12, 2026
About this 6-K
NextSource Materials Inc filed this 6-K on March 4, 2021.
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 or 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
For the
month of September,
2019
Commission
File Number 000-51151
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NEXTSOURCE MATERIALS INC.
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(Translation
of registrant’s name into English)
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1940-130 King Street West
Toronto, Ontario, Canada
M5X 2A2
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(Address
of principal executive office)
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Indicate
by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F
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Form
20-F
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☒
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Form
40-F
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☐
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Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule
101(b)(1):
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Yes
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☐
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No
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☒
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Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule
101(b)(7):
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Yes
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☐
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No
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☒
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Exhibits
Press release dated
September 27, 2019 announcing the release of a new feasibility
study.
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Dated:
March 4, 2021
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NEXTSOURCE MATERIALS INC.
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/s/
Marc Johnson
Marc
Johnson
Chief
Financial Officer
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Exhibit
99.1
NextSource
Materials Releases New Feasibility Study Incorporating Phased
Buildout in Preparation of Mine Financing
HIGHLIGHTS:
●
The 2019
Feasibility Study (“FS”) outlines a phased development
approach with Phase 1 producing 17,000 tonnes per annum
(“tpa”) over the first two years of production and
Phase 2 producing a total of 45,000 tpa by year 3.
●
Over the modelled
life of mine (30 years), the production plants will have a pre-tax
internal rate of return (“IRR”) of 43.1%, and a
post-tax IRR of 36.2%. The pre-tax Net Present Value
(“NPV”) at 8% discount rate will be US$237.1M, and the
post-tax NPV will be US$184.3M.
●
The capital mine
cost (“CAPEX”) for Phase 1 will be US$21.0M with Phase
2 CAPEX being an additional US$39.1M, for a total project cost of
US$60.1M.
●
Both phases will
utilize the Company’s unique, fully modular build approach,
which greatly reduces build time and associated costs in relation
to conventional mine construction.
TORONTO, Sept. 27,
2019 -- NextSource Materials Inc. (TSX:NEXT) (OTCQB:NSRCF)
(“NextSource” or “the Company”), is pleased
to report the results of its 2019 Feasibility Study for its
100%-owned Molo Graphite Project in southern Madagascar. The FS
takes into account updated mine capital equipment and mining costs,
as well as current 12-month rolling flake graphite pricing on a FOB
China basis, supplied by UK-based battery mineral commodities
research firm, Benchmark Minerals Intelligence.
The FS
was based on a Front End Engineering and Design study
(“FEED”), and subsequent Detailed Engineering studies.
The FS incorporates the procurement of all mining equipment,
off-site modular fabrication and assembly, factory acceptance
testing, module disassembly, shipping, plant infrastructure
construction, onsite module re-assembly, commissioning, project
contingencies and working capital. All capital and operating costs
expressed for Phase 1 are considered to be accurate to +/- 10%, and
accurate to +/- 12.5% for Phase 2.
In
order to ensure that the Company maintains a first-mover
competitive advantage over the competition and to appropriately
plan for future market demand, the FS was designed to provide a
flexible mine development approach that comprises a unique,
all-modular build solution yielding optimal cashflow and return
metrics with suitable flexibility to enable a rapid response to the
anticipated market demand for graphite.
As
previously reported to the market, the Company has an off-take
agreement in place with a prominent Japanese trader, whom is a
major supplier of flake graphite to Japan’s largest
battery
processor and
manufacturer of graphite anode material in lithium ion batteries
(“LiB”) for electric vehicle applications. NextSource
is currently in the process of formalizing an additional sales
agreement with a leading European trader. As such, the FS was
undertaken to include two phases in order to account for
off-takers’ demand for NextSource’s SuperFlake®
graphite concentrate.
PHASE
1: Production of 17,000 tpa
●
The first phase of
production will consist of a fully operational and sustainable
graphite mine with a permanent processing plant capable of
processing 240,000 tpa of ore and producing approximately 17,000
tpa of high-quality SuperFlake™ graphite
concentrate.
●
The updated build
cost of the fully modular process plant marginally increased from
the US$18.4 million reported in the 2017 FS to US$21.0M due to
equipment cost inflation.
PHASE
2: Production Expansion to 45,000 tpa in Year 3
●
Phase 2
incorporates the processing of 240,000 tpa of ore (producing 17,000
tpa of SuperFlake® concentrate) for the first two years of
operation and then ramping up to 720,000 tpa of processed ore in
the third year to accommodate additional sales, resulting in a
total of 45,000 tpa of SuperFlake® concentrate being produced
for a mine life of 30 years.
●
The costing for
Phase 2 is based on the addition of two modules of the
beneficiation plant with a proportional increase in mining and
infrastructure costs.
●
The capital mine
cost for Phase 2 (with contingency) will be US$39.1M, for a total
project cost (Phase 1 and Phase 2 with contingency) of
US$60.1M.
FS
RESULTS SUMMARY
●
The Phase 1
production plan of 17,000 tpa of finished SuperFlake®
concentrate for the first two years of production followed by a
ramp-up to Phase 2 production of 45,000 tpa yields the following
financial metrics.
|
Description
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Phase 1 and 2
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Pre-Tax
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Post-Tax
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Post-tax: NPV (8%
Discount Cash Flow)(1)(2)
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$237.1m
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$184.3m
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Post-tax: IRR
(1)(2)
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43.1%
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36.2%
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Payback
(2)
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3.4
years
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3.8
years
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Capital
cost ("CAPEX")
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$60,082,340
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Owners
Contingency
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$6,670,430
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On-site
Operating Costs ("OPEX") per tonne of concentrate, (year 3
onward)
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Mining
$82.69
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On-site
Operating Costs ("OPEX") per tonne of concentrate, (year 3
onward)
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Processing
$270.27
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Transportation per
tonne of concentrate (from mine site to Madagascar Port year 3
onward)
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$133.01
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Average
annual production of concentrate
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45,136
tonne
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Life of
Mine ("LOM")
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30
years
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Graphite
concentrate sale price (US$/tonne at Start Up - 2017)
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$1,208
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Average
Head Grade
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7.1%
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Average
ore mined per annum over Life of Mine
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720,000
tonne
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Average
stripping ratio
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0.53:1
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Average
carbon recovery
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88.30%
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(1)
Assumes Project is financed with 100% equity. Unless otherwise
noted, all monetary figures presented throughout this press release
are expressed in US dollars (USD).
(2)
CAPEX includes process equipment, civil &
infrastructure, mining, buildings, electrical infrastructure,
project & construction services. Values shown are based
on real graphite sales pricing
CAPEX
Summary
|
Capital
Cost Breakdown
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Phase
1 (240ktpa)
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Phase 2 (720ktpa)
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Process
Equipment
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$8,438,609
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$25,315,827
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Civil
& Infrastructure
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$2,103,672
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$6,661,016
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Tailings
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$0.00
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$0.00
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Mining
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$2,574,143
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$4,913,341
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Buildings
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$1,154,609
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$2,886,523
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Electrical
Infrastructure
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$128,804
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$386,412
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Project
Services/EPCM
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$931,481
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$2,794,445
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Construction
Services
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$1,474,775
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$3,686,937
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Indirect
Costs
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$372,750
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$1,118,250
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Environmental &
Permitting costs
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$729,827
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$1,459,655
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Owner's
Costs
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$1,197,000
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$4,189,500
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Sub-total
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$19,105,673
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$53,411,909
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Contingency (10%/12.5%)
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$1,910,567
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$6,676,488
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3
Months Working Capital
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$3,100,000
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$7,300,000
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CAPEX TOTAL
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$24,116,241
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$67,388,398
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Sustaining CAPEX over Life of Mine
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$3,300,000
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OPEX
Summary
●
Discussions with
off takers have indicated their preference is to purchase Molo
graphite concentrate at the local Madagascar port at freight on
board (FOB) China prices. As such, FS Operating costs
(“OPEX”) include the all-in FOB cost to ship Molo
SuperFlake® concentrate to the local port of Fort
Dauphin.
|
Category
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Phase
1
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Phase
2
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Operating
cost
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Mining
(US$/T)
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102.81
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65.34
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Processing
(US$/T)
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265.82
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265.82
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Trucking to local
port / Ft. Dauphin (US$/T)
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133.01
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133.01
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General
and Administration (US$/T)
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64.29
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50.00
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TOTAL
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$565.93
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$514.17
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Craig
Scherba, P.Geo., President and CEO of NextSource
commented,
“Our Feasibility Study will greatly assist us in our current
discussions with mine financiers, and reconfirms to the market the
economic viability of the Molo project under current market
conditions. Our all-modular build strategy has low capital and
operating costs, and a rapid build time. With our phased build-out,
this will allow our graphite to be easily absorbed into the current
market while maintaining NextSource’s flexibility and
competitive advantage to quickly penetrate the market and generate
revenue, establish strong relationships with as many key buyers as
possible, and verify our product for highly technical markets with
production-run material.”
PROVEN AND PROBABLE MINERAL RESERVES
(1)
The
Mineral Reserves and Mineral Resources did not change as a result
of the FS. As disclosed in the Company’s 2015 Molo FS, the
following are the proven and probable mineral
reserves.
Category Tonnage C
Grade (%)
Proven 14,170,000 7.00
Probable 8,367,000 7.04
Proven
and Probable 22,437,000 7.02
(1) Proven reserves are reported as the Measured Resources inside
the designed open pit and above the grade cut off of
4.5%
C. Similarly, the Probable Reserves are reported as the Indicated
Resources inside the designed open pit and above the grade cut-off
of 4.5% C. Mineral Reserves are effective as of August 14,
2014.
MINERAL
RESOURCES
The
Molo project hosts the following mineral resources:
●
Measured mineral
resource of 23.62 MT grading 6.32% C.
●
Indicated mineral
resource of 76.75 MT grading 6.25% C.
●
Inferred mineral
resource of 40.91 MT at 5.78% C.
Effective date of
the Mineral Resource tabulation is August 14, 2014. The Mineral
Resources are classified according to the Canadian Institute of
Mining definitions. A cut-off grade of 4% C was used for the
“higher grade” zones and 2% C for the “lower
grade” zones. Please note that while the ‘high’
grade resource occurs within the ‘low’ grade resource,
each was estimated and reported separately. A relative density of
2.36 tonnes per cubic metre was assigned to the mineralized zones
for the resource estimation. The resource remains open along strike
and to depth. The Mineral Resources are inclusive of the Mineral
Reserves above. Mineral Resources reported herein include Mineral
Reserves. Mineral Resources that are not Mineral Reserves do not
have demonstrated economic viability.
|
Classification
|
Material
Type
|
Tonnes
|
Grade
- C%
|
Graphite
- T
|
|
Measured
|
"Low
Grade"
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13 048
373
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4.64
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605
082
|
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Measured
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"High
Grade"
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10 573
137
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8.4
|
887
835
|
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Total
Measured
|
23 621
510
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6.32
|
1 492
916
|
|
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Indicated
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"Low
Grade"
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39 539
403
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4.73
|
1 871
075
|
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Indicated
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"High
Grade"
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37 206
550
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7.86
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2 925
266
|
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Total
Indicated
|
76 745
953
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6.25
|
4 796
341
|
|
|
Measured +
Indicated
|
"Low
Grade"
|
52 587
776
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4.71
|
2 476
157
|
|
Measured +
Indicated
|
"High
Grade"
|
47 779
687
|
7.98
|
3 813
101
|
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Total
Measured + Indicated
|
100 367
464
|
6.27
|
6 289
257
|
|
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Inferred
|
"Low
Grade"
|
24 233
267
|
4.46
|
1 080
677
|
|
Inferred
|
"High
Grade"
|
16 681
453
|
7.70
|
1 285
039
|
|
Total
Inferred
|
|
40 914
721
|
5.78
|
2 365
716
|
C% =
carbon percentage; Graphite – T = Tonnes of
graphite
(1)
Mineral Resources are classified according to the Canadian
Institute of Mining definitions.
(2)
Mineral Resources are reported Inclusive of Mineral
Reserves.
(3)
“Low Grade” Resources are stated at a cut-off grade of
2% C.
(4)
“High grade” Resources are stated at a cut-off grade of
4% C.
(5)
Eastern and Western high-grade assays are capped at 15%
C.
(6)
A relative density of 2.36 tonnes per cubic metre (t/m3) was
assigned to the mineralised zones for the resource tonnage
estimation.
METALLURGY
& PRICING
The FS
is based on a full suite of metallurgical test work performed by
SGS Canada Metallurgical Services Inc. in Lakefield, Ontario,
Canada. These tests included lab and bench scale process
development work, a bulk sample/pilot plant program, and
metallurgical variability testing. The overall graphitic carbon
recovery into the final concentrate is 88.3%.
Metallurgical
Data – Flake Size Distribution and Product Grade
|
Product
Size
|
%
Distribution
|
Product
Grade (% Carbon)
|
|
+48
mesh (jumbo flake)
|
23.6
|
96.9
|
|
+65
mesh (coarse flake)
|
14.6
|
97.1
|
|
+80
mesh (large flake)
|
8.2
|
97.0
|
|
+100
mesh (medium flake)
|
6.9
|
97.2
|
|
+150
mesh (medium flake)
|
15.5
|
97.3
|
|
+200
mesh (small flake)
|
10.1
|
98.1
|
|
-200
mesh (fine flake)
|
21.1
|
97.5
|
Pricing
Matrix - Flake Size Distribution Grouping and Product
Grade
|
Product
Size
|
%
Distribution
|
Product
Grade (% Carbon)
|
|
>50
mesh
|
23.6
|
96.9
|
|
-50 to
+80 mesh
|
22.7
|
97.1
|
|
-80 to
+100 mesh
|
6.9
|
97.2
|
|
-100
mesh
|
46.8
|
97.6
|
The
selling price used in the FS is the volume weighted average sales
price for the various flake sizes and grades of SuperFlake™
graphite concentrate that are expected to be produced from the Molo
deposit. This price is based on 12-month rolling graphite prices
provided by UK-based Benchmark Minerals Intelligence who are
recognized as leaders in providing independent and unbiased market
research, pricing trends and demand and supply analysis for the
natural flake graphite market.
No
pricing premium for valued-added applications was applied on any
sales. Furthermore, no financial or operational calculations and/or
scenarios in the FS financial model with regards to downstream
value-added processing of SuperFlake™ graphite concentrate
were included. This includes purification, spherodization coating
for battery-grade graphite and thermal expansion for specialty
graphite applications, such as foils.
SOCIAL
RESPONSIBILITY & ENVIRONMENT
All
environmental and social responsibility information for the Molo
Project has been completed to Equator Principles, which are the
standards adopted by the majority of international commercial
banks, as well as the International Finance Corporation’s
(IFC) Performance Standards. They are the highest environmental and
social standards in the world. These standards have been
incorporated into the design of the Molo Project’s facilities
and operations given NextSources’ commitment to follow
international best practices. There is a global consumer shift to
take social responsibility into account when developing projects
and NextSource has worked hard to ensure that it met this
requirement.
TECHNICAL
REPORT FILING
This FS
technical report has been filed under the Company’s profile
and on SEDAR at www.sedar.com,
and will be posted on NextSource’s website at www.nextsourcematerials.com
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 assumptions relating to the above
mineral resource and reserve estimates and data verification
procedures.
BOARD
of DIRECTORS
The
Company announces the resignation of Mr. Quentin Yarie as a
director of the Company, effective September 27, 2019. With
NextSource now solely focused on mine development, Mr. Yarie will
be concentrating more of his time on exploration- based projects
and to explore other opportunities.
“On behalf of
the board of directors and the management team, I would like to
thank Mr. Yarie for his contribution to the Company and wish him
well in his future endeavours”, said Craig Scherba, President
and CEO of NextSource.
QUALIFIED
PERSONS
The FS
was prepared in accordance with National Instrument 43-101
standards by Mr. Johann de Bruin, Pr. Eng. Mr. de Bruin is the
Qualified Person who verified the technical data using industry
acceptable standards and signed off on the relevant sections in the
43-101 report to be filed on SEDAR.
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.
ABOUT
NEXTSOURCE MATERIALS INC.
NextSource
Materials Inc. is a mine development company based in Toronto,
Canada, that is developing its 100%-owned Molo Graphite Project in
southern Madagascar. The Molo Graphite Project is a fully
permitted, feasibility-stage project high quality flake graphite
deposit.
To
learn more, please visit the Company’s website at
www.nextsourcematerials.com or
email investor relations at info@nextsourcematerials.com
For
further information contact: +1.416.364.4911
Brent
Nykoliation, Senior 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 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 relate to the results of the Feasibility Study, funding of
the development of the Molo Project, implementation and
commencement of the build-out of the Molo Project, commencement of
production at the Molo Project, commencement of procurement for
mine infrastructure, the procurement of equipment to construct a
mine, value engineering, any and all product test results and
product analysis, and the permit application. These 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. 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.