NMG and Panasonic Energy Announce Binding Offtake Agreement and US$25 Million Private Placement to Secure the Supply of Active Anode Material for North American Battery Production.
Nouveau Monde Graphite Inc. (“NMG“ or the “Company”) (NYSE: NMGTSX.V: NOU) and Panasonic Energy Co., Ltd. (“Panasonic Energy”), a wholly owned subsidiary of Panasonic Holdings Corporation (“Panasonic”) (TYO: 6752), have entered into a binding offtake agreement (the “Offtake Agreement”) pursuant to which NMG will supply 18,000 tonnes per annum (“tpa”) of its planned Phase-2 active anode material production to Panasonic Energy for an initial period of seven years. In addition to the Offtake Agreement, NMG and Panasonic also entered into a subscription agreement (the “Subscription Agreement”) for Panasonic to make an initial US$25-million equity investment in NMG (the “Tranche 1 Investment”) to support the advancement of NMG’s Phase-2 operations – the Matawinie Mine and the Bécancour Battery Material Plant – in line with Panasonic Energy’s specifications refined during the qualification process and technical collaboration.
Arne H Frandsen, Chair of NMG, declared:
We have found in Panasonic Energy more than a long-term tier-1 customer, we have found a true partner who shares our vision for a decarbonized future and a striving North American integrated battery industry.
“This galvanizing offtake agreement, topped with a substantial investment strategy, is set to propel NMG through the last few steps before a final investment decision (“FID”). On behalf of the Board of Directors, I congratulate NMG’s team on the dedication, quality of work, technological optimization, and growth-oriented commercial mindset they have brought to this engagement process. The result is a successful partnership for years to come!”
Kazuo Tadanobu, President and CEO of Panasonic Energy, stated:
We are thrilled about Panasonic Energy’s strategic investment in NMG and the long-term offtake agreement, marking a significant milestone in our medium-to-long-term management goals aimed at strengthening the North American supply chain for EV batteries.
“This initiative aligns with our vision for sustainability, prioritizing locally sourced materials and leveraging NMG’s impressive vertically integrated supply chain. The bilateral partnership between Japan and Canada adds another layer of significance to our investment, and Panasonic Energy takes pride in contributing to the deepening ties and shared goals in advancing battery supply chains together with NMG.”
Eric Desaulniers, Founder, President, and CEO of NMG, reacted:
Youkoso–歓迎! We welcome Panasonic Energy as a shareholder in NMG and are excited to partner with them to supply carbon-neutral natural graphite extracted and transformed with the highest ESG standards of the industry.
“Today marks a momentous milestone for NMG, highlighting the progress made towards our Phase 2 and the Company’s sound business plan of becoming North America’s largest fully integrated active anode material producer to serve the booming Western battery and electric vehicles (“EV”) market.”
With a confirmed multiyear sales commitment from Panasonic Energy supplemented with the Tranche 1 Investment, and with the parallel General Motors Co. (“GM”) transaction, NMG has the means and technical parameters in hand to advance engineering of the Company’s Phase-2 Bécancour Battery Material Plant. The Offtake Agreement and the parallel GM transaction also provide greater bankability visibility to NMG’s potential lenders, strategic investors, and governments as part of the project financing linked to a positive FID decision for the Company’s integrated Phase-2 Matawinie Mine and Bécancour Battery Material Plan. Lenders’ input was provided throughout discussions with Panasonic Energy to facilitate successful financing at FID.
Offtake Agreement
The binding Offtake Agreement covers the supply of a committed annual volume of 18,000 tonnes of active anode material by NMG to Panasonic Energy for an initial seven-year term from the commencement of the Company’s Phase-2 production. The sales price will be based on an agreed upon price formula linked to future prevailing market prices as well as a pricing mechanism to satisfy project financing ratios and ensure stable procurement for Panasonic Energy. The Offtake Agreement is subject to conditions precedent which are standard for a project of this nature, including among others, the successful start of commercial operation and final product qualification. The Offtake Agreement contains standard termination rights for an agreement of this nature.
Through this Offtake Agreement, Panasonic Energy is set to leverage NMG’s fully integrated North American production, carbon neutrality profile, and proactive ESG practices for the establishment of a reliable, local, and responsible battery manufacturing value chain. The Company’s active anode material complies with the U.S. Government’s Inflation Reduction Act battery material sourcing requirements for EV subsidies.
Strategic Investment & Investor Rights Agreement
In connection with the Tranche 1 Investment, Panasonic has agreed to subscribe for 12,500,000 common shares in the capital of NMG (the “Common Shares”) and 12,500,000 common share purchase warrants (the “Warrants”) for aggregate proceeds ofUS$25 million. Such Warrants are generally exercisable in connection with the Tranche 2 Investment at FID in accordance with their terms. Each Warrant will entitle the holder thereof to acquire one Common Share (a “Warrant Share”) at a price per Warrant Share equal to the lower of (i) the amount in US$2.38 per Common Share and (ii) the amount in US Dollars per Common Share equal to the closing price of the Common Shares on the trading day immediately following the date on which the Tranche 1 Investment is announced. The exercise of the Warrants is subject to certain ownership limitations.
NMG will use the net proceeds from the Tranche 1 Investment for the development of the Phase-2 Matawinie Mine and Bécancour Battery Material Plant.
NMG will also enter into an investor rights agreement (the “Investor Rights Agreement”) and registration rights agreement (the “Registration Rights Agreement”) with Panasonic at the closing of the Tranche 1 Investment. Pursuant to the Investor Rights Agreement, the Panasonic securities will be subject to a “lock-up” for a period of 18 months from the date of their investment. The Investor Rights Agreement also provides Panasonic with certain rights relating to its investment in NMG, including certain board nomination and anti-dilution rights. Copies of the Subscription Agreement, the Offtake Agreement, the Investor Rights Agreement and the Registration Rights Agreement will be available on the Company’s page on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov, and the summary of the such agreements contained herein is qualified in its entirety by the reference to such documents.
In addition, Panasonic will be subject to a standstill limitation whereby it will not be able to increase their holdings beyond 20% of the issued and outstanding NMG Common Shares for a period of three years.
NMG’s Active Anode Material
Thanks to active technical engagement between the parties, active anode material produced at NMG’s Phase-1 facilities has been tested, enhanced, and integrated within Panasonic Energy’s battery prototype production line. Detailed engineering for NMG’s Phase-2 facilities leverages this live technological data as well as Panasonic Energy’s distinct specifications and quality standards.
NMG’s active anode material has demonstrated industry-leading environmental footprint in an ISO-compliant life cycle assessment thanks to the Company’s planned all-electric operations powered by renewable energy combined with clean processing technologies. NMG has also been identified as “Industry Leading” in Benchmark Mineral Intelligence’s natural graphite sustainability index, the only producer to have been qualified in the category following a comprehensive examination of ESG practices, transparency, and engagement.
Decarbonization efforts, trade regulations, and recent geopolitical developments reaffirm the importance of establishing of a local, resilient, and ESG-compliant supply chain of graphite to support battery and EV production. NMG is targeted to become the largest natural graphite producer in North America, fully integrated from ore to active anode material, and with demonstrated sustainability performance.
Complementary Information
NMG has also announced having agreed to enter a multiyear offtake agreement and a private placement with General Motors Co. (NYSE: GM). Other strategic investors have also concurrently committed to an investment of US$37.5 million in NMG via a private placement. Additional information regarding such transactions is available on the is available on the Company’s website, SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov.
Shareholders, analysts, and members of the media are invited to attend a webcast Investor Briefing this morning, Thursday, February 15, 2024, at 10:30 a.m. ET. Hosted by President and CEO Eric Desaulniers with the participation of NMG’s Management Team, the briefing will entail a technical presentation followed by a question-and-answer session. Registration should be completed prior to the start of the briefing at: https://us06web.zoom.us/webinar/register/WN_VmhZvajOQJ2yICWrk9ySzQ.
A brief interview with Eric Desaulniers on this announcement is also available for viewing here: https://youtu.be/kRkK3pPbqn4. Members of the media may download high-resolution files at https://we.tl/t-t9Nwt9RiQR and make additional interview or information requests to Julie Paquet, Vice President, Communications & ESG Strategy at NMG.
Completion of the Tranche 1 Investment remains subject to customary regulatory approvals, including approval of the TSX Venture Exchange and NYSE, and other customary closing conditions. Copies of the Subscription Agreement, the Offtake Agreement, the Investor Rights Agreement and the Registration Rights Agreement will be available on the Company’s page on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov.
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NMG and Panasonic Energy Announce Binding Offtake Agreement and US$25 Million Private Placement to Secure the Supply of Active Anode Material for North American Battery Production. source
