Mr. Hanre Rossouw reports

NEXTSOURCE MATERIALS EXECUTES LETTER OF INTENT WITH HANWA AND JOGMEC FOR A US$30 MILLION STRATEGIC INVESTMENT IN UAE BATTERY ANODE FACILITY

NextSource Materials Inc. has executed a letter of intent (LOI) with Hanwa Co. Ltd., one of Japan's leading trading companies, and Japan Organization for Metals and Energy Security (JOGMEC), a Japanese government agency, for a potential investment in phase 1 of the company's proposed battery anode facility (BAF) in the industrial city of Abu Dhabi in the United Arab Emirates.

Highlights:

• Strategic Japanese investment and partnership achieved through an executed LOI with Hanwa and JOGMEC for a potential project-level equity investment in the UAE battery anode facility of up to $30-million (U.S.);
• Joint investment vehicle to be formed by Hanwa and JOGMEC for the purpose of acquiring a minority equity interest in the company's UAE BAF at the project level;
• Significant advancement on the path to a final investment decision (FID) achieved as this LOI formalizes the previously announced Japanese strategic consortium and further reinforces the company's momentum toward FID;
• Government support provided by the participation of JOGMEC, a Japanese government agency, underscoring the importance of the UAE BAF in diversifying critical mineral supply chains for the Japanese battery industry;
• Exclusivity provided to Hanwa and JOGMEC to March 31, 2026, aligning with the company's planned FID by end Q1 2026.

This LOI represents a key milestone in the company's strategic financing process and underscores growing international interest in establishing diversified and secure battery anode supply chains.

Under the terms outlined in the LOI, Hanwa and JOGMEC collectively are jointly considering a project-level investment of up to $30-million (U.S.) through a special-purpose vehicle jointly owned by the two parties. This investment is anticipated to represent up to 15-per-cent equity interest in the UAE BAF project company upon completion of the initial financing for phase 1. The investment is contemplated to occur in one or more phases, subject to the negotiation and execution of definitive agreements.

As previously announced, phase 1 of the planned UAE BAF is proposed to have an initial production capacity of approximately 14,000 tonnes per annum of natural graphite active anode material, forming part of a staged development strategy targeting total capacity of approximately 30,000 tonnes per annum.

In addition to the contemplated investment into the company's UAE BAF, the LOI also includes Hanwa's and JOGMEC's shared interest in a broader strategic framework, which may include preferential Japanese offtake arrangements, distribution and logistics services to be provided by Hanwa in designated territories, and a long-term supply agreement for graphite feedstock from NextSource's Molo graphite mine.

Hanre Rossouw, president and chief executive officer of NextSource, commented: "We are excited to advance our discussions on strategic partnership with Hanwa and JOGMEC, two esteemed Japanese organizations with deep expertise in global battery materials and energy security and global market access. This LOI highlights the strategic value of our UAE BAF project in supporting Japan's supply chain objectives and diversifying global anode production and represents a potential cornerstone investment toward securing the project's funding requirements."

The LOI is non-binding and subject to customary conditions, including completion of final due diligence, regulatory approvals and internal approvals by all parties. The parties have agreed to an exclusivity period until March 31, 2026, during which time NextSource has agreed not to engage in discussions with other Japanese entities regarding similar investments in the BAF project.

The company continues to advance parallel workstreams to reach FID by the end of Q1 2026, supported by strong progress in front-end engineering and design (FEED) with its engineering partner firm, Stantec. Upon a successful FID and financing, the company will proceed with remaining equipment procurement, installation, commissioning and ramp-up in accordance with its phased development plan.

Mitsubishi offtake agreement.

As previously announced, on Aug. 5, 2025, the company and Mitsubishi Chemical Corp. (MCC) entered into a binding, multiyear offtake agreement. Under the terms of the offtake agreement, the company and MCC have partnered to supply anode active material to a major OEM (original equipment manufacturer) for the North American EV (electric vehicle) market.

The offtake agreement is subject to certain conditions precedents, including, among other matters, the company's obligation to secure financing for the construction of its battery anode facility in the United Arab Emirates, commencement of construction of the UAE BAF and the commencement of production from the first production line by an agreed date. In light of several factors, including delays in securing the required financing, it is unlikely that the company will be able to meet certain of these conditions under the timeline agreed in the offtake agreement. The company has commenced discussions with MCC in respect of establishing a revised timeline to satisfy the conditions precedent. The company expects that it will be able to reach an agreement on these matters with MCC in the next 30 to 45 days; however, no assurance can be given in this regard. In the event that the timeline for meeting these conditions precedent cannot be favourably renegotiated with MCC or waived by MCC, MCC may elect to terminate the offtake agreement. In such instance, the company will not have a confirmed offtake partner for the anticipated production of the BAF.

About NextSource Materials Inc.

NextSource Materials is a battery materials company based in Toronto, Canada, that is intent on becoming a vertically integrated global supplier of battery materials through the mining and value-added processing of graphite and other minerals.

The company's Molo graphite project in Madagascar is one of the largest known and highest-quality graphite resources globally and the only one with SuperFlake graphite. The Molo mine has begun production through phase 1 mine operations.

The company is also developing a significant downstream graphite value-add business through the staged rollout of battery anode facilities capable of large-scale production of coated, spheronized and purified graphite for direct delivery to battery and automotive customers in a fully transparent and traceable manner. The company is now in the process of developing its first BAF in the UAE.

NextSource Materials is listed on the Toronto Stock Exchange under the symbol NEXT and on the OTCQB under the symbol NSRCF.

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