NextSource Materials Inc 6-K, filed Feb 21, 2023

NextSource Materials Inc. (NSRCF)

6-K 2023-02-21 For: 2023-02-19

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Added on April 12, 2026

About this 6-K

NextSource Materials Inc filed this 6-K on February 21, 2023.

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99.1	NextSource Materials Inc. Unaudited Condensed Interim Consolidated Financial Statements for the Six and Three Months Ended December 31, 2022 as filed on SEDAR on February 13, 2023.

99.2	NextSource Materials Inc. Management’s Discussion and Analysis for the Six and Three Months Ended December 31, 2022 as filed on SEDAR on February 13, 2023.

99.3	NextSource Materials Inc. Form 52-109F2 Certification of Interim Filings (CEO) for the Six and Three Months Ended December 31, 2022 as filed on SEDAR on February 13, 2023.

99.4	NextSource Materials Inc. Form 52-109F2 Certification of Interim Filings (CFO) for the Six and Three Months Ended December 31, 2022 as filed on SEDAR on February 13, 2023.

	As at			As at
	December 31,			June 30,
	2022			2022

Assets
Current Assets:
Cash and cash equivalents	$	17,158,316		$	9,793,253
Amounts receivable (note 15)		366,572			574,260
Inventories		321,695			-
Prepaid expenses		248,181			96,792
Total Current Assets		18,094,764			10,464,305
Deposits		1,054,786			181,161
Property, plant, and Mine Development (note 5)		25,721,838			18,652,394
Total Assets	$	44,871,388		$	29,297,860

Liabilities
Current Liabilities:
Accounts payable		389,173			817,265
Accrued liabilities (note 15)		1,367,667			1,047,400
Current portion of lease obligations (note 6)		44,875			51,725
Current portion of royalty obligations (note 7)		1,897,500			-
Fair value of warrant derivative financial liabilities (note 8)		-			21,689,490
Commercial production obligation (note 9)		688,884			727,051
Total Current Liabilities		4,388,099			24,332,931
Lease obligations (note 6)		293,389			298,093
Asset retirement obligation (note 5)		204,868			-
Royalty obligations (note 7)		9,456,834			7,731,196
Total Liabilities		14,343,190			32,362,220

Shareholders’ Equity (Deficit)
Share capital (note 10)		169,198,742			127,377,519
Accumulated deficit		(140,324,743	)		(130,773,347	)
Accumulated other comprehensive income		1,654,199			331,468
Total Shareholders’ Equity (Deficit)		30,528,198			(3,064,360	)

Total Liabilities and Shareholders’ Equity (Deficit)	$	44,871,388		$	29,297,860

Nature of operations (note 1)
Basis of presentation and going concern (note 2)

	Six months ended			Six months ended			Three months ended			Three months ended
	December 31,			December 31,			December 31,			December 31,
	2022			2021			2022			2021
Revenues	$	-		$	-		$	-		$	-

Expenses and other income
Mine development expenses (notes 14)		510,851			(99,609	)		286,475			22,307
Exploration and evaluation expenses		-			93,408			-			40,550
General and administrative expenses (note 14)		1,309,239			875,539			656,849			456,770
Share-based compensation (note 13)		346,146			298,177			166,403			145,607
Amortization of plant and equipment (note 5)		34,919			8,542			18,044			3,673
Lease finance expense (note 6)		22,557			544			11,183			272
Flow through provision expense		-			-			-			-
Foreign currency translation (gain) loss		1,711,534			(63,373	)		1,487,030			(303,012	)
Interest (income)		(120	)		(91	)		(76	)		(47	)
Interest expense		1			32			-			-
Foreign taxes		262			-			262			-
Sub-total before other items		3,935,389			1,113,169			2,626,170			366,120
Realized gain on disposal of asset		-			-			-			-
Change in value of royalty obligation (note 7)		8,201			130,327			2,705			95,404
Change in value of warrant liability (note 8)		2,783,360			7,630,913			735,318			6,065,930
Change in value of commercial production obligation (note 9)		(49,255	)		-			(24,627	)		-
Impairment of sales tax receivable (note 14)		2,873,701			-			293,400			-
Total Expenses		9,551,396			8,874,409			3,632,966			6,527,454
Income (loss) before income taxes		(9,551,396	)		(8,874,409	)		(3,632,966	)		(6,527,454	)
Income tax expense		-			-			-			-
Net income (loss) for the period		(9,551,396	)		(8,874,409	)		(3,632,966	)		(6,527,454	)

Other comprehensive income
Items that will be reclassified subsequently to net income (loss)
Translation adjustment for foreign operations		1,322,731			(69,803	)		1,217,401			(304,988	)
Net income (loss) and comprehensive income (loss) for the period	$	(8,228,665	)	$	(8,944,212	)	$	(2,415,565	)	$	(6,832,442	)

Weighted-average common shares (basic and diluted)		105,752,262			98,599,000			117,606,741			98,994,975
Net income (loss) per common shares (basic and diluted)	$	(0.09	)	$	(0.09	)	$	(0.03	)	$	(0.07	)

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

	Common Shares		Share			Accumulated			Accumulated Other Comprehensive			Total (Deficit)
	Outstanding		Capital			Deficit			Income			Equity
	#		$			$			$			$
Balance as at June 30, 2021		98,184,260		120,491,932			(146,893,550	)		255,314			(26,146,304	)
Reclassification of warrant liability to equity on exercise of warrants		-		1,572,195			-			-			1,572,195
Shares issued on exercise of warrants		942,396		951,056			-			-			951,056
Restricted share units expensed over vesting period		-		298,177			-			-			298,177
Shares issued on conversion of restricted share units		123,518		(70,190	)		-			-			(70,190	)
Net income for the period		-		-			(8,874,409	)		-			(8,874,409	)
Cumulative translation adjustment		-		-			-			(69,803	)		(69,803	)
Balance as at December 31, 2021		99,250,174		123,243,170			(155,767,959	)		185,511			(32,339,278	)
Reclassification of warrant liability to equity on exercise of warrants		-		2,889,961			-			-			2,889,961
Shares issued on exercise of warrants		1,747,440		579,136			-			-			579,136
Shares issued on exercise of stock options		875,000		577,500			-			-			577,500
Stock options granted under long-term incentive plan		-		43,050			-			-			43,050
Restricted share units expensed over vesting period		-		44,702			-			-			44,702
Net income for the period		-		-			24,994,612			-			24,994,612
Cumulative translation adjustment		-		-			-			145,957			145,957
Balance as at June 30, 2022		101,872,614		127,377,519			(130,773,347	)		331,468			(3,064,360	)
Reclassification of warrant liability to equity on exercise of warrants		-		24,472,850			-			-			24,472,850
Shares issued on exercise of warrants		23,214,286		17,002,227			-			-			17,002,227
Shares issued on exercise of stock options		-		-			-			-			-
Stock options granted under long-term incentive plan		-		-			-			-			-
Restricted share units expensed over vesting period		-		346,146			-			-			346,146
Shares issued on conversion of restricted share units		-		-			-			-			-
Net income for the period		-		-			(9,551,396	)		-			(9,551,396	)
Cumulative translation adjustment		-		-			-			1,322,731			1,322,731
Balance as at December 31, 2022		125,086,900		169,198,742			(140,324,743	)		1,654,199			30,528,198

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

	Six months ended			Six months ended
	December 31,			December 31,
	2022			2021

Operating activities
Net income (loss) for the period	$	(9,551,396	)	$	(8,874,409	)
Add (deduct) items not affecting cash:
Amortization of plant and equipment		34,919			8,542
Change in value of lease obligations		(8,691	)		447
Change in value of royalty obligations		8,201			573,743
Change in value of warrant liability		2,783,360			7,630,913
Change in value of provision		(49,255	)
Share-based compensation		346,146			227,987
Subtotal		(6,436,716	)		(432,777	)

Change in non-cash working capital balances:
(Increase) decrease in amounts receivable, prepaid and inventories		(265,396	)		6,728
Increase (decrease) in accounts payable and accrued liabilities		(107,825	)		(171,607	)
Increase (decrease) in provisions		(36,230	)		32,604
Net cash used in operating activities		(6,846,167	)		(565,052	)

Investing activities
Deposits		(873,625	)
Additions to property, plant, and mine development		(6,237,240	)		(7,033,641	)
Net cash used in investing activities		(7,110,865	)		(7,033,641	)

Financing activities
Exercise of warrants		17,002,227			646,311
Lease liability principal payments		(2,863	)		-
Proceeds from royalty financing		3,000,000			-
Net cash provided by financing activities		19,999,364			646,311

Effect of exchange rate changes on cash and cash equivalents		1,322,731			(69,803	)

Net increase (decrease) in cash and cash equivalents		7,365,063			(7,022,185	)
Cash and cash equivalents, beginning of period		9,793,253			22,437,086
Cash and cash equivalents, end of period	$	17,158,316		$	15,414,901

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

·	On March 29, 2021, the Company announced the initiation of construction for Phase 1 of the Molo Graphite Mine, located in Madagascar, with a production capacity of 17,000 tpa of SuperFlake® graphite concentrate. Significant construction activities related to the processing plant and the mining camp were completed in January 2023. Plant commissioning is expected to be completed in March 2023 followed by a ramp up period of up to three months prior to declaring commercial production.

·	On April 27, 2022, the Company released a Preliminary Economic Assessment (“PEA”) considering a Phase 2 expansion of the Molo Graphite Mine consisting of a stand-alone processing plant with a production capacity of 150,000 tpa. The Company initiated a Feasibility Study and a front-end engineering design (“FEED”) study for the Phase 2 expansion considered in the PEA. Completion of the Feasibility Study and the FEED study are expected in early 2023. Prior to making a Phase 2 construction decision, the Company will consider the results of the Feasibility and FEED studies as well as Phase 1 operational results.

·	The Company is planning to build battery anode facilities (“BAF”), which are value-added processing facilities that convert flake graphite into coated spheronized purified graphite (“CSPG”). The BAFs will be designed with modular production capacities that can expand in lockstep with demand from key markets in Asia, North America, and Europe. The Company has an exclusive technical partnership to utilize a proprietary and well-established processing technology that already supplies major EV automotive companies, including the Tesla and Toyota supply chains. Technical and economic studies for the first BAF plant are expected to be completed in early 2023.

·	The Company also owns the Green Giant Vanadium Project, located in Madagascar, and the Sagar Project, located in Quebec, both of which are at the exploration and evaluation stage.

	Mining		Assets Under		Equipment &			Right of Use
	Property		Construction		Vehicles			Assets			Total
	$		$		$			$			$
As at June 30, 2021		708,514		3,611,890		4,683			12,074			4,337,161
Additions		398,836		13,181,333		239,542			530,562			14,350,273
Amortization		-		-		(29,053	)		(5,987	)		(35,040	)
As at June 30, 2022		1,107,350		16,793,223		215,172			536,649			18,652,394
Additions		79,599		6,305,442		719,322			-			7,104,363
Amortization		-		-		(31,900	)		(3,019	)		(34,919	)
As at December 31, 2022		1,186,949		23,098,665		902,594			533,630			25,721,838

Cost		1,107,350		16,793,223		244,780			554,727			18,700,080
Accumulated amortization		-		-		(29,608	)		(18,078	)		(47,686	)
As at June 30, 2022		1,107,350		16,793,223		215,172			536,649			18,652,394

Cost		1,186,949		23,098,665		964,102			554,727			25,804,443
Accumulated amortization		-		-		(61,508	)		(21,097	)		(82,605	)
As at December 31, 2022		1,186,949		23,098,665		902,594			533,630			25,721,838

	Camp Lease			Property Lease			Total Obligations
	$			$			$
As at June 30, 2021		11,099			-			11,099
Additions		-			389,049			389,049
Finance costs		900			11,080			11,980
Foreign exchange adjustments		(318	)		(8,713	)		(9,031	)
Lease payments		(6,027	)		(47,252	)		(53,279	)
As at June 30, 2022		5,654			344,164			349,818
Additions		-			-			-
Finance costs		215			22,342			22,557
Foreign exchange adjustments		(206	)		(31,042	)		(31,248	)
Lease payments		(2,863	)		-			(2,863	)
As at December 31, 2022		2,800			335,464			338,264

	(a)	The Company received the initial royalty funding of $8.0 million (less a $1.5 million royalty financing fee) on June 28, 2021 and received the remaining $3.0 million on August 17, 2022.
	(b)	Beginning on the biannual period ending June 30, 2022, the Company must pay the greater of: (i) $825,000 (the “Minimum Repayment”) or (ii) 3% of the gross sales revenues from graphite concentrate sales (the “GSR”). Once Vision Blue has received cumulative royalty payments of $16.5 million, the Minimum Repayment will cease, and the royalty will only be based on the GSR. NextSource has the option at any time to reduce the GSR to 2.25% by paying $20 million to Vision Blue. Each of the biannual Minimum Repayments can be deferred by 12 months, subject to accrued interest of 15% per annum.
	(c)	Vision Blue received a royalty of 1.0% of the gross revenues from sales of vanadium pentoxide (“V2O5”) from the Green Giant Vanadium Project for a period of 15 years following commencement of production of V2O5.

	Total
	$
As at June 30, 2021		6,330,721
Accretion of royalty obligation		904,771
Remeasurement of royalty obligation		495,704
As at June 30, 2022		7,731,196
Accretion of royalty obligation		614,937
Royalty proceeds		3,000,000
Remeasurement of royalty obligation		8,201
As at December 31, 2022		11,354,334

	Total
	$
Within 12 months		1,897,500
Between 13 and 24 months		1,897,500
Between 25 and 36 months		1,897,500
Between 37 and 48 months		1,897,500
Between 49 and 60 months		1,897,500
Over 60 months		9,487,500
Total undiscounted minimum payments and interest		18,975,000

Warrants Expiring May 19, 2023			Warrant Liability
			$
As of June 30, 2021				40,941,298
Reclassification to equity on exercise of warrants				-
Change in fair value through profit and loss				(19,251,808	)
Share price on measurement date	(CAD $2.12) USD $1.65
Exercise price	(CAD $1.00) USD $0.78
Risk free rate		0
Expected volatility		71.00%
Expected dividend yield	Nil
Expected life (in years)		1
Expected life (in years)		1.89
As of June 30, 2022				21,689,490
Change in fair value through consolidated statement of operations and comprehensive income (loss)				2,783,360
Share price on measurement date	(CAD $2.40) USD $1.76
Exercise price	(CAD $1.00) USD $0.73
Risk free rate		4.05%
Expected volatility		73%
Expected dividend yield	Nil
Expected life (in years)		0.55
Reclassification to equity on exercise of warrants				(24,472,850	)
As of December 31, 2022				-

	Warrant Liability
	$
As at June 30, 2021		45,380,933
Reclassification to equity on exercise of warrants		(4,462,156	)
Change in fair value through profit and loss		(19,229,287	)
As at June 30, 2022		21,689,490
Reclassification to equity on exercise of warrants		(24,472,850	)
Change in fair value through profit and loss		2,783,360
As at December 31, 2022		-

			As at									As at
Grant	Expiration	Exercise	June 30,									December 31,
Date	Date	Price	2022		Awarded		Cancelled			Exercised		2022
March 26, 2019	March 26, 2024	CAD $1.00		580,000		-		-			-		580,000
March 19, 2021	March 19, 2024	CAD $3.60		1,300,000		-		(200,000	)		-		1,100,000
May 11, 2022	May 11, 2025	CAD $2.50		30,000		-		-			-		30,000
Totals				1,910,000		-		(200,000	)		-		1,710,000

	Vesting		As at								As at
Grant	Measurement	Expiration	June 30,								December 31,
Date	Date	Date	2022		Awarded		Cancelled		Converted		2022
*Unvested RSUs - Vesting condition of employment on vesting date*
July 28, 2022	June 30, 2023	June 30, 2024		-		160,000		-		-		160,000
*Vested RSUs*
March 19, 2021	December 31, 2022	June 30, 2023		200,000		-		-		-		200,000
May 11, 2022	July 14, 2022	June 30, 2023		40,000		-		-		-		40,000
May 11, 2022	July 14, 2022	June 30, 2023		30,000		-		-		-		30,000
Totals				270,000		160,000		-		-		430,000

	(a)	On July 14, 2022, the 30,000 and 40,000 RSUs granted on May 11, 2022 satisfied their respective vesting conditions.

	(b)	On July 28, 2022, the Company granted 160,000 RSUs with a vesting measurement date of June 30, 2023 whereby the respective holders will receive a total of 160,000 common shares subject to being employed on the vesting date. The grant date fair value was estimated at $322,818 based on a grant-date market price of $2.02 (CAD$2.59).

	(c)	On December 31, 2022, the 200,000 RSUs granted on March 19, 2021 satisfied their respective vesting conditions.

	Canada		Mauritius		Madagascar		Total
	$		$		$		$
Cash and cash equivalents		15,673,084		180,634		1,304,598		17,158,316
Amounts receivable		364,518		2,054		-		366,572
Inventories		213,950		-		107,745		321,695
Prepaid expenses		73,303		-		174,878		248,181
Deposits		923,901		-		130,885		1,054,786
Property, plant, and mine development		9,642,444		1,180		16,078,214		25,721,838
Total assets as at December 31, 2022		26,891,200		183,868		17,796,320		44,871,388

	As of		As of
	December 31,		June 30,
	2022		2022
Amounts receivable	$	343,214	$	193,471
Accrued liabilities		23,951		35,257

	·	Accounts payable and accrued liabilities, which are generally due within 30 days.
	·	Minimum Repayments under the royalty agreement, which can each be deferred by twelve months.

	·	Completion of commissioning and ramp-up to full Phase 1 production capacity
	·	Declaration of commercial production and first commercial shipment
	·	Completion of a Feasibility Study for a Phase 2 expansion to a production capacity of 150,000 tpa
	·	Completion of a FEED Study for a Phase 2 expansion
	·	Decision of whether to proceed with construction of a Phase 2 expansion
	·	Completion of technical and economic studies for the first BAF plant
	·	Decision of whether to proceed with construction of the first BAF plant
	·	Initiation of construction of the first BAF plant
	·	Completion of a technical study for the Green Giant Vanadium Project

Cash and cash equivalents	Canada		Mauritius		Madagascar		Total
	$		$		$		$
As at December 31, 2022		15,673,084		180,634		1,304,598		17,158,316
As at June 30, 2022		9,641,083		61,010		91,160		9,793,253

Common shares issued and outstanding			125,086,900
Warrants			-
Stock options			1,710,000
Restricted share units (RSUs)			430,000
Fully diluted common shares			127,226,900

	·	Offtake is for a period of ten (10) years, beginning at the start of commercial production at the Molo Graphite Mine, with an automatic renewal for an additional five (5) years.
	·	Exclusive right to import and sell SuperFlake® graphite concentrate in Japan.
	·	Provided that commercial production commences within 3 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 market prices (FOB basis) prevailing in the region.

	·	Commercial agreement for the sale of 35,000 tpa of SuperFlake® graphite concentrate from the Molo mine
	·	10-year term with an automatic 5-year extension
	·	Products under the agreement pertain to refractory, battery anode production and expandable graphite (graphite foil) markets
	·	Geographical regions include, but are not limited to, Europe, the UK, North America, Mexico, China and South Korea
	·	Minimum 7,300 tpa during Phase 1 initial production
	·	Ramp up to 35,000 tpa in Phase 2
	·	Shipments in Phase 1 will be used to verify run-of-mill production to trigger the larger volume expansion

Classification	Tonnage (Mt)	Grade (C%)	Graphite (C Mt)
Measured	23.62	6.32%	1.49
Indicated	76.75	6.25%	4.80
Measured & Indicated	100.37	6.27%	6.29
Inferred	40.91	5.78%	2.36

Description	Phase 2 PEA (150K tpa production)
*Economic Highlights*
Pre-tax Net Present Value (“NPV”) (8% discount rate) ^(1)(2)(4)(8)	US$904.8 million
Post-tax NPV (8% discount rate) ^{(1)(2)(3)(4)(8)}	US$593.0 million
Pre-tax Internal Rate of Return (“IRR”) ^(1)(2)(4)(8)	40.4%
Post-tax IRR ^{(1)(2)(3)(4)(8)}	31.4%
Life of Mine (“LoM”)	26 years
Pre-tax payback ^(1)(2)(4)(8)	3.18 years
Post-tax payback^{(1)(2)(3)(4)(8)}	3.74 years
Capital costs ("CAPEX") including contingency of $31.96 million⁽²⁾	US$155.8 million
Initial working capital	US$20.9 million
Sustaining and closure CAPEX	US$24.5 million
*Operational Highlights*
Graphite concentrate sale price (US$ per tonne of concentrate)⁽⁸⁾	US$1,230.50
Average operating costs FOB (“Opex”) (US$ per tonne of concentrate following ramp-up)⁽⁷⁾	US$495.62
Average annual production of concentrate ⁽⁵⁾⁽⁶⁾	150,000 tpa
Average ore mined per annum over LoM	2,532,345 tpa
Average head grade	6.16%
Concentrate purity (Cg) of finished product	97%
Average stripping ratio	0.53:1
Average carbon recovery	88.30%

Classification	Tonnage (Mt)	Grade (V₂O₅%)	V₂O₅ (million pounds)
Indicated	49.5	0.693%	756.3
Inferred	9.7	0.632%	134.5

	Quarter Ended
	December 31,			September 30,			June 30,			March 31,
	2022			2022			2022			2022
	$			$			$			$
Revenues		-			-			-			-
Mine development expenses		510,851			224,376			138,990			25,779
Exploration and evaluation expenses		-			-			69,989			14,558
General and administrative expenses		1,309,239			652,390			450,766			602,987
Net income (loss)		(9,551,396	)		(5,918,430	)		(29,708,698	)		(4,714,086	)
Net income (loss) and comprehensive income (loss)		(8,228,665	)		(5,813,100	)		29,792,068			(4,651,499	)
Net income (loss) per share (basic and diluted)		(0.09	)		(0.06	)		(0.30	)		(0.05	)
Working capital (deficit) surplus		13,706,665			(21,493,227	)		(13,868,626	)		(42,484,978	)

	Quarter Ended
	December 31,			September 30,			June 30,			March 31,
	2021			2021			2021			2021
		$		$				$		$
Revenues		-			-			-			-
Mine development expenses		22,307			(121,916	)		198,886			17,586
Exploration and evaluation expenses		40,550			52,858			(5,550	)		5,162
General and administrative expenses		456,770			418,769			472,883			357,069
Net income (loss)		(6,527,454	)		(2,346,955	)		(27,419,558	)		(12,710,273	)
Net income (loss) and comprehensive income (loss)		(6,832,442	)		(2,111,770	)		(27,284,712	)		(12,708,656	)
Net income (loss) per share (basic and diluted)		(0.07	)		(0.02	)		(0.32	)		(0.20	)
Working capital (deficit) surplus		(37,099,064	)		(29,161,919	)		(24,500,482	)		(3,952,895	)

a.	designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

	i.	material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and

	ii.	information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

b.	designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.