Mr. Eric Desaulniers reports

NMG PROVIDES QUARTERLY UPDATE: CHANGING MARKET DYNAMICS AND INTENSIFIED COMMERCIAL NEGOTIATIONS UNDERPIN PHASE-2 GROWTH

New market dynamics set favourable conditions for Nouveau Monde Graphite Inc. as the company maintains operational, commercial and financing focus on advancing its development to the final-investment-decision stage for its phase 2 commercial facilities. The company reports steady progress on negotiations of multiyear offtake agreements with top-tier battery and electric vehicle manufacturers at a period of newly announced Chinese restrictions on graphite exports. NMG is advancing the commercial parameters and the execution plan for the phase 2 Matawinie mine and Becancour battery material plan on the back of revived urgency for the development of the North American battery supply chain.

Arne H. Frandsen, chair of NMG, declared: "While the market was shaken by China's announcement curtailment of graphite exports, our unwavering business strategy continues to be reinforced thanks to our localized and fully integrated graphite source. We remain focused and diligently engaged on the thorough task of finalizing anchor offtakes with battery/EV manufacturers. I am confident that shareholders, lenders and stakeholders share our commitment to sound commercial foundations and exemplary operations on the environmental, social, governance and quality levels."

Eric Desaulniers, founder, president and chief executive officer of NMG, said: "Although announcements for additional battery production capacity multiply across North America and Europe, the minerals and advanced materials could very much become the bottleneck for manufacturing cleantech solutions. Having a solid roster of potential customers, we are converging efforts on optimizing our cost and financing structure, securing long-term value in sales contracts, and mapping our execution and operational readiness for success."

Operations overview: scaling from phase 1 to phase 2

Determined to provide a turnkey and traceable source to battery manufacturers, the company has demonstrated an established capacity to produce at all stages of graphite transformation, from ore to active anode material, at its phase 1 facilities. NMG operates a concentrator, two shaping modules, two commercial-scale purification furnaces and a coating unit for a nameplate capacity of 2,000 tonnes per annum.

NMG has successfully and repeatedly produced on-specifications batches of active anode material as per potential customers' individual requirements. Through active engagement with these potential customers, the company is building a robust model to efficiently produce customized samples of varying specifications, with short development and optimization time.

Production samples continue to demonstrate positive results both at the company's laboratory and at a leading third party testing facility. NMG's active anode material is now being tested within Panasonic Energy's battery prototype production line, enabling the diligent progress of the qualification process. Supporting this work and underlying commercial discussions, NMG and Panasonic Energy Co. Ltd. actively co-operate to strengthen technological development and process optimization for the company's active anode material production.

To bridge development from phase 1 to phase 2, the company leverages contemplated commercial offtakes and intelligence from technical engagement with potential customers into the engineering of the Matawinie mine and the Becancour battery material plant. AtkinsRealis and BBA currently support NMG on advancing design, performing trade-off studies and value engineering, and supporting cost optimization for each project.

NMG has also appointed Pomerleau as construction manager for the preconstruction stage of its phase 2 commercial facilities. Pomerleau's mandate covers the preconstruction management of the phase 2 Matawinie industrial facilities and the Becancour battery material plant. Pomerleau is working closely with NMG's project team to prepare a detailed construction sequence and schedule, to develop the contracting strategy, to optimize worksite logistics, and to expand the health and safety, environment, and quality programs.

Pomerleau is also contributing to the budget revision, cost optimization and project control activities for both projects. NMG aims to refine capital expenditure estimates in light of advanced engineering, contemplated offtake agreements, stabilizing material costs and synergies between the two sites for the pro-active procurement strategy. The company will benefit from Pomerleau's established pool of workers and specialty subcontractors.

Construction permit demands as well as long-lead items tendering packages are being prepared in preparation for the construction of the phase 2 projects.

Commercial engagement amid tightening market

Commercial negotiations are intensifying as the company works with potential Tier 1 battery and EV customers to establish anchor multiyear offtake agreements with a flexible pricing mechanism that reflects NMG's active anode material value and advantages, namely a carbon-neutrality guarantee, strategic location, strong ESG profile and easy logistics. Via these multiyear contracts, NMG seeks to provide commercial-capability assurance to lenders and ensure long-term upside opportunities for shareholders.

On the back of their framework agreement targeting NMG's fully integrated ore-to-anode-material production, NMG and Panasonic Energy, a wholly owned subsidiary of Panasonic Holdings Corp. (TYO: 6752), are advancing negotiations toward a definitive offtake agreement. NMG and Panasonic Energy's continued collaboration was reaffirmed at a Japan-Canada trade alliance ceremony earlier this fall as government and industry officialized efforts to enhance the resilience of critical mineral global supply chains, localize advanced manufacturing for the North American market, improve adherence to environmental, social and governance standards, and foster new investment opportunities.

In addition to Panasonic Energy, the company is engaged in discussions with other Tier 1 battery and EV manufacturers for potential offtake agreements. NMG is focused on securing the best agreements and positioning the company for long-term growth in the Western industry.

Indeed, recent announced restrictions on graphite exports by China's Ministry of Commerce and General Administration of Customs are exacerbating pressure on the North American and European battery supply chain. China currently controls 65 per cent of the natural graphite global production (U.S. Geological Survey, January, 2023), and over 99 per cent of spherical graphite refining for lithium-ion batteries (Benchmark Mineral Intelligence, Q3 2023).

This new requirement may offer opportunities for producers outside of China and support graphite prices. Battery manufacturers are already starting to build up inventories in anticipation of these restrictions (Benchmark Mineral Intelligence, October, 2023) and analysts forecast an acceleration of graphite onshoring (UBS, October, 2023).

The situation reiterates the need for local, reliable and scalable supply chains for western battery and electric vehicle producers. Quebec, Canada, is rapidly emerging as a prominent hub for the battery supply chain in North America, predominantly due to its low-carbon hydro power electricity and abundant raw materials. Swedish Tier 1 cell producer Northvolt announced in September, 2023, plans to establish a 60-gigawatt-hour cell production facility in the province, scheduled to commence operations in 2026. This $7-billion venture marks the largest-ever investment in Quebec and contributes to the growing presence of EV battery manufacturing in the country.

EVs continue to gain market shares; September, 2023, set a new record for global electric vehicle sales, with over 1.3 million units sold (Rho Motion, October, 2023). To meet the growing demand, the lithium-ion battery industry is now developing 9,246 gigawatt-hours of global production capacity by 2030 through 408 gigafactories (Benchmark Mineral Intelligence, October, 2023), which would require 11,717,000 tonnes per annum of graphite.

Set to become the largest fully integrated producer of natural graphite in North America, NMG is benefiting from these various market trends as demonstrated in current commercial engagement.

Sustainable design and execution

In line with its strong ESG resolute, the company is advancing its electrification program. NMG and Caterpillar Inc. have established a calendar to deploy early learners and pilot models at the phase 2 Matawinie mine. These models will be tested in real-world conditions and will help guide the transition to future zero-exhaust emission production models. The site's charging infrastructure is also being designed through modelling and simulations to optimize technology choices in relation to operational schedules and the mining plan, identify peak power demand, and define energy management strategies.

Complementary to plans for the Matawinie mine, NMG obtained confirmation of a discounted industrial rate for its operations and a 77-megawatt electricity block for the phase 2 Becancour battery material plant. Quebec's energy grid being among the greenest in the world, NMG's confirmed capacity to tap into the network provides a solid foundation for deploying new equipment and proprietary technologies with a view to produce advanced materials with a very low climate change impact, in line with global decarbonization efforts.

To inform its project development and secure its social licence to operate, the company maintains open and pro-active engagement with stakeholders and first nations. NMG continues to invest in local work force training ahead of its phase 2 operations via on-the-job training programs. The Diploma of Vocational Studies in Production Equipment Operation based in Saint-Michel-des-Saints is now at its ninth cohort, leading graduates to a position as an operator at the Matawinie phase 1 demonstration plant, while recruitment for the Condensed College Diploma in Industrial Processes for Clean Technologies is starting for learners in the Becancour region. These two programs are developed in collaboration with education organizations and industrial partners with a view to expand synergies and promote local opportunities.

For the nine-month period ended Sept. 30, 2023, NMG had an occupational safety and health administration recordable incident rate of 4.77 at its facilities due to minor slip-and-fall incidents. The company is paying increased attention to slippery surfaces and raising awareness of workers.

The company's period-end cash position is at $48.6-million.

About Nouveau Monde Graphite Inc.

Nouveau Monde Graphite is striving to become a key contributor to the sustainable energy revolution. The company is working toward developing a fully integrated source of carbon-neutral battery anode material in Quebec, Canada, for the growing lithium-ion and fuel cell markets. With 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.

We seek Safe Harbor.