UAE Battery Anode Facility FID

Research evidence excerpt

UAE Battery Anode Facility FID

re 6C: NextSource Materials is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited

or an affiliate within the past 12 months: C) Non-Securities Related Services.

Methodology and Risks to Target Price/Valuation for NextSource Materials (NEXT-TSX)

Methodology: We currently do not ascribe a target price to NEXT shares.

Risks: (1) Inability to secure the financing required to advance its development plans along its anticipated timeline. Additional equity and/

or debt funding is required to advance the planned Molo expansion and BAF. Inability to secure the required funding on acceptable terms

could impact our modelled start dates and introduce material dilution to shareholders. (2) Technical Risk. The ability to scale the Molo mine

to target 150 ktpa capacity represents a key risk. During the ramp up of Phase 1, underperforming equipment in the screening circuit, mining

inconsistent weathered ore, and an inefficient floatation circuit have resulted in NEXT reducing the target nameplate capacity and running

Phase 1 on a campaign basis. Potential further delays pose a material risk to shareholders. Additionally, there is technical risk related to the

BAF. NEXT has not yet produced CSPG and technical challenges could arise despite the company using proven technology. (3) Country risk.

The company’s primary project is in Madagascar and depending on the actions of the current or future governments with respect to taxes,

royalty rates, and imposition of export tariffs on raw or finished materials, it could impact the company’s business or operations. Additionally,

the Molo ramp-up has been affected by cyclones in the region, continued adverse weather conditions pose additional risk.