35
TSX : NEXT OTCQB : NSRC MOLO GRAPHITE PROJECT Madagascar
TSX:NEXTOTCQB:NSRC
MOLO GRAPHITE PROJECT Madagascar
1
Forward looking statements
Safe Harbour: This presenta4on contains statements that may cons4tute “forward looking statements” within the meaning ofapplicable Canadian andUnited States securi4es legisla4on. Readers are cau4onednot to place undue reliance on such forwardlooking statements.Any statement in thispresenta4on that is not a statementat ahistorical fact cons4tutes a “forward lookingstatement”. Furthermore, when the Company uses the words “may”, “expect”, “an4cipate”, “plan”, “forecast”, “projec4ons”,“es4mate"orsimilarwords,theCompanyintendedtoiden4fycertainforwardlookingstatements.Forwardlookingstatementsarerelated to the4mingof the comple4onof theupdated and revised Feasibility Study, the results of the revised Feasibility Study,funding of the development of the Molo Project, implementa4on and commencement of the build-out of the Molo Project,commencementofproduc4onat theMoloProject, commencementofprocurement formine infrastructure, theprocurementofequipmenttoconstructamine,valueengineering,con4nuedproducttestresultsandproductanalysis,andthepermitapplica4on.Other forward looking statements relate to growth of the lithium-ion market, graphite demand in the future, electric vehicleprojec4ons and othermarket demands for graphite. These are based on current expecta4ons, es4mates and assump4ons thatinvolveanumberofknownandunknownrisks,uncertain4esandotherfactorsthatcouldcauseactualresultstovaryandinsomeinstancestodiffermateriallyfromthosean4cipatedbytheCompanyanddescribedintheforwardlookingstatementscontainedinthis presenta4on. These risks include, but are not limited to access to sufficient capital, dependence on ore mineral project,governmentalandpoli4calrisksinMadagascar,legalandaccoun4ngrisks,compliancewithvariousregulators,poten4allossofkeypersonnel,nocertaintyastocommercialproduc4onoftheMolomine,inherentchangesinmineralexplora4onanddevelopment,delays, external market factors, nega4ve opera4ng cash flows, lack of demand for graphite, cost overruns, permiRng issues,fluctua4onsinthepriceofgraphite,labourissues,4tledisputesandfluctua4onsincurrency.CriteriaoftheserisksandotherrisksareoutlinedinthecompaniesForm10–KforthefiscalyearendingJune30,2016availableatSEDAR.com,whichinvestorsarehighlyencouragedtoreview.Noassurancecanbegiventhatanyoftheeventsan4cipatedbytheforwardlookingstatementswilltranspireoroccuror,ifanyofthemdoso,whatbenefitstheCompanywillderivetherefrom.Theforwardlookingstatementscontainedinthispresenta4onaremadeasatthedateofthispresenta4onandtheCompanydoesnot undertake any obliga4on to update publicly or to revise any of the forward-looking statements,whether as a result of newinforma4on,futureeventsorotherwise,exceptasmayberequiredbyapplicablesecuri4eslaws.
2
IT’S ESSENTIAL.
IT’S COMPLICATED.
IT’S A HUGE OPPORTUNITY.
3
Flake graphite market = ~500,000 tpa
#1 #3#2BATTERIES CONSUMERELECTRONICS
(GRAPHITEFOILS)
MajorityofdemandsIllIedtotradiIonalsteelmarket
16% 10%
REFRACTORIES
Experiencinglargestgrowth Experiencingfastestgrowth4
65%
Evolution of graphite’s use in lithium-ion batteries
2006 2016 2020
0%
16%35%
5
Li-ionbaberiesLi-ionbaberies
Natural graphite’s use in Li-ion batteries rising
• Amountofnaturalgraphitevs.synthe4cgraphitesteadilyincreasinginLi-ionbaberies
• Almostallsynthe4c10yearsago
Source:2014AvicenneEnergyBaberyReport
6
0 100000 200000 300000 400000 500000 600000 700000
2016 2020
Tonnes
Analyst graphite demand based on battery forecasts
500,000 EVs WOULD DOUBLE CURRENT BATTERY DEMAND FOR GRAPHITE.
7
Robust electric vehicle projections
8
Source:BloombergNewEnergyFinance2017
Graphite the most required input for Gigafactories
9 Source:BenchmarkmineralIntelligence
TheGigafactory1isexpectedtorequireover42,000tonnesofgraphiteanodematerial,28,000tonnesoflithiumhydroxideand5,000tonnesofcobalteveryyearata35GWhcapacityofnewcellproduc4on.
Teslaannounceditplanstobuild3addi4onalGigafactorieswithexpectedconstruc4onpost-2020.Theseareinaddi4onto15megafactoriesbeingbuiltgloballybycompe4tors.
TeslaGigafactory1inNevada
42,000tonnesofgraphiteanodematerialrequiredeveryyearatcapacity
Thelargertheflakesize,
andhigherthepurity,
thehighertheprice.
Graphite pricing
10
Graphite prices
■ Price Low
■ Price High
■ Price Mid
■ 12-month moving average
2,000
3,000
2,500
3,500
4,000
S/TO
NN
E
2014 2015 2016 2017
MayJun Aug
OctDec
FebApr
Jun AugOct
DecFeb
AprJun Aug
OctDec
FebMay
www.benchmarkminerals.com
2 PRICES
3 | BENCHMARK | DATA
BENCHMARK | DATA
GRAPHITE | MAY 2017 REVIEW
GRAPHITE REVIEW MAY 2017
■ SPHERICAL GRAPHITEVALUE-ADDED
Value-added graphite prices relatively stable throughout May 2017 as Chinese processors continued efforts to expand output. Demand for expandable graphite continues to grow with increased use in flame retardant applications as a substitute for brominated alternatives, counteracting some minor decreases in demand for graphite foils. As a result prices have remained robust and are expected to climb again in H2 with feedstock supplies tightening. Demand growth is similarly robust for spherical graphite as anode producers seek to tie in raw material supplies. The 100,000 tpa expansion of China’s largest flake graphite producer is yet another statement of intent from flake graphite and will force greater price competition as seek to tie in larger volume orders. Prices were stable throughout May but there could be some downward price pressure throughout H2 2016
.
Source: Benchmark Mineral Intelligence
15 MICRON, 99.95% C, FOB CHINA
■ FLAKE GRAPHITE FLAKE GRAPHITEFlake graphite prices were up over 5% on average throughout May 2017, as medium and large flake prices rebounded to their highest point since January for many grades. Tighter supplies of large flake material saw increased price pressure for these grades, with concerns over availability of material while China implements environmental restrictions on production.Finer mesh grades also saw some upwards pressure with increased volumes continuing to be used for value-added processing within China. Nevertheless, excess supplies remain in this part of the market due to weak industrial demand. Approaching the end of Q2 2017, prices are expected to be robust although increases will likely be curtailed by relatively low orders and the prospect of new supplies coming online in Africa. Although the opening of new operations in Mozambique and Namibia decrease supply dependence on Chinese exports for AMG N.V. and Imerys Graphite and Carbon, the rest of the industry still relies heavily on Chinese exports.
Source: Benchmark Mineral Intelligence
USD
/TO
NN
E
MayJun Aug
OctDec
FebApr
Jun AugOct
DecFeb
AprJun Aug
OctDec
FebMay
2014 2015 2016 2017
■ 94-95% C, -100 mesh, FOB China
■ 94-95% C, +100 mesh, FOB China
■ 94-95% C, +80 mesh, FOB China
■ 12-month moving average
0
400
800
1,200
1,600
■ Price Low
■ Price High
■ Price Mid
■ 12-month moving average
2,000
3,000
2,500
3,500
4,000
S/TO
NN
E
2014 2015 2016 2017
MayJun Aug
OctDec
FebApr
Jun AugOct
DecFeb
AprJun Aug
OctDec
FebMay
www.benchmarkminerals.com
2 PRICES
3 | BENCHMARK | DATA
BENCHMARK | DATA
GRAPHITE | MAY 2017 REVIEW
GRAPHITE REVIEW MAY 2017
■ SPHERICAL GRAPHITEVALUE-ADDED
Value-added graphite prices relatively stable throughout May 2017 as Chinese processors continued efforts to expand output. Demand for expandable graphite continues to grow with increased use in flame retardant applications as a substitute for brominated alternatives, counteracting some minor decreases in demand for graphite foils. As a result prices have remained robust and are expected to climb again in H2 with feedstock supplies tightening. Demand growth is similarly robust for spherical graphite as anode producers seek to tie in raw material supplies. The 100,000 tpa expansion of China’s largest flake graphite producer is yet another statement of intent from flake graphite and will force greater price competition as seek to tie in larger volume orders. Prices were stable throughout May but there could be some downward price pressure throughout H2 2016
.
Source: Benchmark Mineral Intelligence
15 MICRON, 99.95% C, FOB CHINA
■ FLAKE GRAPHITE FLAKE GRAPHITEFlake graphite prices were up over 5% on average throughout May 2017, as medium and large flake prices rebounded to their highest point since January for many grades. Tighter supplies of large flake material saw increased price pressure for these grades, with concerns over availability of material while China implements environmental restrictions on production.Finer mesh grades also saw some upwards pressure with increased volumes continuing to be used for value-added processing within China. Nevertheless, excess supplies remain in this part of the market due to weak industrial demand. Approaching the end of Q2 2017, prices are expected to be robust although increases will likely be curtailed by relatively low orders and the prospect of new supplies coming online in Africa. Although the opening of new operations in Mozambique and Namibia decrease supply dependence on Chinese exports for AMG N.V. and Imerys Graphite and Carbon, the rest of the industry still relies heavily on Chinese exports.
Source: Benchmark Mineral Intelligence
USD
/TO
NN
E
MayJun Aug
OctDec
FebApr
Jun AugOct
DecFeb
AprJun Aug
OctDec
FebMay
2014 2015 2016 2017
■ 94-95% C, -100 mesh, FOB China
■ 94-95% C, +100 mesh, FOB China
■ 94-95% C, +80 mesh, FOB China
■ 12-month moving average
0
400
800
1,200
1,600
$900 /tonne (May 2017)FlakeGraphite+80mesh,94-95%
$2,800/tonne (May 2017)UncoatedSphericalGraphite
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MARKET REALITY CHECK
Thefuturedemandforflakegraphiteforelectricvehiclesisverybright,but…
• ~65%ofgraphiteconsump4on4edtotradi4onalsteelmarket
• Baberyanodess4llasmallmarketfornaturalgraphite• Projectscannotrelysolelyonababeryorgraphenesalesplan
• Projectsmustbeeconomicalbasedonrealis4csalesvolumeandprice
12
• Ideallylocatedinthesouthern,aridregionofMadagascar
• $Billion+miningprojectsestablishedin-country,codifyingmininglaws
• Democra4cgovernmentviewsminingaskeygrowthengineandoneofthepillarsofMadagascar'sAc4onPlan
• Ambatovyprojectaccountsfor32%ofcountry’stotalrevenue
$+8BillionAmbatovyNickel&CobaltProject(Sherrib,Sumitomo,KORES)
Africa
FortDauphinShippingPort(Taolagnaro)
MOLOGraphiteProject
SakoaCoalProject$400M(e)
RioTinto$1BillionMineralSandsProject
ShippingPorts:Tulear&Soalara
WTRMineralSands$200M(e)Sherrib/GlencoreLimestone
Molo Graphite Project Fotadrevo,Madagascar
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AnnualProduc4onGraphite: 53,017t/yearLifeofmine: 26yearsCAPEX(excludingWorkingCapital): $188MOPEX(Ex-plant): $352/TOPEX(CIF): $709/TAverageHeadGrade: 7.04%OpenPitMiningStripRa4o 0.81:1AverageSellingPrice: US$1689/t
NPV:10%discount US$389.8M IRR: 31.2%Payback: 4.84years
Post-tax
*Please refer to the Company’s technical report entitled “Molo Feasibility Study” dated February 6, 2015 available under the Company’s profile at www.sedar.com for a discussion in respect of certain key assumptions, parameters and methods in respect to the mineral resource disclosure.
2015 Feasibility Study
2015
10%ofmarket
Difficulttoraisetoday
Currentpriceis~$1000/t
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• Posi4veresultsatthe4me,butmarketcondi4onshavesincechanged
A BRAND NEW APPROACH
• 18monthvalue-engineeringprocessundertaken
• Iden4fiedFULLMODULARCONSTRUCTIONwitha17,000tpaini4alproduc4onasmostcost-effec4vesolu4on
• Provenmethodology
• DesignedandbuilttoEUstandards
• LowestCAPEXofanyjuniorgraphiteproject:US$18.4M
15
Modular construction - GAME CHANGER
16
AnnualProduc4onGraphite: 17,000t/yearLifeofmine: 30yearsCAPEX(excludingWorkingCapital): $18.4MOPEX(Ex-plant): $433/TOPEX(CIF): $688/TAverageHeadGrade: 8.1%AverageSellingPrice: US$1014/t
NPV:8%discount US$25.5M IRR: 22%Payback: 4.8years
Post-tax
*Please refer to the Company’s technical report entitled “2017 Updated Molo Feasibility Study” under the Company’s profile at www.sedar.com for certain other details and assumptions relating to the above mineral resource and reserve estimates and data verification procedures.
Updated Feasibility Study (2017) - Phase 1
2017
3%ofmarket
CurrentpricebasedonMoloflakesizedistribu4on
17
Drama4creduc4onvs.2015FS
AccommodaIon
Office
Storage
PotableH2O
AccommodaIon
Office
Storage
PrimaryMill
ClassificaIon
PrimaryFlotaIon
SecondaryMills&FlotaIon
WetTailingsLargerCrushingCircuit
Phase1: 17,000tpamine,30yr.minelifePhase2: Plannedexpansionto50,000tpausingmodularapproach
2-phased approach to production
18
2015FEASIBILITYSTUDY
US$188M for
53,000 tpa production capability
• Averageglobalproduc4onofaflakegraphitemine=11,600tpa• At17,000tpa,theMolowouldrankasatop3producingmine
globallyoutsideofChina
CAPEX comparison
US$18.4M for
17,000 tpa production capability
US$?M for
50,000 tpa production capability
2017UPDATEDFEASIBILITYSTUDYFORPHASE1
PHASE2ESTIMATEDCAPEXTOBE
DETERMINEDWITHMODULARAPPROACH
19
MOLO DIFFERENTIATORS
20
What sets us apart from other projects.
Lowest CAPEX of any competing project
$18.4million(USD)
ActualrepresentaIonoftheMolomine
actual estimated
21
$-
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
$300,000,000
MOLO Focus Mason NouveauMonde
Northern Kibaran Magnis Syrah
CAPEX($USD)
Source:SEDAR.comandrespec4vecompany’snewsreleases
• Lowestquar4leOPEXonanall-in,CIFbasis• Compe44vewithChineseflakepricing
Low operating costs
PHASE1(detailedengineering)Ex-plant: $433/TCIFRokerdam:$688/T
OPEX Portd'EholaatFortDauphin
Source:2017MoloFS22
EU
China
India
SouthKorea
Japan
MoloDepositMadagascar
MOLOISLOCATEDWITHINTHEHUBOFTOPPURCHASINGANDPROCESSINGMARKETSFORFLAKEGRAPHITE.
Location
23
Size
24*Please refer to the Company’s technical report entitled “Molo Feasibility Study” dated February 6, 2015 available under the Company’s profile at www.sedar.com for a discussion in respect of certain key assumptions, parameters and methods in respect to the mineral resource disclosure.
• 23.62Mt)[email protected]%,
RESOURCES;abovea2%Ccut-off RESERVES;abovea4.5%Ccut-off
• [email protected]%C,
• 22.44MtProven&[email protected]%C
Averylargeresource.
100.37milliontonnes(MT)measured&indicatedCombinedMeasured&[email protected]%C,abovea2%Ccut-off
[email protected]%C,abovea2%Ccut-off
Japan
20-40km 12-15km
5-10km
40-60km
40-60km
Scalability
MOLODEPOSIT• 300mx1500m
ADDITIONALGRAPHITETRENDS
Openalongstrikeandatdepth.Mineraliza4onconsistentthroughout.
• Over300linekmsofcon4nuousgraphiteiden4fied• Immediatelyatsurface
25
IMMEDIATELYATSURFACE
• Minimaloverburden
• Negligiblewaste-to-orera4o(0.81:1)
• Verylowenvironmentalandsocialliabili4es
Ease of extraction
Surfacegraphitevisiblefromtheair
26
• 97%-98%carbon(C)purityachievedwithsimpleflota4on
• Excellentthermalexpansioncoefficient(>500x)forgraphitefoilapplica4ons
• Easilyupgradedto99.97%C(baberygrade)
Source:SGSMinerals
SuperFlake™
Very high-qualityflakegraphite.
27
Source:2015MoloFeasibilityStudy
SuperFlake™
large/jumboflake
78.9%medium/large/jumboflake
21.1%small/fineflake
GradeMesh Size % Distribution % Carbon (t)
+48 (jumbo flake) 23.6 96.9
+65 (coarse flake) 14.6 97.1
+80 (large flake) 8.2 97.0
+100 (medium-large flake) 6.9 97.2
+150 (medium flake) 15.5 97.3
+200 (medium-small flake) 10.1 98.1
-200 (small / fine flake) 21.1 97.5
Molopilotplantproduced13tonnesofSuperFlake™atSGSCanadaInc.
Excellentflakesizedistribu4onandaveragepuri4eswellabovetheglobalaverage.
28
SuperFlake™ is verified by end users for ALL top demand markets
29
Engineering and technical expertise
RobinBorleySeniorVicePresident,MineDevelopmentPr.TechEng
• FormerDirectorofMiningOpera4onsforDRAGlobal• 25+yearsexperiencebuildingandopera4ngmines
interna4onally(incl.Madagascar)
JohanndeBruinSeniorConsultant,Opera4onalReadinessPrEng
• Re4redManagingDirectorofDRAGlobalAfricas• 30+yearsofminingopera4onsexperienceinAfrica,Australia
andCanada
OliverPetersSr.Consultant,ProcessEngineeringPrEng
• HeadprocessengineeratSGSMineralsCanada(Lakefield)
• FormerprocessengineeratDRAGlobal
• 25+yearsofprocessengineeringexperienceinAfricaandCanada
30
Financing
Procurement
Assembly&FAT
Transport
SitePrepara4on
Commissioning
Fabrica4on
ACCELERATEDTIMELINE
Produc4on
TimelinebasedonobtainingminefinancingbySept1st.
Fast-tracking to mine development
31
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec20182017
Jun Jul Aug Sept Oct Nov Dec
SitePrepara4on
Fast-tracking to mine development
32
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
20182017Jun Jul Aug Sept Oct Nov Dec
Phase1(17,000T/yr)
Financing
Construc4on
Commissioning
CommercialProduc4on
Phase2(53,000T/yr)
2019Jan Feb Mar Apr May Jun Jul
Financing
Construc4on
Commissioning
CommercialProdu
c4on
FrontEndEngineering&Design(FEED)Study
DetailedEngineering
Procurement
Assembly&FAT
Transport
SitePrepara4on
Fabrica4on
BasedonMarketCondi4ons
The Molo growth plan
2018
• Easyexpansionasmarketdemandrequires
• VerylowCAPEXexpected
• Furtherreduc4oninOPEXexpectedthrougheconomiesofscale
• Posi4veeconomicsundercurrentmarketcondi4ons
• First-moveradvantage
• Significantbarriertoentry
• Proofofconcept
• Right-sizedforcurrentmarket
2019-2020
Phase 1 17,000 tpa
Phase 2 >50,000 tpa
-
10,000
20,000
30,000
40,000
50,000
60,000
NS1 NS2 Mason NouveauMonde Northern
Produc;on/Year(T)
33 Source:SEDAR.comandrespec4vecompany’snewsreleases
NS1=Phase1 NS2=Phase2
NextSource’s growth plan
Wherewearegoing.Asamaterialscompany,wewillapplyouruniquemodularminemodelacrossotherprojectsandcommodi4es.
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DundeeResources 19%
VRCapitalGroup 10%
JPMorganAssetManagement 8%
InvestorsGroup/MackenzieFinancial 5%
AGFMutualFundGroup 3%
DRAGlobal 1%
Management 7%
Strong institutional shareholders
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