Executive Summary / Key Takeaways

• Nouveau Monde Graphite (NMG) is strategically positioning itself as a vertically integrated, carbon-neutral supplier of graphite-based active anode material for the burgeoning electric vehicle (EV) and energy storage markets in the Western world.
• The company's phased development plan, centered on the Matawinie Mine and Bécancour Battery Material Plant, is progressing towards a Final Investment Decision (FID) with cumulative expressions of interest for project financing reaching approximately US$1.60 billion.
• NMG's technological strategy emphasizes de-risking through demonstration plants and a shift to proven chemical purification technology for its Phase-2 Bécancour plant, aiming for high-purity anode material and leveraging R&D for next-generation solutions.
• Despite a current lack of operating revenue and ongoing negative cash flow, the company anticipates commercial production within three years of a positive FID, supported by significant offtake agreements covering over 80% of planned Phase-2 active anode material production.
• The investment thesis hinges on NMG's ability to secure full project financing, execute its development plan, and capitalize on geopolitical tailwinds, such as U.S. tariffs on Chinese graphite, to establish a secure, localized supply chain.

Powering the Green Revolution: NMG's Strategic Ascent

Nouveau Monde Graphite (NYSE:NMG) is emerging as a pivotal player in the critical minerals sector, dedicated to establishing a fully integrated, carbon-neutral supply chain for graphite-based active anode material. This material is indispensable for the rapidly expanding electric vehicle (EV) and energy storage system markets. The company's strategic focus on Québec, Canada, leverages the region's abundant hydroelectricity and robust infrastructure, positioning NMG as a potential cornerstone for Western battery manufacturing.

The global landscape for critical minerals is undergoing a profound transformation. Demand for lithium-ion battery components, driven by the electrification of transportation and grid-scale energy storage, continues its upward trajectory. Geopolitical dynamics further underscore the urgency for diversified and localized supply chains. Notably, U.S. imports of both synthetic and natural graphite anodes from China are now subject to a combined 170% in tariffs, creating a significant competitive advantage for non-Chinese suppliers like NMG. This policy shift, coupled with stated governmental aims to reduce reliance on foreign critical mineral control, provides a powerful tailwind for NMG's North American-centric strategy. While the global graphite market has experienced a recent slump due to inventory gluts, a structural deficit is widely forecast in the medium to long term, highlighting the strategic importance of NMG's projects.

NMG's journey began on December 31, 2012, as Nouveau Monde Mining Enterprises Inc., evolving through a name change in 2017 and a reverse stock split in 2021. Early operational milestones included the launch of a graphite flake concentration demonstration plant in September 2018 and a Shaping Demonstration Plant in February 2020. These early-stage facilities were crucial for product sampling, qualification, and process optimization, laying the groundwork for the company's ambitious Phase-2 commercial projects.

The Integrated Vision: From Ore to Anode

NMG's core strategy revolves around a phased development plan for its Matawinie Mine and Bécancour Battery Material Plant, aiming to create a seamless "ore-to-battery-material" production flow. This integrated approach is designed to offer a turnkey, local source of natural graphite active anode material, catering directly to the needs of leading lithium-ion battery and EV manufacturers.

The Matawinie Mine Project is envisioned as the upstream anchor, supplying high-purity graphite concentrate. The 2025 Updated Feasibility Study outlines a robust project with a 25-year life of mine (LOM), a nominal annual processing rate of 2.56 million metric tonnes, and an average recovery rate of 93%. This is projected to yield 105,882 metric tonnes of graphite concentrate annually, with a finished product purity of 97.50% Cg. The capital expenditure (CAPEX) for the Matawinie Mine is estimated at US$415 million, with annual operating expenses (OPEX) of US$44 million. A key differentiator is NMG's commitment to sustainability, pursuing an electrification strategy in collaboration with Caterpillar Inc. (CAT) for a zero-emission mining fleet and leveraging Hydro-Québec's 120-kV electrical line to power operations with clean hydroelectricity.

Downstream, the Bécancour Battery Material Plant Project is set to transform Matawinie's concentrate into advanced active anode material. Located in Québec's "battery valley," this plant benefits from robust local infrastructure, including chemical suppliers, affordable hydroelectricity, and access to international shipping and rail. The 2025 Updated Feasibility Study projects an annual average production of 44,100 tonnes of active anode material and 43,334 tonnes of micronized byproduct, achieving a finished product purity of 99.90% Cg. The CAPEX for this advanced processing facility is estimated at US$911 million, with annual OPEX of US$124 million.

Technological Edge and Innovation

NMG's technological differentiators are central to its competitive strategy. The company has utilized its Phase-1 demonstration plants—the Concentrator, Shaping, and Coating Demonstration Plants—to optimize processes, qualify products, and refine operational parameters. The Shaping Demonstration Plant, operational since February 2020, focuses on micronization and spheronization to produce dense spherical graphite particles, a critical step for battery anode material. The Coating Demonstration Plant applies an amorphous carbon coating to purified graphite, enhancing battery performance by minimizing surface area and improving stability.

A significant technological decision involved the purification process. After extensive testing at its proprietary Purification Demonstration Plant and third-party sites, NMG opted to decommission its thermochemical facility by Q3-2025. Instead, the company has selected a prevalent chemical purification technology for its Phase-2 Bécancour plant. This strategic shift is driven by the chemical technology's "demonstrated performance and efficiency in commercial operations in Asia and the Western World," which "significantly reduc[es] the technological risks for the project". This pragmatic approach prioritizes proven, scalable solutions, thereby de-risking a critical aspect of anode material production.

Beyond current processes, NMG maintains an active R&D portfolio through collaborations with academic institutions like McGill University and the University of Sherbrooke. These initiatives focus on developing new precursors, coating technologies, and eco-friendly processes, aiming to enhance graphite performance, reduce environmental impact, and lower production costs. A US$500,000 research grant received in June 2024 from the Ministère des Ressources naturelles et des Forêts du Québec further supports the development of a versatile "next-generation active anode material". This commitment to continuous innovation, coupled with its participation in the Global Battery Alliance's Battery Passport initiative for traceability, strengthens NMG's competitive moat by addressing both performance and critical ESG metrics.

Looking ahead, the Uatnan Mining Project is targeted as NMG's Phase-3 expansion, aiming to significantly scale up graphite production to approximately 500,000 tonnes per annum, entirely dedicated to the anode material market. This project, acquired in January 2024, underscores NMG's long-term growth ambitions and its commitment to establishing a large-scale, fully vertically integrated natural graphite production capability.

Financial Foundations and the Path to Commercialization

NMG is currently a development-stage company, meaning it has no history of revenues from its operating activities and has consistently reported net losses and negative cash flows. For the fiscal year ended December 31, 2024, the company recorded a net loss and comprehensive loss of C$73.28 million. Operating activities consumed C$51.95 million in cash during the same period. As of December 31, 2024, NMG held C$106.30 million in cash and cash equivalents and C$67.03 million in working capital. The company anticipates that negative cash flow from operating activities will persist until commercial production is achieved at both the Matawinie Mine and Bécancour Battery Material Plant.

The path to commercialization is heavily reliant on securing substantial project financing. NMG has made significant strides in this area, receiving cumulative expressions of interest from potential lenders, customers, and institutional equity investors totaling approximately US$1.60 billion. Société Générale (SCGLY) and BMO Capital Markets (BMO) are advising on debt and equity financing, respectively. The company is also exploring strategies like sequencing financing stages to mitigate geopolitical risks. While management believes a Final Investment Decision (FID) will occur, there is no assurance that these expressions of interest will convert into a positive FID.

The 2025 Updated Feasibility Study's financial metrics are aligned with U.S. dollars, reflecting that nearly 100% of the project financing, anticipated revenue, significant capital expenditures, and interest expenses are expected to be U.S. dollar-denominated. This alignment provides a clearer representation of the project's underlying economic realities.

Competitive Landscape and Strategic Positioning

NMG operates within a competitive global graphite market, but its integrated, North American-focused strategy provides distinct advantages. Key direct competitors include Syrah Resources (SYAAF), Graphite One Inc. (GPHOF), and Westwater Resources (WWR), each with their own strengths and strategic focuses.

Syrah Resources, an Australian-based company, has established global production capabilities, particularly for the EV battery market. While Syrah benefits from a longer operational track record and consistent profitability from its advanced-stage projects, NMG's emphasis on localized production in Canada offers potential advantages in regional logistics and responsiveness to North American customers. NMG's Matawinie project, with its focus on sustainable, regionally integrated supply, could appeal to customers prioritizing local sourcing, potentially leading to improved pricing power in its target markets.

Graphite One Inc., a U.S.-based company, is developing its Graphite Creek project in Alaska, aiming to supply the North American market. NMG's Canadian projects, like Matawinie, offer similar North American supply chain benefits. However, NMG may demonstrate greater efficiency in project execution due to its established exploration track record and access to existing Canadian mining infrastructure. While Graphite One might see stronger growth from U.S. market penetration and potential government incentives, NMG's diversified business segments (including real estate) could offer operational efficiency.

Westwater Resources, also U.S.-based, focuses on a broader portfolio of energy materials. NMG's specialized focus on high-purity graphite projects in Canada could provide greater efficiency in project-specific execution and foster stronger customer loyalty within the graphite-dependent battery market. NMG's concentrated efforts may lead to lower operating costs and faster innovation cycles in its core area, differentiating it from Westwater's more diversified, and potentially riskier, multi-material exposure.

NMG's strategic shift to a prevalent chemical purification technology for its Phase-2 Bécancour plant, based on its proven performance in commercial operations, significantly reduces technological risks and aligns NMG with established industry best practices. This decision enhances its competitive standing by ensuring product quality and reliability, crucial for tier-1 battery manufacturers. The imposition of 170% tariffs on Chinese graphite anodes by the U.S. further strengthens NMG's competitive position, creating a protected market for its future output.

Outlook, Milestones, and Key Investment Risks

NMG's outlook is firmly tied to the successful execution of its phased development plan and securing the necessary financing. The company anticipates that upon a positive FID, both the Matawinie Mine and Bécancour Battery Material Plant could be built and enter commercial production within less than three years. This timeline positions NMG to capitalize on the projected long-term structural deficit in the graphite market. The decommissioning of the Purification Demonstration Plant by Q3-2025 marks a key operational milestone, streamlining the path to commercial-scale purification. The Uatnan Mining Project, as a Phase-3 expansion, represents significant future growth potential, though it requires additional funding and is contingent on positive studies and stakeholder engagement.

Despite the promising outlook, an investment in NMG carries substantial risks. The company is a speculative investment, and there is no guarantee of achieving commercial production or generating revenues, potentially leading to a complete loss of investment. NMG will continue to experience negative cash flow from operating activities until commercial production is realized. A critical risk factor involves the company's offtake agreements, which cover over 80% of its planned Phase-2 active anode material production. These agreements contain conditions precedent, including a positive FID and other project-related agreements by fixed dates, which have been exceeded. The termination of these agreements would have a "material adverse impact on the Corporations business, ability to obtain additional financing, financial performance and operations". Furthermore, there is currently no active trading market for NMG's Debt Securities, Subscription Receipts, Warrants, or Units, other than its Common Shares. The company also retains broad discretion over the use of proceeds from any future securities offerings, and there are no current plans to pay cash dividends.

Conclusion

Nouveau Monde Graphite stands at the precipice of transforming from a development-stage entity into a critical supplier for the Western world's burgeoning battery industry. Its integrated "ore-to-battery-material" strategy, anchored by the Matawinie Mine and Bécancour Battery Material Plant in Québec, offers a compelling narrative of localized, carbon-neutral, and traceable graphite anode material production. The company's pragmatic technological choices, including the adoption of proven chemical purification, coupled with its active R&D and ESG commitments, reinforce its competitive positioning.

While NMG's financial performance currently reflects its pre-revenue development stage, the significant expressions of interest for project financing and substantial offtake agreements underscore the market's recognition of its strategic value. The investment thesis for NMG is deeply rooted in its ability to successfully secure this financing, execute its ambitious construction timelines, and navigate the inherent risks of large-scale project development. Should NMG achieve commercial production within its stated timeframe, it is poised to become a foundational element in the secure and sustainable supply chain for the electric vehicle and energy storage revolution, offering a unique opportunity for investors seeking exposure to the critical minerals essential for a greener future.