NextSource Materials Inc. (TSX:NEXT, OTCQB:NSRCF) said it has signed a non-binding letter of intent with Japan’s Hanwa Co Ltd and the Japan Organization for Metals and Energy Security (JOGMEC) for a potential investment of up to $30 million in the first phase of its proposed battery anode facility in the United Arab Emirates.
The Canadian-listed graphite producer said the parties are considering a project-level investment through a jointly owned special purpose vehicle that could result in Hanwa and JOGMEC holding up to a 15% equity stake in the Abu Dhabi facility once initial Phase 1 funding is completed. The investment could be made in one or more stages, subject to definitive agreements.
NextSource is planning to build the battery anode facility in the Industrial City of Abu Dhabi, with Phase 1 expected to have annual production capacity of about 14,000 tonnes of natural graphite active anode material. The project is part of a staged development strategy targeting total capacity of roughly 30,000 tonnes per year.
CEO Hanré Rossouw said the letter of intent marked a key step in the company’s financing strategy and highlighted growing international interest in diversifying battery materials supply chains. “This LOI highlights the strategic value of our UAE BAF project in supporting Japan’s supply chain objectives and diversifying global anode production,” Rossouw said in a statement, adding it could represent a cornerstone investment toward securing project funding.
Beyond the proposed equity investment, the parties are also exploring a broader strategic relationship that could include preferential offtake arrangements for the Japanese market, distribution and logistics services by Hanwa in selected regions, and a long-term supply agreement for graphite feedstock from NextSource’s Molo graphite mine in Madagascar.
The letter of intent is subject to customary conditions, including due diligence, regulatory approvals and internal approvals by all parties. It also includes an exclusivity period through March 31, 2026, during which NextSource has agreed not to engage with other Japanese entities on similar investments in the project.
NextSource said it is continuing parallel workstreams to reach a final investment decision by the end of the first quarter of 2026, supported by ongoing front-end engineering and design work with Stantec.
Separately, the company said it is in discussions with Mitsubishi Chemical Corp to adjust timelines under a previously announced multi-year offtake agreement linked to the UAE facility. NextSource said it is working with Mitsubishi to address certain conditions tied to project financing, noting that the parties are seeking to align on a revised schedule. The company added that discussions are ongoing, though the outcome remains subject to agreement between the two sides.