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NMG PROVIDES PROJECT FINANCE UPDATE

Nouveau Monde Graphite Inc. has made meaningful progress on its financing efforts for the development of its fully vertically integrated phase 2 operations, combining the Becancour battery material plant and Matawinie mine. Following the appointment of financial advisors to assist with the structuring and securing of project financing, the Company has engaged with Export Credit Agencies (“ECAs”), governments, strategic investors, and potential customers to frame a robust capital structure that leverages international debt, government funding and equity. NMG has received formal Expressions of Interest (“EOI”) to cover approximately up to 70% of the estimated total funding for an integrated project, subject to standard project finance conditions. NMG’s financing approach strives to further derisk its development by seeking to secure medium-term debt, complemented by strategic equity participation.

Arne H Frandsen, Chair of NMG, said: “The strong expressions of interest received through our financing efforts thus far illustrates the technical, commercial, and sustainable attractiveness of NMG’s ore-to-battery-material business. As the Western World rushes to secure minerals, advanced materials, and manufacturing capacity to engage in the global clean energy economy, the team at NMG has made tremendous progress in advancing our fully integrated model through our proprietary ecotechnologies, Phase-1 production, engineering of our Phase 2 and active engagement with the marketplace. The contemplated structure of our financing and the participation of leading international lenders would strategically position the Company for future steps.”

Senior Debt Facility

As NMG’s technical team and engineering consultants finalize the selection of key equipment and service providers for Phase 2, discussions with ECAs have advanced considerably and have led to a significant level of interest by certain ECAs. The Company has received indicative expressions of interest for a senior debt facility from Euler Hermes Aktiengesellschaft, the German Export Credit Agency (“EH”) and Export Development of Canada (“EDC”) Canada’s export credit agency.

The proposed medium-term project finance is expected to deliver a significantly lower cost of capital than traditional financing structures. As both ECAs and the capital markets increasingly turn their attention to support impact investment, the funding would also reflect NMG’s significant environmental, social and governance (“ESG”) benefits to key stakeholders, including the local community, as well as contribute to the global clean energy drive towards zero emissions. The lower interest rates and longer repayment terms associated with ECA financing minimizes the financial risks with this level of funding.

Eric Desaulniers, Founder, President, and CEO of NMG, commented:

“I am confident that the competitive and integrated nature of our projects, combined with our best-in-class approach to ESG standards, will advantageously position NMG towards international lenders and customers. As governments, institutions and investors look to support decarbonization ventures, our value proposition provides exceptional exposure to battery materials while promoting a carbon-neutral footprint, local development of critical value chains and responsible sourcing.”

The EOIs have indicated funding of up to approximately 70% of the total funding required, to include both an imported component and the local costs associated with the installation of that imported content and an additional local component. EH has provided a strong EOI which is in line with the Organisation for Economic Co-operation and Development (“OECD”) Arrangements of Officially Supported Export Credits. EH has stipulated minimum German content requirements and welcomes EDC’s involvement in helping to facilitate the development of the project in order to support greater exports out of Canada under their “Export Capacity” mandate. EDC will potentially provide direct lending in either CAD$ or US$, the terms of which will need to be agreed. EDC is expected to participate alongside EH under a Common Terms Agreement.

The EOIs provide an indication of the attractiveness of the project, and cover, in principle, the level of financial support and their flexibility and desired conditions. The EOIs are not binding commitments and are subject as is customary to a series of standard project finance terms and satisfactory due diligence.

To further advance the development of this facility, NMG has appointed Societe Generale as the sole coordinating mandated lead arranger (“MLA”). The appointment of Societe Generale was undertaken after a Tender Panel issued by NMG’s advisor, GKB Ventures Ltd (and supported by SD Capital Advisory Limited), to the banking market and after an extensive review and selection process. Societe Generale is a leading international financial services group, has very strong credentials in the metals and mining space as well as the battery value chain. It was named International Financing Review’s 2021 Bank of the Year for Sustainability for its role in helping tackle global warming through financial leadership and climate action.

The following stages in the Company’s financing efforts will include, among other things, setting up due diligence workstreams, completion of the definitive feasibility study, securing a formal credit approval and providing lenders with its National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”)-compliant feasibility study. Targeted to be delivered before the end of Q2-2022, the study will reflect NMG’s integrated business model for the Phase-2 Becancour Battery Material Plant and Matawinie Mine in a unified economics structure.

The ECA backing that the Company is striving to secure demonstrates a sound vote of confidence in the responsible, carbon-neutral and sustainable development of what is projected to be North America’s largest fully integrated natural graphite operation.

Commercial Engagement

In parallel to its financing efforts, NMG continues to advance commercial discussions with tier-1 battery manufacturers thanks to the production of its Phase-1 facilities that enables technical product qualification and confirmation of specifications and quality standards. The Company is striving to secure an anchor customer offtake agreement that could potentially be coupled with a cornerstone strategic investor’s participation in the financing structure. This agreement could prove beneficial in advancing the financing efforts to the next stage.

Leveraging its global advisory expertise in the battery and energy transition sectors, Societe Generale will also assist NMG as a strategic advisor in the negotiation with a potential off-taker and equity-stake investor. Throughout the negotiation process, Societe Generale will be called upon to provide a valuation view, assistance in the formulation of an optimal outcome across off-take conditions, valuation of the equity and timeline to enable the project finance debt, and support in structuring and finalizing the terms and conditions of the equity investment.

Governmental Levers

Based on discussions to date, NMG anticipates meaningful government support in the form of debt, equity and/or grants as both the Quebec and Canadian governments are rolling out generous measures to develop a local battery and electric industry underpinned by an abundance of strategic minerals, mining expertise, advanced manufacturing capacity and ESG-leading standards. The U.S. Government has also positioned its capacity to fund critical mineral businesses by adopting the Defense Production Act Title III Presidential Determination for Critical Materials in Large-Capacity Batteries.

About Nouveau Monde Graphite

Nouveau Monde Graphite is striving to become a key contributor to the sustainable energy revolution. The Company is working towards developing a fully integrated source of carbon-neutral battery anode material in Quebec, Canada for the growing lithium-ion and fuel cell markets. With low-cost operations and enviable ESG standards, NMG aspires to become a strategic supplier to the world’s leading battery and automobile manufacturers, providing high-performing and reliable advanced materials while promoting sustainability and supply chain traceability. www.NMG.com

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