NMG Secures Multiyear Offtakes from GM and Panasonic

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• Panasonic Energy and GM (together, the “Anchor Customers”) concurrently commit to multiyear offtake agreements for NMG’s active anode material, covering approximately 85% of NMG’s planned Phase-2 fully integrated production, from ore to battery materials.
• Offtake agreements are complemented by an aggregate US$50 million Tranche 1 Investment from Panasonic and GM to advance the development of NMG’s Phase-2 Matawinie Mine and Bécancour Battery Material Plant as per their respective specifications.
• Strategic partner Mitsui and long-time investor Pallinghurst inject a total of US$37.5 million into NMG’s development, the aggregate proceeds of which will be used to repurchase their previously announced convertible notes.
• Offtake agreements and investments support NMG’s execution plan for its Phase-2 Matawinie Mine and Bécancour Battery Material Plan, marking a significant milestone toward future funding by Anchor Customers of up to US$275 million, subject to certain conditions and a maximum ownership threshold agreed between the relevant parties.

On the back of agreed-upon offtake agreements with Panasonic Energy Co., Ltd. (“Panasonic Energy”), a wholly owned subsidiary of Panasonic Holdings Corporation (“Panasonic”) (TYO: 6752), and General Motors Holdings LLC, a wholly owned subsidiary of General Motors Co. (collectively, “GM”) (NYSE: GM), Nouveau Monde Graphite Inc. (“NMG“ or the “Company”) (NYSE: NMGTSX.V: NOU) has rallied Mitsui & Co., Ltd (“Mitsui”) (TYO: 8031) and Pallinghurst Bond Limited (“Pallinghurst”) for an aggregate combined investment of US$87.5 million to advance its development toward commercial operations. Projected to become the first fully integrated natural graphite active anode material production of its kind in North America, NMG is set to provide a carbon-neutral, reliable, sizeable, and ESG-driven source of Canadian natural graphite for the local electric vehicle (“EV”) and lithium-ion battery market.

Arne H Frandsen, Chair of NMG, declared: “Today, influential actors in strategic minerals, modern commodities, batteries, and EVs are coming together to drive the establishment of a Canadian source of graphite to support energy autonomy, national security, and global decarbonization. I am confident that such commercial and investment levers will constitute the bedrock on which NMG can build its Phase 2 operations and more. Congrats to colleagues at Panasonic Energy, GM, Mitsui and Pallinghurst for this multifaceted transaction; together we will support the world’s transitions towards a cleaner future.”

Eric Desaulniers, Founder, President, and CEO of NMG, reacted: “In our journey to position NMG as the North American leader of responsible mining and advanced manufacturing, we had been looking for top-tier EV and battery manufacturers to bolster our commercial vision. Thanks to visionary customers and investors, we are now moving toward establishing a fully local and traceable value chain. From the Matawinie ore, to the Bécancour active anode material, to our clients’ U.S. battery factories, we are pioneering a resilient supply chain for the EV market.”

Eric Desaulniers, President, and CEO of NMG, recaps the highlights of today’s parallel announcements in a short video captured at the Company’s battery material laboratory

A Solid Commercial Backing

The multiyear offtake agreements cover the supply of a committed combined annual volume of 36,000 tonnes of active anode material by NMG to the Anchor Customers, representing approximately 85% of the Company’s Phase-2 production. With agreed upon pricing formula linked to future prevailing market prices and project financing ratio requirements, NMG can now demonstrate strong long-term bankability underpinnings to lenders, investors, and shareholders.

In parallel, the Company maintains intensive commercial discussions and continued product qualification with other tier-1 battery manufacturers for the balance of its Phase-2 production. Current market dynamics in North America, reflecting recent Chinese graphite exportation limitations and stringent U.S. sourcing requirements for battery materials, favorably position NMG’s local production. The Company’s recent acquisition of the Uatnan Mining Project for its Phase-3 expansion also provide an attractive supply opportunity for Western EV and battery manufacturers looking to secure and grow active anode material volumes as their production increases.

Strategic Participation into NMG’s Business Plan

The Anchor Customers, directly or through an affiliate, have each agreed to make an initial US$25 million equity investment in NMG subject to certain conditions (the “Tranche 1 Investment”), for a total of US$50 million, to support the advancement of NMG’s Phase-2 operations — the Matawinie Mine and the Bécancour Battery Material Plant — aligned with their respective battery specifications.

In line with the previously announced framework agreement between NMG, Panasonic Energy and Mitsui, the Company’s strategic partner Mitsui supports the attainment of this milestone and further development efforts towards a final investment decision (“FID”) by investing US$25 million, subject to regulatory approvals and the requirements of MI 61-101 (as defined below), pursuant to which Mitsui has agreed to subscribe for 12,500,000 Common Shares in the capital of NMG (the “Common Shares”) and 12,500,000 warrants on the same pricing and other terms as the Tranche 1 Investment, such proceeds to be used to repurchase Mitsui’s convertible note dated November 8, 2022, as amended and restated (the “Mitsui Convertible Note”). NMG will also enter into an investor rights agreement (the “Investor Rights Agreement”) and registration rights agreement with Mitsui at the closing of their investment. Pursuant to the Investor Rights Agreement, Mitsui will be required to “lock-up” its securities for a period of 12 months from the date of their investment. The Investor Rights Agreement also provides Mitsui with certain rights relating to its investment in NMG, namely certain board nomination and anti-dilution rights. Mitsui will be subject to a standstill limitation whereby it will not be able to increase its holdings beyond 20% of the issued and outstanding NMG Common Shares for a period of three years.

Long-time strategic investor Pallinghurst has also agreed to participate via a US$12.5-million investment, also subject to regulatory approvals and the requirements of MI 61-101, pursuant to which Pallinghurst has agreed to subscribe to 6,250,000 Common Shares and 6,250,000 warrants on the same pricing and other terms as the Tranche 1 Investment, such proceeds to be used to repurchase Pallinghurst’s convertible note dated November 8, 2022, as amended and restated (the “Pallinghurst Convertible Note” and together with the Mitsui Convertible Note, the “Notes”). NMG will also enter into a registration rights agreement with Pallinghurst at the closing of their investment.

Such warrants are generally exercisable in connection with the Tranche 2 Investment at FID in accordance with their terms. Each warrant will entitle the holder thereof to acquire one Common Share (a “Warrant Share”) at a price per Warrant Share equal to the lower of (i) the amount in US$2.38 per Common Share and (ii) the amount in US Dollars per Common Share equal to the closing price of the Common Shares on the trading day immediately following the date on which the investments described above are announced. The exercise of the warrants is subject to certain ownership limitations.

Upon a positive FID, the parties’ commercial relationship is also intended to expand through further investments into NMG as part of the construction financing. The Anchor Customers, directly or through an affiliate, together with potential co-investors, intend to participate in future funding of a total amount valued at approximately US$275 million, subject to certain conditions and a maximum ownership threshold agreed between the relevant parties. Assisted by its financial advisors, the Company continues to advance financing efforts, including with its other convertible noteholder, and is engaged with export credit agencies, governments, and strategic investors, in addition to customers to frame a robust capital structure that leverages international debt, government funding and equity. BMO Capital Markets is acting as financial advisor to the Company in connection of certain of the transactions described herein.

Courtesy of Nouveau Monde Graphite (NMG).