Annual information form
Page 1
NextSource Materials Inc. Annual Information Form for the year ended June 30, 2026 September 28, 2026
Page 2
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 2 TABLE OF CONTENTS INTRODUCTION ..................................................................................................................................................................................3 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION...........................................................3 CORPORATE STRUCTURE ...............................................................................................................................................................4 GENERAL DEVELOPMENT OF THE BUSINESS...........................................................................................................................5 DESCRIPTION OF THE BUSINESS...................................................................................................................................................8 RISK FACTORS .................................................................................................................................................................................. 13 DIVIDENDS AND DISTRIBUTIONS ................................................................................................................................................ 20 DESCRIPTION OF THE CAPITAL STRUCTURE......................................................................................................................... 20 MARKET FOR SECURITIES ............................................................................................................................................................ 20 SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER ..................................................................... 21 DIRECTORS AND OFFICERS .......................................................................................................................................................... 22 LEGAL PROCEEDINGS AND REGULATORY ACTIONS .......................................................................................................... 23 INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS ............................................................... 23 TRANSFER AGENT AND REGISTRAR.......................................................................................................................................... 24 MATERIAL CONTRACTS ................................................................................................................................................................ 24 INTEREST OF EXPERTS .................................................................................................................................................................. 24 AUDIT COMMITTEE ......................................................................................................................................................................... 25 ADDITIONAL INFORMATION ........................................................................................................................................................ 26 SCHEDULE “A” - MOLO GRAPHITE MINE EXPANSION - NI 43-101 TECHNICAL FEASIBILITY STUDY ................ A-1 SCHEDULE “B” – AUDIT COMMITTEE CHARTER ................................................................................................................. B-1
Page 3
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 3 INTRODUCTION This Annual Information Form ( the “AIF”) of NextSource Materials Inc. (“ NextSource” or the “Company”) should be read in conjunction with the Company’s management’s discussion and analysis for the year ended June 30, 2026 and 2025 (the “MD&A”) and the Company’s audited consolidated financial statements for the years ended June 30, 2026 and 2025 (the “Financial Statements”), each as filed under the Company’s SEDAR+ profile at www.sedarplus.ca. All information disclosed in this AIF is presented as of June 30, 2026, unless otherwise stated. The Financial Statements, the MD&A, and this AIF are presented in United States dollars (“USD$” or “$”) and all units of measurement are expressed using the metric system, unless otherwise stated. Additionally, certain information in this AIF is presented in Canadian dollars (“CAD$” or “C$”). All references herein to “NextSource” or the “Company” include NextSource Materials Inc. and all of its subsidiaries, unless the context requires otherwise. Additional information relating to the Company is available on the SEDAR + website at www.sedarplus.ca and on the United States Securities and Exchange Commission’s website at www.sec.gov. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION This AIF contains “forward-looking information” within the meaning of applicable Canadian securities legislation and “forward-looking statements” within the meaning of applicable United States securities laws (collectively referred to herein as “ forward-looking information”). Generally, forward-looking information can be identified by the use of forward -looking terminology such as “plans,” “expects,” or “does not expect,” “is expected,” “budget,” “scheduled,” “goal,” “estimates,” “forecasts,” “intends,” “anticipa tes,” or “does not anticipate,” or “believes” or variations of such words and phrases or statements that certain actions, events or results “may,” “could,” “would,” “might,” or “will be taken,” “occur,” or “be achieved”. Forward-looking information includes, but is not limited to, certain expectations, development plans, and production estimates in respect of the Molo Graphite Mine (as defined herein); certain expectations, development plans, and estimates in respect of the United Arab Emirates (UAE) BAF (as defined herein) and additional battery anode facilities (“ BAFs”) located in other key geographical regions, and strategies and project evaluation measures relating thereto; the potential impact of the Company’s BAF partnerships; an agreement with Mitsubishi Chemical Corporation (as defined herein); supply, demand and pricing outlook in the graphite and EV (as defined herein) market; the use of proceeds of the Facility (as defined herein); the Company’s intention to suppl y AAM (as defined herein) to a major OEM (as defined herein) under the terms of the Offtake Agreement (as defined herein) and the Company’s business objectives and targeted milestones (and timing thereof). Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information. Such factors relate to, among others, BAF technical studies, emerging markets; development, commissioning, and operation of the Molo Graphite Mine; development, commissioning, and operation of the BAFs; construction and start-up of new mines and industrial plants; geopolitical risk and conflict; additional financings; the Company’s development and exploration projects are in the African country of Madagascar and are subject to country political and regulatory risks; the Company has a significant shareholder; economic dependence on the Molo Graphite Mine; permits and licenses are necessary to operate Phase 1 of the Molo Graphite Mine and export products from Madagascar ; additional permits and licenses are necessary to complete the development of Phase 2 of the Molo Graphite Mine; fluctuations in the market price of graphite and other metals may adversely affect the value of the Company’s securities, revenue projections and the ability of the Company to develop Phase 2 of the Molo Graphite Mine; estimates of mineral resources and mineral reserves may not be realized; the Company has a limited operating history and expects to incur operating losses for the foreseeable future; due to the speculative nature of mineral property exploration, there is substantial risk that the Company’s assets will not go into commercial production and the business will fail; mining companies are increasingly required to consider and provide benefits to the communities and countries in which they operate, and are subject to extensiv e environmental, health and safety laws and regulations; because of the inherent dangers involved in mining operations and mineral exploration, there is a risk that the Company may incur liability or damages as the Company conducts business ; should the Company lose the services of key executives, the Company’s financial condition and proposed expansion may be negatively impacted; access to the Company’s properties , mine operations, and export of product may be restricted by inclement weather or lack of proper infrastructure; climate change and related regulatory responses may impact the Company’s business; compliance with changing regulation of corporate governance and public disclosure will result in additional expenses and pose challenges for managemen t; tax risks; the Company may experience losses due to foreign exchange translations; the Company’s business is subject to anti -corruption and anti-bribery laws, a breach or violation of which could lead to civil and criminal fines and penalties, loss of licenses or permits and reputational harm; the Company is exposed to general economic conditions, which could have a material adverse impact on its business, operating results and financial condition; the market price for the common shares of the Company (the “ Common Shares ”) is particularly volatile given the Company’s status as a company with a small public float, limited operating history and lack of profits which could lead to wide fluctuations in the market price for the Common Shares; the Company does not intend to pay dividends in the foreseeable future; and other risks involved in the mineral exploration and development industry and risks specific to the Company,
Page 4
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 4 including the risk factors identified elsewhere in this AIF and in the MD&A under “Risk Factors” and in other continuous disclosure documents of the Company filed under the Company’s SEDAR+ profile at www.sedarplus.ca. Forward-looking information is based on the reasonable assumptions, estimates, analysis and opinions of management and/or “qualified persons” (as such term is defined under National Instrument 43 -101 – Standards of Disclosure for Mineral Projects (“NI 43-101”)) made in light of their experience and their perception of trends, current conditions and expected developments, as well as other factors that management and/or qualified persons believe to be relevant and reasonable in the circumstances at the date tha t such statements are made, but which may prove to be incorrect. Although the Company believes that the assumptions and expectations reflected in such forward-looking information are reasonable, undue reliance should not be placed on forward-looking information because the Company can give no assurance that such expectations will prove to be correct. In addition to the assumptions discussed in this AIF, the material assumptions upon which such forward-looking information is based include, among others, that: the Company will be successful in its financing activities, the demand for graphite will develop as anticipated; graphite prices will remain at or attain levels that would make the Molo Graphite Mine and BAFs economic ally viable ; that any proposed operating and capital plans will not be disrupted by operational issues, title issues, loss of permits, environmental concerns, power supply, labour disturbances, financing requi rements or adverse weather conditions; the Company will continue to have the ability to attract and retain skilled staff; and there are no material unanticipated variations in the cost of energy or supplies. Readers are cautioned that the foregoing list is not exhaustive o f all factors and assumptions which may have been used. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward -looking information. Th e forward -looking information contained in this AIF is presented for the purposes of assisting investors in understanding the Company’s expected financial and operating performance and the Company’s plans and objectives and may not be appropriate for other purposes. In respect of any forward-looking information or statements relating to the UAE BAF Study (as defined herein) or other BAFs, including but not limited to annual sales and operating cash flows, such figures , if any, have been included herein for the purposes of providing information on the project evaluation measures of the BAFs and should not be viewed as financial outlooks or guidance for the Company. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws. This AIF includes market, industry and economic data and projections obtained from various publicly available sources and other sources believed by the Company to be true. Although the Company believes these to be reliable, it has not independently verified the information from third party sources, or analyzed or verified the underlying reports relied upon or referred to by the third parties or ascertained the underlying economic and other assumptions relied upon by the third parties. The Company believes that the market, industry and economic data and projections are accurate and that the estimates and assumptions are reasonable, but there can be no assurance as to their accuracy or completeness. The accuracy and completeness of the market, indus try and economic data and projections in this AIF are not guaranteed and the Company does not make any representation as to the accuracy or completeness of such information. For the avoidance of doubt, nothing stated in this paragraph operates to relieve the Company from liability for any misrepresentation contained in this AIF under applicable Canadian securities laws. The forward-looking information contained in this AIF and documents incorporated by reference herein are expressly qualified by the foregoing cautionary statement. CORPORATE STRUCTURE Name, Address and Incorporation NextSource Materials Inc. was continued under the Canada Business Corporations Act from the State of Minnesota to Canada on December 27, 2017. The C ompany’s head and registered office is located at 130 King Street West, Exchange Tower, Suite 194 3, Toronto, Ontario M5X 2A2. The Company’s website is www.nextsourcematerials.com. The outstanding Common Shares are listed and posted for trading on the Toronto Stock Exchange (the “ TSX”) under the symbol “NEXT” and on the OTCQB under the symbol “NSRCF”. The Company is a reporting issuer in each of the provinces of Canada, except Quebec.
Page 5
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 5 Intercorporate Relationships The following figure displays the corporate structure of the Company and its subsidiaries: Note: A written resolution by the sole shareholder of an entity located in UK, Mauritius , UAE and Madagascar is sufficient to appoint/remove directors and officers of each of the entities in the Company’s corporate structure . There are no government regulations preventing the appointment/removal of directors and officers and government approvals of the underlying shareholder’s resolution are not required in such jurisdictions. Therefore, within the Company’s corporate structure , the Company has sole control over the appointment/removal of any directors or officers of the entities that are located in the UK, Madagascar and Mauritius. GENERAL DEVELOPMENT OF THE BUSINESS Three-Year History The following summary describes development s relating to the Company’s business over the last three financial years, including acquisitions, dispositions, financing transactions, changes to management and the board of directors (the “ Board”), and certain other events that influenced the general development of the business of the Company during such period. Year Ended June 30, 2024 On August 1, 2023, the Company completed an overnight marketed, public offering of 30,303,500 Common Shares at a price of C$1.65 per Common Share for gross proceeds of C$50,000,775 (the “2023 Offering”). The 2023 Offering was conducted through a syndicate of underwriters co-led by Cormark Securities Inc., BMO Capital Markets, and Clarus Securities Inc. On September 5, 2023, the Company announced the signing of a non-binding memorandum of understanding (the “MoU”) with South Korea’s POSCO International Corp. (“POSCO”) for strategic collaboration that could involve an equity investment into the Company as well as a long -term offtake agreement for spheronized and purified graphite (“SPG”) and the Company’s other graphite products. The MoU envisages the potential for a definitive offtake agreement for 30,000 tonnes per annum (“ tpa”) of SuperFlake® graphite concentrate and 10,000 to 15,000 tpa of SPG over a ten-year period, to be supplied to Future M. Future M is a POSCO Group subsidiary that is responsible for EV battery businesses and supplies all of South Korea’s major battery cell manufacturers with finished cathode and anode materials. Prior to executing a definitive agreement, certain customary technical and economic studies must be completed. Canada 100.0% 100.0% South Africa United Kingdom 100.0% 100.0% UAE 100.0% 100.0% Mauritius 100.0% "MATMAU" 100% 100% "GRAMAU" "MINMAU" 100% "CSPG" Madagascar 100% "MATMAD" 100% 100% "ERGMAD" "MINMAD" NextSource Materials Inc. NextSource Graphite (Mauritius) Ltd. NextSource Minerals (Mauritius) Ltd. NextSource Battery Materials L.L.C ERG (Madagascar) SARLU NextSource Minerals (Madagascar) SARLU NextSource Materials (Mauritius) Ltd. NextSource CSPG (Mauritius) Ltd. NextSource Materials (Madagascar) SARLU NextSource Global Talent Inc. 2391938 Ontario Inc. NextSource U.K. Ltd. NextSource Materials (UK) Ltd. NextSource Global Talent Inc. (Incorporated in Canada) NextSource Battery Materials Holding Limited
Page 6
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 6 On September 28, 2023, the former industrial lease for the Mauritius BAF was terminated and the Company announced that the results of the initial Mauritius BAF Technical Study specific to this site should no longer be relied upon. On November 24, 2023, the Company announced that Robin Borley resigned as Chief Operating Officer and as a director of the Company and announced the appointment of Johnny Velloza as Chief Operating Officer, on an interim basis. On December 6, 2023, the Company announced the appointment of Martina Buchhauser to the Board. On December 12, 2023, the Company announced the results of the feasibility study for a mine expansion of its Molo Graphite Mine. Subsequently, on January 26, 2024, the Company filed a technical report titled “Molo Graphite Mine Expansion NI 43 -101 Technical Feasibility Study Report 2023” dated January 25, 2024 and an effective date of September 1, 2023, authored by Johann de Bruin (Pr. Eng.), Hector Mapheto (Pr. Eng.), Schalk Pienaar (Pr. Eng), Hercu Smit (Pr. Eng), Alkie Marais (M.Sc., Geohydrology), Philip John Hancox (Pr. Sci. Nat.), Sivanesan (Desmond) Subramani (Pr. Sci. Nat.), Oliver Peters (P. Eng.), Ruan Albert Daffue (M. Sc. Eng.), Nico Hamman (Pr. Tech. Eng.) and Eugene de Villiers (Pr. Eng.) (the “ Feasibility Study”). Readers should refer to Schedule “A” for a summary of the Feasibility Study. On April 10, 2024, the Company announced the signing of a new lease for the Mauritius BAF at a site in Port Louis that is estimated to reduce ground logistics costs and improve the project’s social and environmental standards in contrast to the former Jin-Fei site. On May 28, 2024, t he Company announced the appointment of Hanré Rossouw as President and Chief Executive Officer (“ CEO”) effective November 1, 2024, and as a director of the Company effective September 1, 2024. Effective November 1st, 2024 , Craig Scherba, former President and Chief Executive Officer , was appointed as Chief Development Officer of NextSource to focus on developing strategy, managing offtake negotiations and expanding the Company’s relationships with auto manufacturers (“OEMs”) around the world. On June 13, 2024, the Company announced the signing of a Mandate Letter with International Finance Corporation (“IFC”), the private sector investment arm of the World Bank Group, in respect of a senior debt facility totaling US$91 million (the “IFC Debt Facility”) to fund an expansion of the Molo Graphite Mine. The IFC has provided indicative financial terms to lead the coordination of the overall debt syndicate with other select commercial banks and development finance institutions. The IFC Debt Facility was expected to fund approximately 50% of the capital costs and working capital requirements for the mine expansion to a total production capacity 150,000 tpa of SuperFlake® graphite concentrate. The mandate is subject to satisfactory technical, social, legal and environmental due diligence, documentation and execution of acceptable terms, obtaining final credit, and regulatory and board approvals. On June 27, 2024, the Company announced the results of a conceptual design and an AACE Class 5 evaluation to develop BAF in t he Kingdom of Saudi Arabia (“KSA”) capable of producing 20,000 tpa of coated, spheronized, purified graphite (“CSPG”) (the “KSA BAF Study”). Year Ended June 30, 2025 On July 9, 2024, the Company announced the appointment of Jaco Crouse as Chief Financial Officer (“ CFO”). Mr. Crouse replaced Marc Johnson who served as CFO since October 2015. On August 12, 2024, the Company announced the appointment of Dr. Tilo Hauke as Executive Vice President of Downstream Operations, effective October 1, 2024. On October 11, 2024 the Company announced the closing of the first tranche of a non-brokered private placement offering of 27,728,100 Common Shares at a price of C$0.53 per Common Share for aggregate gross proceeds of C$14,695,893 (the “2024 Private Placement”). On October 24, 2024, the Company announced that it completed its first commercial shipments of SuperFlake® graphite concentrate from its Molo Graphite Mine to Germany and the United States under existing offtake agreements. On November 13, 2024, the Company announced that it closed the second and final tranche of the 2024 Private Placement, issuin g an additional 1,360,000 Common Shares at a price of C$0.53 per Common Share for aggregate gross proceeds of C$720,800. On January 30, 2025, the Company announced that it has secured a drawdown credit facility of up to US$20 million with Vision Blue (the “Facility”). The proceeds of the Facility, which is non-dilutive to shareholders, have been used as needed to progress the Company’s BAF strategy, support the continued ramp -up and growth of Molo Graphite Mine, and for general working capital purposes. The Company has fully drawn down on the Facility. On May 1, 2025, the Company announced that Mr. Johnny Velloza would be stepping down from his position as Interim Chief Operating Officer of the Company and that his responsibilities would be transitioned to Mr. Nick Miller, who was appointed as Acting Executive Vice President, Operations of the Company, which is a newly consolidated role merging the responsibilities of Interim Chief Operating Officer and General Manager.
Page 7
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 7 On June 2, 2025, the Company announced that due to the prolonged and costly nature of the process to establish the Mauritius BAF, the Company is updating its BAF strategy, exercising its option to terminate the Mauritius BAF at the end of May 2025 and wit hdraw its Environmental Impact Assessment application at no further cost. The Company further announced that it is prioritizing the development of a larger-scale BAF in the Middle East, targeting prospective sites in the KSA and the United Arab Emirates (“UAE”). Year Ended June 30, 2026 On August 5, 2025 the Company and Mitsubishi Chemical Corporation ( “MCC”), Japan’s largest chemical company and a leading supplier of anode active material (“AAM”) to original OEMs, have entered into a binding, multi-year offtake agreement (“the Offtake Agreement”). Under the terms of the Offtake Agreement, the Company and MCC have partnered to supply AAM to a major OEM for the North American EV market. NextSource will produce and supply intermediate AAM to MCC’s Japan plant where MCC will produce final AAM for the OEM’s EV battery cell manufacturing facilities in North America. The Offtake Agreement is subject to certain conditions precedents including, among other matters, the Company’s obligation to secure financing for the construction of th e BAF, commencement of construction of the BAF and the commencement of production from one production line by an agreed date. The dates for achieving these conditions precedent can be extended at the agreement of MCC. On October 1, 2025, the Company announced the positive technical and economic study associated with a 30,000tpa BAF in the UAE. The Company also announced the signing of an agreement with the aim of securing a site in Abu Dhabi to construct the BAF. On October 29, 2025, the Company announced that it has agreed to an extension to its drawdown credit facility (the “Amended Facility”) of up to a further $10 million with Vision Blue. On January 7, 2026, the first shipment of equipment for its proposed UAE BAF arrived in Abu Dhabi. The shipment consists of long‑lead items for anode processing which the Company has previously procured. The procurement of key processing equipment and delive ry of these components are critical in demonstrating the Company’s proactive approach and ability to deliver, ensuring that key equipment is secured ahead of installation and commissioning. The Company also reported significant progress in the Front‑End Engineering and Design (“FEED”) phase of the UAE BAF. The FEED work has progressed to schematic design, providing further definition on plant design, capital requirements, and execution planning and will form a key input into the Final Investment Decision (“FID”). On February 3, 2026, the Company announced the execution of a letter of intent (“LOI”) with Hanwa Co. Ltd. (“Hanwa”), one of Japan’s leading trading companies, and Japan Organization for Metals and Energy Security (“JOGMEC”), a Japanese government agency, for a potential investment in Phase 1 of the Company’s proposed UAE BAF. Under the terms outlined in the LOI, Hanwa and JOGMEC jointly considered a project-level investment of up to $30 million through a special purpose vehicle. The proposed investment was anticipated to represent up to 15% equity interest in the UAE BAF project upon completion of the initial funding for Phase 1. The investment is contemplated to occur in one or more phases, subject to the negotiation and execution of definitive agreements. On February 24, 2026, the Company announced the closing of a “best-efforts” private placement of 58,823,500 units of the Company (the “Units”) at a price of C$0.425 per Unit for aggregate gross proceeds of C$24,999,987.50. Each Unit consists of one common share of the Company and one-half (½) of one Common Share purchase warrant . Each Warrant will be exercisable to acquire one Common Share at an exercise price of C$0.55 per Common Share for a period beginning 61 days following the Closing Date and expiring 3 years following the Closing Date. Jaco Crouse resigned from his position as Chief Financial Officer on March 2, 2026 after accepting a chief financial officer position with another organization. Following his resignation, Mr. Crouse continued to provide the Company with CFO oversight and supported the Finance team to ensure an orderly transition and continuity in the Company’s financial reporting, treasury, disclosure -control and internal-control functions. The Company has not appointed a successor Chief Financial Officer. During the fourth quarter of fiscal 2026, Danniel Stokes resigned as Vice President, Projects, and departed the Company at the end of July 2026 following a transition period. Mr. Stokes’ responsibilities were allocated among Tilo Hauke, Executive Vice -President, Downstream, and the project directors who previously reported to Mr. Stokes. A structured transition plan was implemented to maintain continuity across the relevant pr oject workstreams. Also on March 2, 2026, the Company announced that it has entered into a binding agreement with Syrah Resources Limited (“Syrah”) for the supply of natural graphite fines for planned UAE BAF. Under the terms of the agreement, the Company will source a minimum of approximately 34,000 tonnes and up to 68,000 tonnes of natural graphite fines in total over a seven -year period, with annual committed and optioned volumes subject to specific conditions precedent being satisfied. These conditions include the commencement of commercial production at the UAE BAF and successful qualification and final approval of the use of Syrah’s graphite by the Company and its downstream offtake customer. Pricing is expected to be determined quarterly and by referencing an independently repor ted natural graphite fines price index, with adjustments for product grade and shipping costs. If the conditions have not been satisfied or waived by December 31, 2026, Syrah may terminate the Agreement without liability. If the conditions have not been satisfied or waived by December 31, 2027, the Company may terminate the Agreement without liability.
Page 8
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 8 On March 3, 2026, the Company announced it has agreed with M CC to extend the timetable for the binding multi -year Offtake Agreement, announced on August 5, 2025. All core commercial terms of the 9,000 tonnes per annum Offtake Agreement of AAM are unchanged, including volume commitments and the established pricing framework. The extension provided the Company with additional flexibility through July 31, 2027 to satisfy financing, construction, commissioning and first production milestone s for its planned UAE BAF. On May 12, 2026, the Company announced that it has approved the FID on Phase 1 of its proposed UAE BAF. The approval follows the successful completion of FEED, which confirmed the robust economics and project configuration outlined in the October 2025 BAF Study. Developments Since June 30, 2026 On July 27, 2026, t he Company announced the positive results of an updated Technical Feasibility Study (“FS”) for a Phase 2 mine expansion of its Molo Graphite Mine in southern Madagascar. On September 25, 2026, the Company entered into a binding share subscription agreement with Hanwa Co, Ltd. and the Japan Organization for Metals and Energy Security, through their jointly owned investment vehicle, for a $30 million investment in exchange for a 15% interest in the Company’s UAE BAF project. The Company will retain an 85% interest upon closing, which remains subject to customary closing conditions. Significant Acquisitions The Company did not complete any significant acquisitions during the year ended June 30, 2026. DESCRIPTION OF THE BUSINESS General The Company is intent on becoming a vertically integrated global supplier of battery materials through the mining and value -added processing of its proprietary SuperFlake® graphite concentrate and potentially other battery minerals from non -foreign entities of concern (“FEOC”). The Company’s near-term focus is the development and operation of the Molo graphite mine in Madagascar (the “Molo Graphite Mine”) and the Company is also prioritizing the development of a large-scale BAF in the Middle East. Mineral Projects Molo Graphite Mine, Province of Toliara, Madagascar The Company is developing and operating the Molo Graphite Mine located near the town of Fotadrevo in the Province of Toliara, Madagascar, which is the Company’s sole material mineral property. The Company operates the Molo Graphite Mine near Fotadrevo in southern Madagascar, its only material mineral property. The mine is held under a 40 -year mining license granted in 2019. The existing Phase 1 processing plant was designed to produce 17,000tpa of SuperFlake® graphite concentrate. Construction of the Phase 1 processing plant was completed in February 2023, with first production achieved in June 2023. The Company made its first commercial shipments of SuperFlake® to customers in Germany and the United States in October 2024, and shipments continued during fiscal 2026. Following an operational review completed in the third quarter of fiscal 2025, the Company adopted a campaign -production strategy for Phase 1. The review identified remaining milling and flotation -circuit inefficiencies that limited plant capacity to appro ximately 11,000tpa. Addressing these matters would require additional equipment, capital and implementation time that would overlap with the proposed Phase 2 expansion. Accordingly, the Company determined that its capital and personnel would be used more effectively by operating Phase 1 on a campaign -production basis while advancing customer qualification, commercial sales, potential feedstock production for the proposed UAE BAF and the staged Phase 2 expansion. On July 27, 2026 the Company announced the results of an updated FS for a staged Phase 2 expansion of the Molo Graphite Mine. The study contemplates three additional 50,000tpa processing modules adjacent to the existing plant, resulting in total planned p roduction capacity of 150,000tpa and a 37 -year mine life. The Feasibility Study was prepared by Keith Wilson (P.Eng.), Philip John Hancox (Pr.Sci.Nat.), Oliver Peters (P.Eng.), Desmond Subramani (BSc (Hons) Geology), Clive Brown (P. Eng.), Jeremy Tape (CP, BEng (chem)), Andreas Savvas (Pr. Eng.), Albertus (Alkie) Marais (M.Sc., Geohydrology), Damian Pianta (B.Eng.) and Greg Gold (P. Eng.), each of whom is a “qualified person” for the purposes of NI 43-101. See also “Risk Factors” in this AIF and the MD&A.
Page 9
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 9 Molo Graphite Mine – Molo Phase 1 and Molo Phase 2 Expansion During the year ended June 30, 2026, the Company completed five production campaigns, reprocessed 3,399 tonnes of mixed material and produced 3,174 tonnes of on -specification SuperFlake®. The Company shipped 880 tonnes to international customers, compared with 787 tonnes in fiscal 2025. As of June 30, 2026, SuperFlake® inventory at the Molo Graphite Mine and the Port of Toliara totaled 3,495 tonnes, more than half of which was -100 mesh material stockpiled as potential feedstock for the proposed UAE BAF. On July 27, 2026, after year -end, the Company announced the results of an updated FS for a staged Phase 2 expansion of the Molo Graphite Mine. The study contemplates three additional 50,000tpa processing modules adjacent to the existing plant, resulting in total planned production capacity of 150,000tpa and a 37-year mine life. The proposed expansion is contemplated in two stages and uses the same modular construction approach as Phase 1. Development of the expansion remains subject to financing, detailed engineering, permitting, construction, market demand and other customary development risks. For additional information with respect to the Molo Graphite Mine, readers are referred to the MD&A as well as Schedule “A” hereto, which is the summary section from the Feasibility Study reproduced in its entirety. See also “Risk Factors” in this AIF and the MD&A. The Company continues to pursue financing for the expansion under the mandate letter entered with International Finance Corporation (“IFC”) in June 2024. IFC has presented indicative terms and is expected to coordinate potential debt syndication with selected commercial banks and development-finance institutions. Any financing remains subject to due diligence, credit approval, definitive documentation and other customary conditions. There can be no assurance that definitive financing arrangements will be concluded. Green Giant Vanadium Project, Province of Toliara, Madagascar The Company holds a 100% interest in the Green Giant Vanadium Project , which is located 15 kilometers from the Molo Graphite Mine in the Province of Toliara, Madagascar and hosts a large sedimentary-hosted vanadium deposit. Since early 2012, the Company has focused its efforts on the Molo Graphite Mine and as such only limited work has been completed on the Green Giant Vanadium Project since that time. Currently, there are no plans for exploration or development, and the Green Giant Vanadium Project is not considered to be material to the Company. Sagar Project, Labrador Trough Region, Quebec, Canada The Company holds a 100% interest in the Sagar Project, which is located in the Labrador Trough Region in northern Quebec, Canada. Since early 2012, the Company has focused its efforts on the Molo Graphite Mine and as such only limited work has been comple ted on the Sagar Project since that time. Currently, there are no plans for exploration or development, and the Sagar Project is not considered to be material to the Company. Battery Anode Facilities Battery anode facilities convert natural flake graphite into spheronized purified graphite (“SPG”) and coated spheronized pur ified graphite (“CSPG”), which are used as AAM in lithium-ion batteries. Battery anode facilities are not mineral projects for purposes of National Instrument 43-101. Accordingly, studies concerning the UAE BAF are economic and technical studies relating to an industrial processing facility and are not technical reports under N ational Instrument 43-101. Through its Japanese Partner and technical relationships with graphite -anode processors, the Company has advanced plans to develop the UAE BAF. The proposed facility is intended to convert SuperFlake® and potentially other qualified natural graphite feedstock from sources that are not foreign entities of concern into AAM for lithium-ion batteries. MCC Offtake Agreement On August 5, 2025, the Company entered into a binding, multi-year offtake agreement with Mitsubishi Chemical Corporation (“MCC”) for the supply of approximately 9,000tpa of AAM to be produced from the Company’s SuperFlake® graphite concentrate for use by a major original equipment manufacturer in the North American electric-vehicle market (the “MCC Offtake Agreement”). The MCC Offtake Agreement is subject to certain conditions precedent, including the Company securing financing for the construction of the UAE BAF, commencing construction and achieving commissioning and first-production milestones by specified dates.
Page 10
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 10 On March 3, 2026, the Company announced that it had agreed with MCC to extend the period for satisfying certain of these conditions through July 31, 2027, while leaving the principal commercial terms, including the contemplated volumes and pricing framewor k, unchanged. The Company is currently in discussions with MCC regarding a further extension of the applicable deadlines, principally becau se of delays to financing and project -development activities arising from the armed conflict involving Iran and the broader geopoli tical uncertainty in the Middle East. There can be no assurance that MCC will agree to a further extension, that the remaining conditions precedent will be satisfi ed or that deliveries under the MCC Offtake Agreement will commence within the contemplated period. Proposed Facility The Company proposes to develop a 30,000tpa AAM facility in phases at the Industrial City of Abu Dhabi (“ICAD”). Phase 1 is planned to have production capacity of approximately 14,000tpa and an estimated capital cost of approximately $150 million. This cap acity is expected to be sufficient to satisfy the approximately 9,000tpa contemplated by the MCC Offtake Agreement and provide capacity for additional customers. The Company has secured a site containing an existing heavy-industrial building at ICAD. The site is located near deep-water ports and established industrial and transportation infrastructure and requires limited structural modification. The Company has also acquired processing equipment with production capacity of approximately 3,600tpa of SPG or CSPG. This equipment represents only a portion of the equipment required for the planned 14,000tpa Phase 1 facility. At June 30, 2026, the Company invested $11,972,733 in this equipment. The preliminary economic and technical study and front-end engineering work completed with Stantec included conceptual site design, equipment integration and capital and operating-cost estimates prepared in accordance with applicable AACE International guidelines. The design will continue to be refined through detailed engineering and project execution. The Company continues to advance financing and project-planning activities; however, the timing of construction, commissioning and commencement of production will depend on, among other matters, regional conditions, the availability of financing and the Company's ability to satisfy the conditions under the MCC Offtake Agreement described below. The Company's development plans remain subject to financing, permitting, engineering, construction, commissioning, customer qualification, commodity-price, market-demand, geopolitical and other risks. See "Cautionary Statement Regarding Forward -Looking Information" and "Risk Factors" in this AIF and the MD&A. Former Mauritius Location The Company previously proposed locating the battery anode facility in Mauritius. On June 2, 2025, it terminated the Mauritiu s lease and withdrew the related environmental-impact-assessment application because of the duration, cost and potential post -approval risks associated with that process. The transportable processing equipment acquired for the proposed Mauritius facility is being redeployed to the proposed UAE BAF. Next Steps The next stages of development include: • securing project financing and strategic investment; • completing property, permitting and regulatory arrangements; • advancing detailed engineering; • procuring the remaining equipment; • completing construction, installation and commissioning activities; and • continuing customer qualification and commercial-readiness activities. The timing and completion of these activities remain subject to financing, permitting, construction and supply -chain execution, commissioning performance, customer requirements, geopolitical developments and market conditions. In particular, the armed conflict involving Iran and the related uncertainty in the Middle East may continue to affect potential investors and lenders, shipping routes, equipment delivery, project costs and the timing of construction. The Company may be required to revise, defer or reduce planned activities if the conflict continues or sufficient financing is not available on acceptable terms.
Page 11
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 11 Specialized Skill and Knowledge In order for the Company to perform its business effectively, the following specialized skills are required: qualified persons, engineers, legal advisors and financial experts and experienced investor relations and marketing personnel. The Company employs personnel with many of these skills. Professional, administrative, mine development and mineral exploration and evaluation services are provided by contractors, including by corporations controlled by certain officers and directors of the Company. Competitive Conditions The mining industry is intensely competitive in all of its phases. The Company competes with a number of other entities for resources, including qualified people. As a result of this competition, some of which is with companies with greater financial resources than the Company, it may be unable to acquire the necessary qualified people. The Company also competes for funding with other public resource companies, many of whom have greater financial resources and/or more advanced properties and who are better able to attract equity investments and other capital. Trends Global market for and supply of flake graphite Flake graphite demand is projected to reach approximately 1.5 million tonnes in 2026, with battery demand accounting for approximately 917,000 tonnes, or 61% of total demand. Benchmark forecasts total flake graphite demand to grow to approximately 2.6 million tonnes by 2035 (+73%), with battery demand more than doubling to approximately 2.0 million tonnes and representing 76% of total demand. Industria l demand is expected to remain broadly stable in volume terms through 2035. Benchmark forecasts the flake graphite market remaining in deficit through 2028 before moving into surplus from 2029 to 2038 as approximately 1.6 million t onnes of ex-China capacity come online (Benchmark Mineral Intelligence, Q2 2026). The graphite supply chain is also undergoing significant geographic diversification. China is forecast to account for approximately 68% of global flake graphite supply in 2026, declining to 46% by 2036, while ex-China supply is expected to grow at a 12.5% CAGR. Africa is forecast to lead supply growth, increasing its share of global supply from 24% in 2026 to 39% by 2036. At the same time, n atural graphite AAM demand in North America and Europe is forecast to represent approximately 42% of global demand by 2035, reflecting increasing regional production of natural-graphite anodes. Geopolitical and regulatory developments continue to support supply-chain diversification. Following the March 2026 US ITC decision rejecting antidumping and countervailing duties on Chinese anode imports, Benchmark expects potential effective US tariffs on China- origin battery supply to reach approximately 50–65% by the end of 2026 as forced-labour and excess-capacity measures take effect. US Treasury PFE guidance also establishes a minimum non -PFE material-assistance threshold of 60% in 2026, rising to 85% by 2030. Governments are increasingly treating critical minerals as strategic assets, with th e US establishing Project Vault, a US$12 billion strategic critical minerals reserve, while Canada is developing a national critical-minerals stockpiling mechanism and Korea and Canada are developing a joint stockpiling plan. These initiatives, together with rising synthetic graphite feedstock costs, underscore the growing importance of secure, diversified, and non -China supply chains and reinforce the strategic rationale for natural graphite and vertically integrated anode supply outside China. Economic Dependence The Company’s business is dependent on the development and operation of its mineral properties and the conversion of graphite into anode material for the EV market. The Company does not expect to be dependent on any sole contract to purchase the majority of the Company’s requirements for goods, services or raw materials. The Company could be dependent on certain customers since the Company expects to sell the majority of its flake graphite product and anode material through offtakes to a small number of customers. Cycles Mining is a cyclical industry and commodity prices, including the market price of graphite and other metals, can fluctuate substantially due to global economic trends and conditions, which can impact the Company’s business. See also “Risk Factors” below in this AIF. Environmental Protection The current and future operations of the Company, including exploration and development activities, are subject to extensive laws and regulations governing environmental protection and remediation , employee health and safety, exploration, development, tenure, production, taxes, labour standards, occupational health, waste disposal, reclamation, mine safety, toxic substances and othe r matters. Compliance with such laws and regulations can increase the costs of, and potentially delay planning, designing, and developing the Company’s mineral properties, including the Molo Graphite Mine.
Page 12
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 12 Employees As of June 30, 2026, the Company had 198 employees and 3 management consultants. No assurance can be given that the Company can retain qualified employees when necessary. Foreign Operations The Company’s foreign operations in Madagascar and the Middle East are exposed to various levels of political, economic and social risks and uncertainties. These risks and uncertainties vary from country to country and include, but are not limited to: terrorism; hostage taking; military repression; expropriation; political corruption, extreme fluctuations in currency exchange rates; high rates of inflation; labour unrest; war or civil unrest; renegotiation or termination of existing concessions, licenses, permits and contracts; ability o f governments to unilaterally alter agreements; surface land access issues; illegal mining; changes in taxation policies, laws and regulations; restrictions on foreign exchange and repatriation; and changing political conditions, currency controls and gove rnmental regulations that favor or require the awarding of contracts to local contractors or require foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. Any changes in regulations or shifts in political attitudes in such foreign countries are beyond our control and may adversely affect our business. Future development and operations may be affected in varying degrees by such factors as government regulations (or changes thereto) with respect to restrictions on production, export controls, impo rt restrictions, such as restrictions applicable to, among other things, equipment, services and su pplies, taxes, expropriation of property, repatriation of profits, environmental legislation, land use, water use, surface land access, land claims of local people and mine safety. Bankruptcy and Similar Procedures There are no bankruptcies, receivership or similar proceedings against the Company, nor is the Company aware of any such pending or threatened proceedings. The Company has not commenced any bankruptcy, receivership or similar proceedings during the Company’s history. Reorganizations There have been no corporate reorganizations of the Company within the three most recently completed financial years. Social and Environmental Policies The Company is committed to the health and safety of its workers, protection of the environment, and protection of the rights , culture and development of its host communities, and transparent engagement with all its stakeholders. To ensure the Company’s implementation of all aspects of its Group Sustainability Policy, which covers a broad range of workplace health and safety, environmental, stakeholder engagement, human rights and climate change risk and opportunities, the Board has created a sustainability committee (the “Sustainability Committee”) . The Sustainability Committee, which includes an independent director, oversees and monitors the Company’s health, safety, social and environmental activities to ensure that the Company follows applicable laws, adopts best practices in all aspects of its operations. It also r eviews and reports to the Board on the overall adequacy and effectiveness of the Company’s risk management and disclosure processes. In its approach to reporting on its sustainability performance, the Company’s sustainability reports are prepared with due consideration of the guidance materials provided by the Global Reporting Initiative (GRI) Standards, the International Council on Mining and Metals (ICMM), as well as the Taskforce on Climate-related Financial Disclosures (TCFD) and the International Financial Reporting Standards S1 and S2 recommendations. The Company is evaluating but has not adopted the requirements of the Mining Association of Canada ’s industry leading Towards Sustainable Mining Initiative. As part of the development of the Molo Graphite Mine, the Company completed an Environmental and Social Impact Assessment to a standard compliant or aligned with local Madagascar legislation at the time as well as the detailed guidance of the International Finance Corporation’s (IFC) Performance Standards (PS). On April 11, 2019, the Company announced it had received the Global Environmental Permit for the Molo Graphite Mine from the Madagascar Ministry of Environment’s Office National pour l’Environnement (the National Office for the Environment). This follows the completion of the Environmental & Social Impact Assessment and Relocat ion Action Plan to IFC performance standards, including the completion of negotiations and signed agreements with all potentially affected land occupants to accept compensation for any affected crops and grazing land and relocation if needed. To sustain transparen t and constructive stakeholder relations with all interest ed and affected parties the Company continues to hold documented, transparent and regular stakeholder forums at all levels of our host community. As the Company aspires to evolve into a leading global supplier of graphite, a critical mineral for EV batteries, the Company is committed to transparent demonstration of its supply of responsibly produced graphite as part of the global energy transition.
Page 13
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 13 RISK FACTORS The Company manages risks inherent to its business and has procedures to identify and manage significant operational and fina ncial risks. The reader is cautioned to carefully review the risk factors identified below as well as additional risk factors included in the Company’s continuous disclosure documents filed from time to time on SEDAR+ at www.sedarplus.ca. Any such risk factors or events could materially affect the Company’s business, financial condition and/or future operating results and prospects and could cause actual events to differ materially from those described in forward-looking statements and information relating to the Company. Additional risks and uncertainties not currently identified by the Company or that the Company currently believes not to be material also may materially and adversely affect the Company’s business, financial condition, operations or prospects. Risks Related to BAF Technical Studies The projections and financial outlooks in the UAE BAF Study and any other BAF technical studies (including but not limited to capital expenditures, working capital investments, annual revenues, annual operating costs, and annual operating cash flows) were, are, and will be estimates only and no assurance can be given that any particular level of profitability will be realized from any BAFs developed by the Company. Such projections and financial outlooks rely upon certain assumptions relating to, among other things, product pricing, demand for graphite, capital costs, and operating costs and while the Company believes such assumptions to be reasonable as at the date hereof, there is no guarantee that any such assumptions will prove to be accurate or correct. If these assumptions are incorrect or if access to the technology partner is impeded, the Company may not be able to achieve such financial projections for any BAFs developed by the Company. Actual financial results may differ materially from those estimated in the UAE BAF Study , and any other BAF technical studies of the Company. Risks Related to Emerging Markets The Company’s material mineral property, the Molo Graphite Mine, is located in Madagascar and the Company is prioritizing the development of a BAF in the UAE, countries which are considered to be emerging markets. The legal and regulatory requirements in Madagascar and the UAE are different from those in Canada. The Company’s business is subject to the risks and potential governmental and other restrictions normally associated with the conduct of business in countries that are considered to be emerging markets. The mining regulatory regime in Madagascar grants rights to explore, develop and operate a mine. The Company holds its mining interests through an exploration permit and various other approvals from the government, as disclosed in the Feasibility Study. No assurance can be given that the terms and conditions of the Company’s exploration and mining authorizations will not be amended or that such exploration and mining authorizations will not be challenged or impugned by third parties. In addition, construction of a BAF will be subject to a number of governmental approvals. While the Board and management of the Company have extensive experience with operating businesses in Africa, the Company relies, to a great extent, on the Company’s local advisors in respect of legal, environmental compliance, banking, financing and tax matters to ensure compliance with material legal, regulatory and governm ental developments as they pertain to and affect the Company’s operations in Madagascar and the UAE . Despite these resources, the Company may fail to comply with legal or regulatory requirements in Madagascar or the Middle East, which may lead to the revocation of certain rights or to penalties or fees and in enforcement actions thereunder. Specific risks relating to Madagascar and the UAE may include, among others, labour disputes, invalidation of governmental orders and permits, corruption, uncertain political and economic environments, sovereign risk, civil disturbances and terrorist actions, arbitrary changes in laws or policies of particular countries, the failure of foreign parties to honor contractual relations, foreign taxation, delays in obtaining or the inability to obtain necessary governmental permits, opposition to mining and BAF developments from environmental or other non -governmental organizations, limitations on foreign ownership, limitations on the repatriation of earnings, limitations on graphite exports and processing, instability due to economic under -development, inadequate infrastructure and increased financing costs. The occurrence of one or more of these risks could have a material and adverse effect on the Company’s profitability or the viability of its affected foreign operations, which could have a material and adverse effect on the Company’s future cash flows, earnings, results of operations and financial condition. In addition, the enforcement by the Company of its legal rights to exploit the Molo Graphite Mine or develop a BAF may not be recognized by the local government or by its court system. These risks may limit or disrupt the Company’s operations, restrict the movement of funds or result in the deprivation of contractual rights or the taking of property by nationalization or expropriation without fair compensation. The economy and political systems of Madagascar, as with other countri es in Africa and many other mining jurisdictions, should be considered by investors to be less predictable than those in countries in which the majority of inve stors are likely to be resident. The possibility that the current, or a future, government may a dopt substantially different policies, take arbitrary action which might halt production, extend to the re-nationalization of private assets or the cancellation of contracts, the cancellation of mining and exploration rights or development permits and/or c hanges in taxation treatment cannot be ruled out, the happening of any of which could result in a material and adverse effect on the Company’s results of operations and financial condition.
Page 14
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 14 Risks Related to the United States Regulatory and Tariff Policies Recent actions by the presidential administration in the United States have created increased uncertainty around trade polici es, tariffs, and regulations affecting trade between the United States and other countries, which could impact the Company financially. In particular, there is uncertainty regarding tariffs imposed by the United States and support for amending existing treaty and trade relationships, including with Canada. Implementation by the United States government of new legislative or regulatory policies could impose additional costs on the Company, decrease United States demand for the Company’s graphite concentrate or other products, or otherwise negatively impact the Company, which may have a material adverse effect on the Company’s business, financial condition and operations. In addition, this uncertainty may adversely impact: (i) the ability of companies to transact business with companies such as the Company; (ii) the Company’s profitability; (iii) regulation affecting mining companies in Canada or elsewhere; (iv) global stock markets (including the TSX); and (v) general global economic conditions. All of these factors are outside of the Company’s control, but may nonetheless lead the Company to adjust its strategy in order to compete effectively in global markets. Operating risk - Molo Graphite Mine The Molo Graphite Mine is currently operated on a campaign-production basis to manage costs while maintaining operational readiness. Under this operating model, production is undertaken periodically based on factors including customer requirements, inventory levels, market demand and the Company’s available financial resources. The campaign-production model results in a cost structure that is not optimized for scale and may lead to variability in production volumes, product consistency, operating performance and unit production costs. As a result, the Company may continue to incu r operating losses from the Molo Graphite Mine under the current operating model. There can be no assurance that production volumes, operating costs or realized sales prices will be sufficient to generate positive operating cash flows. In addition, maintaining operations in southern Madagascar requires ongoing engagement with local communities and other stakeholders. Changes in operating levels, including any reduction or suspension of production or transition to care and main tenance, could adversely affect the Company’s relationships with local communities and stakeholders, its social licence to operate and its ability to advance future development activities at the Molo Graphite Mine. The timing and scope of future production activities and the proposed Phase 2 expansion of the Molo Graphite Mine will depend on a number of factors, including the availability and terms of financing, customer qualification, market demand, graphite pricing and the Company’s broader development strategy. There can be no assurance that the Company will be able to increase production at the Molo Graphite Mine or advance the proposed Phase 2 expansion on the anticipated schedule or at all. Development, Commissioning, and Operation of the BAFs The development, commissioning, and operation of BAFs is based on management’s expectations, and may be delayed by several factors, some of which are beyond the Company’s control. There is a risk that development, commissioning, and achievement of commercial production will not be completed on time or on budget, or at all. Successful development and operation of a BAF may be affected by opposition to the project by local communities or authorities, the design and construction of an efficient processing facility, the cost and availability of suitable machinery, supplies, equipment and skilled labor, price escalation on all components of development, commissioning, construction and start-up, the existence of competent operational management, prudent financial administration and the availability and reliability of appropriately skilled and experienced employees , the performance of engineering and construction contractors, suppliers and consultants, and the receipt of required governmental approvals and permits in connection with the construction of a BAF, including environmental and operating permits . Until all required approvals are received in order to allow the Company to begin construction and development of a BAF, there is no guarantee that a BAF will be built on the currently identified property, or at all. It is common for new processing facilities to experience unexpected problems and delays during construction, development, sta rt-up, and commissioning activities due to late delivery of components, the inadequate availability of skilled labor and processing equipment, energy and chemical reagents at an economic cost, adverse weather or equipment failures, the rate at which expenditures are i ncurred, delays in construction schedules, or delays in obtaining the required permits or consents, or to obtain the required financing. The revenues, costs, timing, and complexities of developing and operating the BAFs may be significantly higher than anticipated, which could add to the cost of development, production, and operation and/or impair production and activities, thereby affectin g the Company’s profitability. Any delay in the performance of any one or more of the contractors, suppliers, consultants or other persons on which the Company is dependent in connection with its construction and development activities, a delay in or failure to receive the required gover nmental approvals and permits in a timely manner or on reasonable terms, or a delay in or failure in connection with the comple tion and successful operation of the operational elements in connection with the industrial facilities could delay or prevent the cons truction and start-up of a BAF and may result in additional costs being incurred by the Company beyond those budgeted. There can be no assurance that current or future construction and start-up plans implemented by the Company will be successful.
Page 15
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 15 Geopolitical Risk and Conflict The Company’s operations and development activities are exposed to geopolitical developments and conflicts that may adversely affect its business, financial condition, results of operations and ability to execute its development strategy. In particular, th e Company’s proposed BAF is located in the United Arab Emirates and is therefore exposed to geopolitical developments in the Middle East. During the year ended June 30, 2026, the conflict involving Iran introduced increased regional uncertainty in the UAE and imp acted the timing and progression of discussions with potential financing and strategic partners. The conflict and related geopoliti cal and economic uncertainty have also affected shipping routes, equipment deliveries, energy markets and regional supply chains. Con tinued instability, an escalation or expansion of the conflict, or other geopolitical developments in the Middle East could further delay financing, construction and other development activities relating to the UAE BAF. Delays in the development of the UAE BAF may also affect the Company’s broader development plans, including the timing of the proposed Phase 2 expansion of the Molo Graph ite Mine and the alignment of the Company’s upstream and downstream activities. More generally, geopolitical conflicts, sanctions, trade restrictions, embargoes, disruptions to global supply chains and cha nges in international trade relationships may adversely affect the availability and cost of equipment, materials, fuel, transportation and financing required for the Company’s operations and development activities. There can be no assurance that current or future geopolitic al developments will not have a material adverse effect on the Company’s business, financial condition, results o f operations or development plans. Additional Financings The Company will require additional financing through equity securities, debt, strategic investment or other financing arrangements to advance construction of the UAE BAF, the proposed Phase 2 expansion of the Molo Graphite Mine and other future developmen t activities. The success and pricing of any such financing will depend on prevailing market conditions, project development pr ogress, geopolitical developments, investor sentiment and the Company's ability to attract sufficient debt, equity or strategic investment. While the Company believes that its existing cash resources, together with its amended credit drawdown facility, provide suff icient liquidity to meet its near -term obligations, the Company will require additional financing to fund future development activi ties. The timing and availability of such financing are subject to a number of factors, including market conditions, progress on engine ering and development activities, engagement with potential partners and geopolitical developments in the Middle East, in cluding the ongoing conflict involving Iran. These conditions indicate the existence of a material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern. There can be no assurance that additional financing will be available on acceptable terms, or at all. Failure to obtain financing when required could result in the delay, reduction or indefinite postponement o f the development of the UAE BAF, the proposed Phase 2 expansion of the Molo Graphite Mine or other planned development activities, which could materially and adversely affect the Company's business, financial condition, results of operations and the market price of the Company's securities. If the Com pany raises additional funding through the issuance of equity securities or convertible debt securities, such financings may substantially dilute the interests of existing shareholders. The Company’s development and exploration projects are in the African country of Madagascar and are subject to country political and regulatory risks The Company is actively monitoring the political climate in Madagascar and continues to hold meetings with representatives of the government and the Ministries in charge of mining. Depending on future actions taken by the government, or any future governm ent, the Company’s business operations could be impacted. Companies in the mining and metals sector continue to be targeted to rai se government revenue, particularly as governments struggle with deficits and concerns over the effects of depressed economies. Many governments are continually assessing the fiscal terms of the economic rent for mining companies to exploit resources in their countries. This could include, but is not limited to, the increase of government royalty rates and the imposition of export tariffs on raw or finished materials. The government of Madagascar has granted mining claims, permits, and licenses that will enable us to conduct anticipated oper ations or exploration and development activities. Notwithstanding these arrangements, the Company’s ability to conduct operations, exploration and/or development activities at any of its properties is subject to obtaining and/or renewing permits or concessions, changes in laws or government regulations or shifts in political attitudes beyond its control. Any adverse developments to the political and regulatory situation in Madagascar could have a material effect on the Company’ s business, results of operations and financial condition. The Company’s operations may also be affected in varying degrees by terrorism; military conflict or repression; crime; populism; activism; labour unrest; attempts to renegotiate or nullify existing concessions, licenses, permits and contracts; unstable or unreliable legal systems; changes in fiscal regimes including taxation, and other risks ar ising out of sovereignty issues. The Company does not currently carry political risk insurance covering its investments in Madagascar. It may not be possible for investors to enforce judgments in Canada against a loss suffered on the Company’s assets and operations in Madagascar.
Page 16
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 16 The Company has a Significant Shareholder Vision Blue holds approximately 47% of the issued and outstanding Common Shares. Dispositions by a significant shareholder could have an adverse effect on the market price of the Common Shares, as the market price of the Common Shares could fall. As a result of the significant holdings, th ere is a risk that the Company’s securities are less liquid and trade at a relative discount compared to circumstances where a significant shareholder does not have the ability to influence or determine matters affecting the Company. Additionally, there is a risk that its significant interest in the Company discourages transactions involving a change of control, including transactions in which an investor, as a holder of the Company’s securities, would otherwise receive a premium for its securities in the Company over the then current market price. Further, as long as Vision Blue maintains its current ownership interest in the Company, it may be able to exert influence over matters that are to be determined by votes of the holders of Common Shares. There is a risk that the interests of Vision Blue may differ from those of other shareholders. Economic dependence on the Molo Graphite Mine The Company’s principal material mineral property is the Molo Graphite Mine. As a result, unless the Company acquires or develops any additional material properties or projects, any adverse developments affecting this project or the rights to develop the Molo Graphite Mine could materially adversely affect the Company’s business, financial condition and results of operations. Fluctuations in the market price of graphite and other metals may adversely affect the value of the Company’s securities, revenue projections and the ability of the Company to develop Phase 2 of the Molo Graphite Mine The value of the Company’s securities may be significantly affected by the market price of graphite and other metals, which are cyclical and subject to substantial price fluctuations. Market prices can be affected by numerous factors beyond the Company’s control, including levels of supply and demand for a broad range of industrial products, economic growth rates of various international economie s, expectations with respect to the rate of inflation, the relative strength of various currencies, interest rate s, speculative activities, global or regional political or economic circumstances. The Chinese market is a significant source of global demand for commodities, including graphite. Chinese demand has been a major driver in global commodities markets for a number of years and recent reductions in Chinese demand have adversely affected prices for graphite. A slowing in China’s economic growth could result in even lower prices and could negatively impact the value of the Company’s securities. Excess global supp ly of graphite could result in a decrease in the price of graphite and other metals, which could adversely impact the actual and projected revenues from the Molo Graphite Mine. Prolonged decreases in the price of graphite or other metals could adversely impact the ability of the Company to proceed with the deve lopment of any expansion of the Molo Graphite Mine. Estimates of mineral resources and mineral reserves may not be realized Mineral resource estimates and mineral reserve estimates are only estimates and no assurance can be given that any particular level of recovery of minerals will be realized or that an identified mineral resource will ever qualify as a commercially mineable (or viable) deposit which can be legally and economically exploited. There is no guarantee that mineral resource estimates will ever be converted to mineral reserves. The Company relies on laboratory-based recovery models to project estimated ultimate recoveries by mineral type. There can be no assurance that mineral recovery in small scale laboratory tests will be duplicated in large scale tests under on-site conditions or in production scale operations. Actual recoveries may exceed or fall short of projected laboratory test results. In addition, the grade of mineralization ultimately mined may differ from the one indicated by the drilling results and the difference may be material. Production can be affected by such factors as permitting regulations and requirements, weather, environmental factors, unfore seen technical difficulties, unusual or unexpected geological formations, inaccurate or incorrect geologic, metallurgical or engineering work, and work interruptions, among other things. Short term factors, such as the need for an orderly development of deposits or the processing of new or different grades, may have an adverse effect on mining operations or the results o f those operations. Material changes in mineral resources, mineral reserves, grades, waste-to-ore ratios or recovery rates may affect the economic viability of projects. The estimated mineral resources and mineral reserves should not be interpreted as assurances of mine life or of the profitability of future operations. The Company has a limited operating history and expects to incur operating losses for the foreseeable future Since incorporation, the Company has principally operated as a mineral exploration and evaluation company and has earned limited revenues. Although the Company received a mining permit in 2019 and initiated construction of the Molo Graphite Mine in 2021, the Company has no operating history as a mining company and there is no basis to assume the Company will be successful as a mini ng company. There are numerous difficulties normally encountered by mining companies and these companies experience a high rate of failure. Further, although the Company is prioritizing the development of a BAF, the Company has no experience in successfully constructing or operating a BAF. The process for identifying a prospective site for a BAF, and the subsequent development, construction and operation of a BAF is an extremely complex, risky and onerous process which may take many years to complete and is contingent on several factors. See “Development, Commissioning, and Operation of the BAFs” above.
Page 17
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 17 The Company expects to continue to incur operating losses until the Molo Graphite Mine or a BAF generates sufficient recurring revenues to report operating profits, but there is no assurance that Molo Graphite Mine or a BAF will ever achieve profitable operations. Due to the speculative nature of mineral property exploration, there is substantial risk that the Company’s assets will not g o into commercial production and the business will fail Exploration for minerals is a speculative venture involving substantial risk. There are numerous difficulties normally encoun tered by exploration companies and these companies experience a high rate of failure. The Company cannot provide investors with any assurance that any of the Company’s mineral claims, properties, resources or reserves will ever achieve commercial production. The expl oration and evaluation work completed on the Molo Graphite Mine claims may not result in commercial production of graphite. The exploration and evaluation work completed on the Green Giant Vanadium Project may not result in commercial production of vanadium or othe r minerals. Mining companies are increasingly required to consider and provide benefits to the communities and countries in which they operate, and are subject to extensive environmental, health and safety laws and regulations As a result of public concern about the real or perceived detrimental effects of economic globalization and global climate im pacts, businesses generally, and large multinational corporations in natural resources industries, face increasing public scrutiny of their activities. These businesses are under pressure to demonstrate that, as they seek to generate satisfactory returns on investm ent to shareholders, other stakeholders, including employees, governments, communities surrounding operations and the coun tries in which they operate, benefit and will continue to benefit from their commercial activities. Such pressures tend to be particularly f ocused on companies whose activities are perceived to have a high impact on their social and physical environment. T he potential consequences of these pressures include reputational damage, legal suits, increasing social investment obligations and pressure to increas e taxes and royalties payable to governments and communities. In addition, the Company’s ability to successfully obtain key permits and approvals to explore for, develop and operate mines and to successfully operate in communities around the world will likely depend on the Company’s ability to develop, operate and close mines in a manner that is consistent with the creation of social and economic benefits in the surrounding communities, which may or may not be required by law. The Company’s ability to obtain permits and approvals and to successfully operate in particu lar communities may be adversely impacted by real or perceived detrimental events associated with the Company’s activities or those of other mini ng companies affecting the environment, human health and safety of communities in which the Company operates. Delays in obtaining or failure to obtain government permits and approvals may adversely affect the Company’s operations, including its ability to ex plore or develop properties, commence production or continue operations. Key permits and approvals may be rev oked or suspended or may be varied in a manner that adversely affects the Company’s operations, including its ability to explore or develop properties, c ommence production or continue operations. The Company’s operations are subject to environmental regulations, which could result in additional costs and operational del ays. Environmental legislation is evolving in a manner that may require stricter standards, and enforcement, increased fines and p enalties for non -compliance, more stringent environmental assessments of proposed projects, and a heightened degree of responsibility for companies and their officers, directors, and employees. There is no assurance that any future changes in environmental regulation will not negatively affect the Company’s projects. The Company’s business operations are subject to extensive laws and regulations governing worker health and safety and land use and the protection of the environment, which generally apply to air and water quality, protection of endangered, protected or other specified species, hazardous waste management and reclamation. The Company has made, and expect s to make in the future, significant expenditures to comply with such laws and regulations. Compliance with these laws and regulations imposes substantial costs a nd burdens, and can cause delays in obtaining, or failure to obtain, government permits and app rovals which may adversely impact the Company’s closure processes and operations. Because of the inherent dangers involved in mining operations and mineral exploration, there is a risk that the Company may incur liability or damages as the Company conducts business Mining operations and mineral exploration involve numerous hazards. Insurance against environmental risks, including potential liability for pollution or other hazards as a result of the disposal of waste products occurring from exploration and product ion, has not been available generally in the mining industry. The Company may become subject to liability for such hazards, including accidents, pollution, cave-ins and other hazards against which the Company cannot, or may elect not, to insure against. The Company currently has mine and general liability insurance coverage for its operations. The Company has limited insurance coverage for most environmental risks. In the event of a problem, the payment of environmental liabilities and costs would reduce the funds available to us for future operations. Management intends to periodically review the availability of commercially reasonable insurance coverage. If a hazard were to occur, the costs of rectifying the hazard may exceed the Company’s insurance coverage. If the shortfall in insurance coverage were to exceed the Company’s asset value, it could cause the Company to liquidate its assets.
Page 18
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 18 Should the Company lose the services of key executives, the Company’s financial condition and proposed expansion may be negatively impacted The Company depends on the continued contributions of the Company’s executive officers to work effectively as a team, to execute its business strategy and to manage its business. The loss of key personnel, or their failure to work effectively, could have a material adverse effect on its business, financial condition, and results of operations. Specifically, the Company relies on the members of management discussed under the heading “Directors and Officers” herein. The Company does not maintain key man life insurance. Should the Company lose any or all of their services and the Company is unable to replace their services with equally competent and experienced personnel, the Company’s operational goals and strategies may be adversely affected. Access to the Company’s properties, mine operations, and export of product may be restricted by inclement weather or lack of proper infrastructure Access to the mining property, processing plant, ports and properties underlying the Company’s mineral claims and interests could be restricted due to their remote locations and because of weather conditions. Some of the Company’s exploration properties are only accessible by air. As a result, any attempts to visit, test, or explore the property are generally limited to those periods w hen weather permits such activities. These limitations can result in significant delays in exploration activities, mining operations, and efforts to export production. Compliance with changing regulation of corporate governance and public disclosure will result in additional expenses and pose challenges for management The Company’s management team needs to devote significant time and financial resources to comply with both existing and evolv ing standards for public companies, which will lead to increased general and administrative expenses and a diversion of management time and attention from revenue generating activities to compliance activities. Tax risks Changes in tax laws or tax rulings could materially affect the Company’s financial position and results of operations. Change s to, or differing interpretations of, taxation laws or regulations in Canada, Madagascar, Mauritius, South Africa, Germany, the United States, the UAE or any of the countries in which the Company’s assets or relevant contracting parties are located could result in additional taxation or other tax liabilities being applicable to the Company or its subsidiaries. Taxation laws are complex, subject to differing interpretations and applications by the relevant tax authorities. In particular, the tax treatment relating to the Company’s corporate redomicile from the US to Canada is complex. There is no assurance that new taxation rules or accounting policies will not be enacted or that existing rules will not be applied in a manner which could result in the Company’s profits being subject to additional taxation or which could otherwise have a material adverse effect on profitability, results of operations, financial condition and the trading price of the Company’s securities. Additionally, the introduction of new tax rules or accounting policies, or changes to, or differing interpretations of, or application of, existing tax rules or accounting policies could make investments in or by the Company less attractive to counterparties. Such changes could adversely affect the Company’s ability to raise additional funding or make future investments. The Company may experience losses due to foreign exchange translations Periodically, the Company maintains a substantial portion of its cash reserves in Canadian dollars. Fluctuations in foreign e xchange rates may lead to translation gains or losses when these reserves are reported in U.S. dollar terms. A significant deprecia tion of the Canadian dollar against the U.S. dollar would result in a notable decrease in the U.S. dollar equivalent of the Company’s Can adian dollar cash balances presented on its balance sheet. Conversely, should the U.S. dollar decline notably relative to the Canadian dollar, the Company’s reported U.S. dollar cash position would decline, as covering Canadian dollar expenses would become more costly in U.S. dollar terms. The Company has not entered into derivative instruments to hedge against the impact of foreign exchange fluctuations. Additionally, certain ongoing expenditures are denominated in South African Rand, Madagascar Ariary, and Euros, necessitating periodic holdings of these foreign currencies and exposing the Company to similar risks of foreign exchange translation losses.
Page 19
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 19 The Company’s business is subject to anti -corruption and anti-bribery laws, a breach or violation of which could lead to civil and criminal fines and penalties, loss of licenses or permits and reputational harm The Company operates in certain jurisdictions that have experienced governmental and private sector corruption to some degree , and, in certain circumstances, strict compliance with anti-bribery laws may conflict with certain local customs and practices. Anti-corruption and anti-bribery laws in certain jurisdictions generally prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business or other commercial advantage. The Company’s corporate policies mandate compliance with these anti -bribery laws, which often carry substantial penalties. There can be no assurance that the Company’s internal control policies and procedures will always protect it from recklessness, fraudulent behavior, dishonesty or other inappropriate acts committed by the Company’s affiliates, employees or agents. As such, the Company’s corporate policies and processes may not prevent all potential breaches of law or other governance practices. Violations of these laws, or allegations of such violations, could lead to civil and criminal fines and penalties, litigation, and loss of operating licenses or permits, and may damage the Company’s reputation, which co uld have a material adverse effect on its business, financial position and results of operations or cause the market value of the Comm on Shares to decline. The market price for the Common Shares is particularly volatile given the Company’s status as a company with a small public float, limited operating history and lack of profits which could lead to wide fluctuations in the market price for the Common Shares The market price for the Common Shares is characterized by significant price volatility when compared to seasoned issuers, an d the Company expects that its share price will continue to be more volatile than a seasoned issuer. Such volatility is attributable to a number of factors. First, the Common Shares, at times, are thinly traded. As a consequence of this lack of liquidity, the trading of relatively small quantities of Common Shares by shareholders may disproportionately influence the price of those Com mon Shares in either direction. The price for the Common Shares could, for example, decline precipitously in the event that a large number of Comm on Shares are sold on the market without commensurate demand, as compared to a seasoned issuer which could bet ter absorb those sales without adverse impact on its share price. Second, the Company is a speculative or “risky” investment due to the Company’s li mited operating history, lack of profits to date and uncertainty of future market acceptance for the Company ’s potential products. As a consequence, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at gr eater discounts than would be the case with the stock of a seasoned issuer. Many of these factors are beyond the Company’s control and may decrease the market price of t he Common Shares, regardless of the Company’s performance. The Company cannot make any predictions as to what the prevailing market price for the Common Shares will be at any time or what effect that the sale of Common Shares or the availability of C ommon Shares for sale at any time will have on the prevailing market price. Securities of small-cap and mid-cap companies have experienced substantial volatility in the recent past, often based on factors unrelated to the financial performance or prospects of the companies involved. These factors include macroeconomic developments in North America and globally and market perceptions of the attractiveness of particular industries. The price of the Common Shares is also likely to be significantly affected by short -term changes in graphite prices and demand, the U.S. dollar, the Malag asy ariary, the Canadian dollar, and the Company’s financial condition or results of operations as reflected in its financial statements. Oth er factors unrelated to the performance of the Company that may have an effect on the price of the Common Shares in clude the following: the extent of analytical coverage available to investors concerning the Company’s business may be limited if investment banks with research capabilities do not follow the Company’s securities; lessening in trading volume and general market interest in the Company’s securities may affect an investor’s ability to trade significant numbers of Common Shares; the size of the Company’s public float may li mit the ability of some institutions to invest in its securities; and a substantial decli ne in the price of the Common Shares that persists for a significant period of time could cause its securities, if listed on an exchange, to be delisted from such exchange, further reducing market liquidity. As a result of any of these factors, the market price of the Common Shares at any given point in time may not accurately refl ect the long-term value of the Company. Class action litigation often has been brought against companies following periods of volatility in the market price of their securities. The Company may in the future be the target of similar litigation. Securities litigation co uld result in substantial costs and damages and divert management’s attention and resources. The Company does not intend to pay dividends in the foreseeable future The Company does not anticipate paying cash dividends in the foreseeable future. The Company may not have sufficient funds to legally pay dividends. Even if funds are legally available to pay dividends, the Company may nevertheless decide, in its sole discretion, not to pay dividends. The declaration, payment and amount of any future dividends will be made at the discretion of the board of dir ectors, and will depend upon, among other things, the results of the Company’s operations, cash flows and financial condition, operating and capital requirements, and other factors the board of directors may consider relevant. There is no assurance that the Company will pay any dividends in the future, and, if dividends are paid, there is no assurance with respect to the amount of any such dividend.
Page 20
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 20 DIVIDENDS AND DISTRIBUTIONS The Company does not pay dividends and is unlikely to do so in the foreseeable future. DESCRIPTION OF THE CAPITAL STRUCTURE The Company is authorized to issue an unlimited number of Common Shares, of which 245,556,438 Common Shares are outstanding as at the date hereof. Holders of Common Shares are entitled to receive notice of any meetings of the holders of Common Shares of the Company and to attend and to cast one vote per Common Share held at all such meetings. Holders of Common Shares do not have cumulative voting rights with respect to the election of directors and, accordingly, holders of a majority of the Common Shares entitled to vote in any election of directors may elect all directors. Holders of Common Sh ares are entitled to receive on a pro rata basis such dividends, if any, as and when declared by the Board at its discretion from funds legally available, and upon the liquidation, dissolution or winding up of the Co mpany are entitled to receive on a pro rata basis the net assets of the Company after payment of debts and other liabilities, in each case subject to the rights, privileges, restrictions and conditions attaching to any other series or class of shares ranking senior in priority to or on a pro rata basis with the holders of Common Shares with respect to dividends or liquidation. The Common Shares do not carry any pre -emptive, subscription, redemption or conversion rights, nor do they contain any sinking or purchase fund provisions. MARKET FOR SECURITIES Trading Price and Volume The outstanding Common Shares are listed and posted for trading on the TSX under the symbol “NEXT” and on the OTCQB under the symbol “NSRCF”. The table below sets forth the high and low closing sale prices and volume of the Common Shares on the TSX for each month of the financial year ended June 30, 202 6. Over-the-counter market quotations reflect inter -dealer prices, without retail mark-up, markdown or commission and may not necessarily represent actual transactions. Period High Trading Price (C$) Low Trading Price (C$) Volume July 2025 0.58 0.23 4,567,926 August 2025 0.56 0.33 2,442,992 September 2025 0.475 0.335 1,746,889 October 2025 0.63 0.37 4,842,600 November 2025 0.50 0.37 1,294,900 December 2025 0.47 0.34 1,305,800 January 2026 0.60 0.34 2,531,900 February 2026 0.54 0.29 6,236,200 March 2026 0.35 0.24 5,020,800 April 2026 0.34 0.27 2,677,500 May 2026 0.41 0.32 4,770,300 June 2026 0.42 0.31 3,979,100
Page 21
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 21 Prior Sales The following table summarizes the issuances by the Company of Common Shares, and securities convertible into or exchangeable for Common Shares, during the financial year ended June 30, 2026 and including to the date hereof. Date Type of Security Issued Issuance / Exercise Price Per Security Number of Securities Issued November 5, 2025 Restricted share units(1) N/A 18,132,923 November 6, 2025 Stock options(2) C$0.54 600,000 February 24, 2026 Common shares(3) C$0.425 58,823,500 February 26, 2026 Warrants(3) C$0.55 29,411,750 April 21, 2026 Restricted share units(4) N/A 1,350,000 Notes: (1) Each restricted share unit entitled the holder thereof to a cash settlement based on the corresponding share price upon vesting . 429,368 of the RSUs issued vested on November 28, 2025, and 967,467 on March 5, 2026. 5,578,696 of the RSUs issued will vest on September 30, 2026, 5,578,696 will vest on September 30, 2027 and 5,578,696 will vest on September 30, 2028. Each stock option issued entitles the holder thereof to one Common Share, subject to adjustments. All 600,000 options vested on November 6, 2025 and will expire on November 5, 2030. (2) Issued pursuant to the “best-efforts” private placement completed on February 24, 2026, as described above. (3) Each restricted share unit entitled the holder thereof to a cash settlement based on the corresponding share price upon vesting. 450,000 of the RSUs issued will vest on September 30, 2026, 450,000 will vest on September 30, 2027 and 450,000 will vest on September 30, 2028. SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER To the knowledge of the Company, there are no securities of the Company that are subject to a contractual restriction on transfer, as at the date hereof.
Page 22
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 22 DIRECTORS AND OFFICERS Name, Occupation, and Security holdings The name, province or state of residence, position with and principal occupation within the five preceding years for each of the directors and executive officers of the Company as at the date hereof are set out in the following table: Name Company Position Principal Occupation(1) Director or Officer Since # and % of Common Shares Beneficially Owned, Controlled or Directed, Directly or Indirectly (2) Sir Mick Davis (London, UK) Chair of the Board of Directors CEO of Vision Blue Resources Ltd. March 2021 116,121,836 (7) (47.29%) Craig Scherba (6) (London, United Kingdom) Director, and Chief Development Officer January 2010 613,785 (0.25%) Brett Whalen (3) (Markham, ON, Canada) Director Professional investor July 2020 1,033,360 (0.42%) Christopher Kruba (3)(4)(5) (Windsor, ON, Canada) Director Vice-President and Senior Counsel of Nostrum Capital Corporation December 2020 368,070 (0.15%) Ian Pearce (3)(4)(6) (Toronto, ON, Canada) Director Chair of the Board of Directors of Newgold Inc., Director of Nexa Resources, Northland Power Inc., and Metso Outotec July 2021 41,306 (0.02%) Hanré Rossouw (Cape Town, South Africa) Director, President and Chief Executive Officer September 2024 219,981 (0.09%) Jaco Crouse (Toronto, ON, Canada) Chief Financial Officer July 2024 55,493 (0.02%) Brent Nykoliation (Toronto, ON, Canada) EVP Corporate Affairs & Strategy November 2008 501,958 (0.20%) Markus Reichardt (Isleworth, United Kingdom) Vice President, Sustainability March 2023 80,274 (0.03%) Danniel Stokes (Lancashire, United Kingdom) Vice President, Projects October 2022 80,274 (0.03%) Notes: (1) Other than as described in the Company Position by the respective individual. (2) The number of securities beneficially owned or controlled or directed, directly or not directly, is not within the knowledge of the Company and has been furnished by the respective individual. (3) Ian Pearce, Brett Whalen and Christopher Kruba are independent directors of the Company. (4) Members of the Audit Committee are Christopher Kruba (Chair), Brett Whalen, and Ian Pearce. (5) Members of the Governance Committee are Brett Whalen (Chair) and Christopher Kruba. (6) Members of the Sustainability Committee are Ian Pearce (Chair). (7) These represent the Common Shares held by Vision Blue.
Page 23
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 23 Cease Trade Orders, Bankruptcies, Penalties and Sanctions No directors or executive officers of the Company: (i ) is, as at the date hereof, or has been, within 10 years before the date hereof, a director, chief executive officer or chief financial officer of any company (including the Company) that (a) was subject to a cease trade order; an order similar to a cease trade order; or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days (collectively, an “Order”) that was issued while the proposed director was acting in the capacity as director, chief executive officer or chief financial officer, or (b) was subject to an Order that was issued after the proposed director ceased to be a director, chief executive o fficer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial offi cer; (ii) is, as at the date hereof, or has been within 10 years befor e the date hereof, a director or executive officer of any company (including the Company) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity , became bankrupt, made a proposal under any legis lation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or (iii) has, within the 10 years before the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolve ncy, or become subject to or instituted any proceedings, arrangements or compromise with creditors, or had a receiver , receiver manager or trustee appointed to hold the assets of the proposed director. As at the date hereof, no directors or executive officers of the Company has been subject to: (i ) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (ii) any other penalties or sanctions imposed b y a court or regulatory body that would likely be considered important to a reasonable investor in deciding whether to vote for a proposed director. Conflicts of Interest To the best of our knowledge, and other than as disclosed below, there are no known existing or potential conflicts of interest between the Company and any of the Company’s directors or officers, except that certain of the directors and officers serve as directors and officers of other public companies and therefore it is possible that a conflict may arise between their duties as a director or officer of NextSource and their duties as a director or officer of such other companies. The Chair of the Board, Sir Mick Davis, is also the CEO of Vision Blue, and a director of the Company, Ian Pearce, was appointed to the Board by Vision Blue. Vision Blue holds 47.29% of the outstanding and issued Common Shares. Vision Blue also owns a royalty on the Molo Graphite Mine and a royalty on the Green Giant Vanadium Project. LEGAL PROCEEDINGS AND REGULATORY ACTIONS The Company is not presently engaged in any litigation that, in management’s view, would reasonably be expected to have a material adverse effect on the Company’s financial condition or operating results. Furthermore, there are no regulatory actions, lawsuits, proceedings, inquiries, or investigations pending or, to the knowledge of the Company's executive officers, threatened before any court, public board, government agency, securities commission, self-regulatory organization, or similar body against the Company, its Common Shares, or any of its officers or directors in their respective capacities, where an unfavorable outcome could result in a material adverse effect. INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS To the knowledge of the Company, other than as disclosed below , no director, executive officer, or person that beneficially owns, or controls or directs, directly or indirectly, more than 10% of any class or series of outstanding voting securities of the Company, or an associate or affiliate of any of the foregoing, have had any material interest, direct or indirect, in any transaction within the three most recently completed financial years or during the current financial year prior to the date hereof that has materially affected or is reasonably expected to materially affect the Company. Vision Blue holds 116,121,836 Common Shares representing approximately 47.29% of the issued and outstanding Common Shares, which were acquired in connection with the Financing Package, the exercise of VB warrants, the 2023 Offering and the 2024 Private Placement. Vision Blue also holds a royalty on the Molo Graphite Mine and a royalty on the Green Giant Vanadium Project. Vision Blue was also granted certain other rights in connection with the Financing Package, and the Investment Agreement (as defined herein), including (i) certain appointment rights for the Board; (ii) a right to participate in future equity financing s on the same terms as such financing to maintain its ownership percentage in the Company, subject to Vision Blue holding at least 10% of the issued and outstanding Common Shares; and (iii) a right of first refusal to finance the Phase 2 expansion of the Molo Graphite Mine. The Chairman of Vision Blue, Sir Mick Davis, was appointed as Chair of the Board of the Company on March 5, 2021. The second Vision Blue appointee, Ian Pearce, was appointed to the Board on July 14, 2021.
Page 24
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 24 TRANSFER AGENT AND REGISTRAR The Company’s principal transfer agent and registrar for the Common Shares is TSX Trust Company and its principal offices in Toronto, Ontario, Canada. MATERIAL CONTRACTS The following lists material contracts that were entered into outside the normal course of business during the most recently completed fiscal year or before the last fiscal year that are still in effect and material to the Company: a) The investment agreement dated February 7, 2021, entered into between Vision Blue Resources Limited and the Company , and as amended June 6, 2023 (the “Investment Agreement”). b) The Royalty Agreement Relating to the Molo Graphite and Vanadium Project dated February 8, 2021, entered into between Vision Blue Resources Limited as royalty holder, NextSource Graphite (Mauritius) Ltd., as graphite grantor, NextSource Minerals (Mauritius) Ltd. as vanadium grantor, and NextSource Materials Inc., ERG (Madagascar) SARLU, NextSource Minerals (Madagascar) and NextSource Materials (Mauritius) Ltd. as guarantors. c) The Energy Services Agreement dated July 5, 2023 , between ERG (Madagascar) SARLU and CrossBoundary Energy Madagascar Ltd. (“CBE”), pursuant to which CBE owns and operates a hybrid solar and thermal power facility supplying electricity to the Molo Graphite Mine. The agreement has an initial term of 20 years, includes minimum annual energy purchase commitments by the Company and remains in effect as of the date hereof. d) The MCC Offtake Agreement. A multi-year offtake agreement with Mitsubishi Chemical Corporation for the supply of approximately 9,000tpa of AAM to be produced from the UAE BAF. e) Syrah Graphite Supply Agreement. A seven-year agreement for the supply of natural graphite fines of approximately 34,000 tonnes and up to 68,000 tonnes with annual committed and optioned volumes subject to specific conditions precedent being satisfied. f) The amended and restated credit drawdown facility dated February 24, 2026, entered into between Vision Blue Resources Limited and the Company (the “Amended Facility”), pursuant to which the maximum amount available under the facility was increased from $30 million to $50 million and the facility was amended from an on -demand facility to a term facility, with repayment deferred for a period of 12 months and one day from February 24, 2026. As at June 30, 2026, $30 million had been drawn under the Amended Facility. Of the additional $20 million of facility capacity, $5 million is available for drawdown, with the remaining $15 million subject to the sole discretion of Vision Blue. INTEREST OF EXPERTS The following are the names of each person or company who is named as having prepared or certified a report, valuation, statement or opinion described or included herein or in a document incorporated by reference, and whose profession or business gives aut hority to such report, valuation, statement or opinion: 1. The Co mpany’s independent auditors are PricewaterhouseCoopers LLP, Chartered Professional Accountants, who have prepared an independent auditor’s report dated September 2 8, 202 6, in respect of the Company’s consolidated financial statements as at June 30, 2026 and for the year then ended. PricewaterhouseCoopers LLP has advised that they are independent with respect to the Company within the meaning of the relevant rules and related interpretations prescribed by the relevant professional bodies in Canada, including the Chartered Professional Accountants of Ontario CPA Code of Professional Conduct. 2. Keith Wilson, Pr. Eng., Senior Mining Engineer at Stantec Consulting Ltd, is a qualified person who authored certain portions of the Feasibility Study. To the knowledge of the Co mpany, neither the author nor the firm the author works with had an interest in any securities or other properties of the Company, its associates or affiliates as at the date of the Feasibility Study or as at the date hereof. 3. Philip John Hancox, Pr. Sci. Nat., Director at Caracle Creek International Consulting (Pty) Ltd., is a qualified person who authored certain portions of the Feasibility Study. To the knowledge of the Co mpany, neither the author nor the firm the author works with had an interest in any securities or other properties of the Company, its associates or affiliates as at the date of the Feasibility Study or as at the date hereof.
Page 25
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 25 4. Sivanesan (Desmond) Subramani, Pr. Sci. Nat., Principal Resource Geologist at Caracle Creek International Consulting (Pty) Ltd., is a qualified person who authored certain portions of the Feasibility Study. To the knowledge of the Co mpany, neither the author nor the firm the author works with had an interest in any securities or other properties of the Company, its associates or affiliates as at the date of the Feasibility Study or as at the date hereof. 5. Oliver Peters, P. Eng., Principal Metallurgist at Metpro Management Inc., is a qualified person who authored certain portions of the Feasibility Study. To the knowledge of the Co mpany, neither the author nor the firm the author works with had an interest in any securities or other properties of the Company, its associates or affiliates as at the date of the Feasibility Study or as at the date hereof. 6. Clive Brown, Pe. Eng, Principal Mining Engineer at Bara Consulting, is a qualified person who authored certain portions of the Feasibility Study. To the knowledge of the Company, neither the author nor the firm the author works with had an interest in any securities or other properties of the Company, its associates or affiliates as at the date of the Feasibility Study or as at the date hereof. 7. Jeremy Tape, CP, BE (Chem), Discipline Lead at Stantec Consulting is a qualified person who authored certain portions of the Feasibility Study. To the knowledge of the Company, neither the author nor the firm the author works with had an interest in any securities or other properties of the Company, its associates or affiliates as at the date of the Feasibility Study or as at the date hereof. 8. Andreas Savvas, Pr. Eng, Tailing Engineer, Director and Partner at Epoch Resources (Pty) is a qualified person who authored certain portions of the Feasibility Study. To the knowledge of the Company, neither the author nor the firm the author works with had an interest in any securities or other properties of the Co mpany, its associates or affiliates as at the date of the Feasibility Study or as at the date hereof. 9. Damian Pianta, B.Eng., Project Manager at Stantec Consulting Pty. is a qualified person who authored certain portions of the Feasibility Study. To the knowledge of the Company, neither the author nor the firm the author works with had an interest in any securities or other properties of the Company, its associates or affiliates as at the date of the Feasibility Study or as at the date hereof. 10. Greg Gold, Pr. Eng, Senior Mining Engineer at Stantec Services Inc., is a qualified person who authored certain portions of the Feasibility Study. To the knowledge of the Company, neither the author nor the firm the author works with had an interest in any securities or other properties of the Company, its associates or af filiates as at the date of the Feasibility Study or as at the date hereof. 11. Alkie Marais, M.Sc. (Geohydrology) , Principal Hydrogeologist and Partner at Geostratum Groundwater and Geochemistry Consult (Pty), is a qualified person who authored certain portions of the Feasibility Study. To the knowledge of the Company, neither the author nor the firm the author works with had an interest in any securities or other properties of the Company, i ts associates or affiliates as at the date of the Feasibility Study or as at the date hereof. 12. Craig Scherba, P. Geo., Chief Development Officer of the Co mpany, is the qualified person who reviewed, approved and verified the scientific and technical information disclosed in this AIF. Mr. Scherba’s holdings of securities of the Co mpany as of the date hereof do not exceed 0.25% of the issued and outstanding securities of the Company. AUDIT COMMITTEE Audit Committee Charter Attached hereto as Schedule “B” is the Audit Committee Charter. Oversight The Audit Committee is responsible for the oversight and for recommending the appointment, compensation, retention, termination of an independent external auditor engaged for the purpose of preparing or issuing an audit report or performing other audit, re view, or attest services for the Company. The Company has adopted a requirement to pre-approve non-audit services provided by the external auditor. Meetings During the financial year ended June 30, 2026, the Audit Committee met four times virtually via online meetings.
Page 26
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 26 Composition The members of the Audit Committee are Christopher Kruba (Chair), Brett Whalen, and Ian Pearce. Each member is “independent” and is “financially literate” in accordance with the standards of National Instrument 52-110. Relevant Education and Experience Christopher Kruba is Vice-President and Counsel to Nostrum Capital Corporation and a number of related corporations that are part of the Toldo Group. The Toldo Group is headquartered in Windsor, Ontario and is composed of several privately held corporations in Canada and the United States, some of which manufacture and operate in diversified sectors and others which are involved in a ctive and passive investments across capital markets throughout North America, Europe and Africa. In addition to his responsibilities as counsel to the Toldo Group, Mr. Kruba serves as corporate secretary to all the companies, is a member of the Toldo Group’s investment committee and he serves on the board of directors of many of the companies. In his roles Mr. Kruba is involved in capital ma rket decisions, he has led mergers and acquisitions, and he has participated in the management and strategic planning for numerous companies, including venture capital corporations in which the group has invested. Prior to joining the Toldo Group in 2000, Mr. Kruba articled with and practiced at the law firm of Gignac, Sutts LLP in Windsor, Ontario. Mr. Kruba graduated from the University of Windsor’s Faculty of Law in 1998 and has been a Member of the Law Society of Ontario since 1999. Nostrum Capital Corporation and Mr. Kruba personally have been investors in NextSource since 2011. Brett Whalen has been a director since July 2020 and was appointed as Chair of the Board from July 2020 until March 2021. Mr. Whalen has over 20 years of investment banking and M&A expertise, spending over 16 of those years at Dundee Corporation (“Dundee Corp.”). During his tenure at Dundee Corp., Mr. Whalen was directly involved in completing approximately $2 billion in M&A deals and helped raise over $10 billion dollars in capital to the resource sector. Mr. Whalen became Vice President and Portfolio Manager of Goodman and Company (a division of Dundee) and was President and CEO of the CMP Group of Companies. Mr. Whalen has held Board seats of several TSX -listed and privately held companies and holds a BA (Honours) degree in Economics and Finance from Wilfrid Laurier University. Ian Pearce is a Corporate Director with over 40 years of professional experience in the global metallurgy and mining related industries. Mr. Pearce held executive roles at Falconbridge Limited, including Chief Operating Officer and subsequently served as Chief Executive Officer of Xstrata Nickel, a subsidiary of Xstrata plc. He has also held senior engineering and project management roles mana ging numerous significant development projects in the mining extractives sector. Mr. Pearce currently is a Director and Chairman of Northland Power Inc. Mr. Pearce holds a Higher National Diploma in Engineering (Mineral Processing) from the University of Johannesburg and a Bachelor of Science degree from the University of the Witwatersrand in South Africa. External Auditor Service Fees PricewaterhouseCoopers LLP served as external auditor for the fiscal year ended June 30, 202 6, as well as June 30, 202 5. The Board considers that the work done by PricewaterhouseCoopers LLP is compatible with maintaining PricewaterhouseCoopers LLP as external auditor for the next fiscal year. During the years ended June 30, 2026 and 2025, the Audit Committee pre-approved the following fees by PricewaterhouseCoopers. Year-ended June 30, 2026 Year-ended June 30, 2025 Audit Fees – Consolidated Company (1) C$370,000 C$220,000 Audit Fees - Mauritius $Nil $38,000 Audit-Related Fees (2) C$41,500 $Nil Tax Fees (3) C$39,000 C$15,000 All Other Fees (4) C$2,050 $Nil (1): Audit Fees is the aggregate fees in CAD or USD as applicable, approved by the Audit Committee during each of the last two fiscal years for audit services. (2): Audit-Related Fees is the aggregate fees CAD or USD as applicable, approved by the Audit Committee during each of the last two fiscal years for assurance and related services. (3): Tax Fees is the aggregate fees in CAD or USD as applicable and approved by the Audit Committee during each of the last two fiscal years for professional services rendered by the issuer’s external auditor for tax compliance, tax advice, and tax planning. (4): All Other Fees is the aggregate fees in CAD or USD as applicable and approved by the Audit Committee during each of the last two fiscal years for products and services provided by the issuer’s external auditor, other than the services reported under. ADDITIONAL INFORMATION Additional information related to the Company is provided in the Financial Statements and MD&A for the years ended June 30, 2026 and 2025, which are available on SEDAR+ at www.sedarplus.ca or on the Company website at www.nextsourcematerials.com.
Page 27
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 A-1 SCHEDULE “A” - MOLO GRAPHITE MINE EXPANSION - NI 43-101 TECHNICAL FEASIBILITY STUDY The summary in this Schedule A does not purport to be a complete summary of the Molo Graphite Mine and is subject to all of the assumptions, qualifications and procedures set out in the Feasibility Study and is qualified in its entirety with reference to the full text of the Feasibility Study , which is incorporated by reference herein. Readers should read the summary in this Schedule “A” in conjunction with the Feasibility Study which is available electronically under the profile of the Company at www.sedar plus.ca. Capitalized terms used in this Schedule “A” and not otherwise defined shall carry the meanings of such terms as defined in th e Feasibility Study. 1. Introduction This Feasibility Study (FS) evaluates the expansion of the Molo Graphite Mine (the Project) in southwestern Madagascar, owned by NextSource Materials Inc. (NEXT). The proposed Molo Expansion Project (MEP) includes the construction of an additional processing plant and supporting mining infrastructure to place steady- state production at 150,000 tonnes per annum (tpa) of SuperFlake® graphite concentrate over an approximately 37-year life-of-mine (LOM). The study updates the 2023 FS and incorporates operational experience and lessons learned from the Phase 1 development, which has been accelerating since 2023. NEXT is a Toronto-based mining and strategic materials company listed on the Toronto Stock Exchange under the symbol NEXT. NEXT is focused on becoming an integrated global supplier of critical battery materials and development of the Molo graphite deposit represents a key component of this strategy. This Technical Report, titled Molo Graphite Mine NI 43-101 Technical Report Feasibility Update, was prepared by Stantec Consulting International Ltd. (Stantec) in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101). The scope of work includes engineering and design of a modular processing plant, estimation of capital and operating costs (CAPEX and OPEX), and development of a financial model to assess project economics. The study was completed by a multidisciplinary team of Qualified Persons (QPs) from several independent firms, covering geology, mine planning, metallurgy, infrastructure, hydrology, environmental and social aspects, and tailings management. Key contributors include Stantec (process and infrastructure), Caracle Creek International Consulting (CCIC) (geology), Bara Consulting (mine planning), and other specialist consultants. Multiple site visits were conducted by QPs between 2012 and 2025 to inspect geology, mining operations, and process plant performance, including detailed reviews of Phase 1 operations and current open-pit mining activities. These inspections support the validity of the data used in the study and its conclusions. The FS is based on a comprehensive dataset including geological models, mine schedules, metallurgical test work, process design criteria, infrastructure plans, environmental and permitting documentation, and financial inputs. The Project has a well-documented development history, including multiple prior feasibility studies, permitting milestones, and construction activities dating back to the initial discovery in 2012. All estimates and results are presented in SI metric units, with financial figures expressed in United States dollars (US$), unless otherwise stated. 2. Property Description and Location The Project is in the Republic of Madagascar, the largest island in the Indian Ocean, situated off the southeastern coast of Africa. Madagascar extends approximately 1,570 km north to south and encompasses a surface area of 587,040 km². The capital city of Antananarivo is in the central-eastern region of the country. Madagascar is officially bilingual, with Malagasy as the national language and French used in government and business. Madagascar is recognized as one of the world’s mega biodiversity countries, with over 80% of its flora and fauna endemic to the island. Vegetation varies significantly across the country, ranging from tropical rainforest biomes in the east to savannah and arid, spiny vegetation biomes in the south, where the Project is situated.
Page 28
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 A-2 The Government of Madagascar has recently reformed its mining sector through the introduction of a new Mining Code (Law No. 2023-007), reflecting a shift toward a more state-centered and sustainable development model. The updated framework aims to balance foreign investment with increased national and community benefit, while strengthening environmental, social, and governance requirements. Key changes include an increase in royalty rates for key minerals (including graphite) from 2% to 5%, the introduction of a stability guarantee for up to five years; and enhanced social and local content obligations, including workforce localization requirements and contributions to community development funds. While Law No. 2023-007 improves regulatory clarity, uncertainties remain regarding implementation capacity and certain fiscal provisions, which may present risks to project development. The Project is in the Toliara region of southwestern Madagascar, approximately 160 km southeast of the port city of Toliara and 220 km northwest of Fort Dauphin. The property consists of 790 claims covering a total area of approximately 308.6 km², centered at UTM coordinates 495,289E and 7,345,473N (UTM Zone 38S, WGS 84 datum). The Project area includes one Exploitation Permit (PE #39807) covering 175 km² and two Exploration Permits (PR #39806 and PR #39810) covering 96.1 km² and 37.5 km², respectively. In addition, a 50-year land lease (effective February 25, 2022) provides legal access to the Project area. The Project area boundaries are defined using the LaBorde coordinate system, based on a rectilinear grid of 625 m by 625 m claims. Although the Project has not been formally surveyed, claim boundaries can be accurately located using GPS, with positional data collected in the WGS 84 system and converted to LaBorde coordinates as required. 3. Property Ownership NEXT holds its interest in the Project through a series of agreements with Malagasy Minerals Limited (Malagasy Ltd.). On December 14, 2011, NEXT entered into a Definitive Joint Venture Agreement to acquire a 75% interest in a portfolio of industrial mineral properties. This interest was subsequently increased to 100% following the execution of a Memorandum of Understanding on October 24, 2013, and a Sale and Purchase Agreement and Mineral Rights Agreement on April 16, 2014. Malagasy Ltd. retains a 1.5% net smelter return (NSR) royalty on the Project. Independent review has confirmed that mineral rights have been validly transferred to NEXT or its Madagascar subsidiaries. The Project was originally held under exploration permit PR #3432 issued by the Bureau du Cadastre Minier de Madagascar (BCMM). On January 18, 2019, this permit was restructured into two exploration permits (PR #39806 and PR #39810) and one exploitation permit (PE #39807), with official approval granted on February 14, 2019. All Mineral Resources and Mineral Reserves defined for the Project are contained within the boundaries of the Exploitation Permit PE #39807. NEXT holds exclusive mining rights within PE #39807 from February 14, 2019 for an initial period of 40 years, with provisions for renewal in successive 20-year terms. Exploration rights for a broad suite of industrial minerals, including graphite, lithium, vanadium, and other commodities, are held under PR #39806 and PR #39810. These exploration permits are granted for an initial term of 5 years and may be renewed twice for an additional 3-year period. Permits are administered under Malagasy mining legislation, with annual obligations including payment of administrative fees and submission of activity reports. Fees increase progressively based on the duration of permit tenure. Exploration permit holders are required to maintain records of activities, personnel, and work completed, and to submit site plans documenting exploration work. Based on a review by Caracle Creek International Consulting (CCIC), NEXT is compliant with all applicable permitting and reporting requirements and is in good standing with respect to its mineral tenure.
Page 29
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 A-3 According to John W Ffooks & Co (JWF), in May 2026, the Government of Madagascar enacted Decree No. 2026- 831, which designates a number of minerals, including graphite, as Strategic Mineral Substances and provides for direct State participation in projects involving certain strategic commodities. The decree establishes an entitlement of a minimum non-dilutable State participation of 10%, exercisable through designated State entities and without any requirement for the State to contribute funding for such interest. It also provides the State with enhanced governance, information and oversight rights and introduces provisions relating to domestic supply obligations and strategic resource management. The financial assessment presented in this FS has been prepared on the basis of the current project ownership structure and does not include the impact on NEXT of a potential 10% free-carried State interest. Should the provisions of the decree be determined to apply to the ownership of the Project, the resulting reduction in attributable project cash flows, net present value and investor returns could have a material adverse effect on economics and overall project viability for NEXT. 4. Project Accessibility and Infrastructure The Project is accessible via established regional transportation networks, although access can be impacted seasonally by climatic conditions. From the port city of Toliara, the Project can be reached via a primary 268 km road route passing through Andalatanosy, Betioky, Ambatry, and Fotadrevo. An alternative 324 km route, which includes Ejeda, is typically used by heavy transport vehicles and serves as a secondary option when the primary route becomes impassable, particularly during the rainy season. Both routes may be significantly affected by seasonal rainfall, with access constraints most pronounced during peak rainy periods. Additional access is available from the Port of Ehoala via a 372 km route along the RN13 corridor, passing through several municipalities including Andalatanosy, Ambatofotsy, Beraketa, and Bekily. Road conditions along this route vary, with sections consisting of severely rutted tracks that may be impassable during the rainy season (November to March) and while other sections are undergoing or scheduled for upgrading as part of national highway improvement programs. Air access to the Project is facilitated by an upgraded all-weather airstrip located at Fotadrevo. The airstrip supports year-round access via private aircraft from Antananarivo, except during prolonged periods of heavy rainfall. Flight times are approximately 2.5 hours from Antananarivo and 45 minutes from Toliara. International access to Madagascar is supported by multiple commercial airlines serving Antananarivo, including connections from Paris, Mauritius, Addis Ababa, Nairobi, and Johannesburg. Domestic air service is available through regular scheduled flights, including approximately three weekly flights between Antananarivo and Toliara. The local community of Fotadrevo, situated west of the Project, where unskilled labour is readily available from the local community, while semi-skilled personnel can be sourced regionally. Skilled labour requirements are met through recruitment at the national level and (where necessary) through expatriate personnel. Basic goods and services are available within Fotadrevo, with more advanced logistical and commercial support provided by the regional centres of Toliara and Antananarivo. Current accommodation and on-site infrastructure are provided through a dedicated 70-person mine camp located adjacent to the processing plant. Power to the camp is supplied via an 11 kVA overhead line connected to the main generator facility and supplemented by a solar power installation. Communication infrastructure is supported by a cellular network, with coverage provided by an existing tower in Fotadrevo and an additional Airtel tower installed on site during Phase 1 development. Water supply to the Project is currently sourced from three established boreholes. To support the planned expansion, additional groundwater infrastructure is anticipated, with up to 15 new boreholes expected to be developed to meet increased operational water demand.
Page 30
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 A-4 5. History The Project was originally held by Malagasy Ltd., an Australian Securities Exchange-listed company. No documented exploration activity occurred on the Project prior to 2007. Between 2007 and 2011, systematic exploration programs were undertaken by NEXT (initially as Uranium Star and later Energizer Resources), managed by Taiga Consultants Limited and other contractors. These programs included extensive geological mapping, soil and stream sediment sampling, trenching, airborne and ground geophysical surveys, and diamond drilling across multiple graphite prospects within the broader Project area. Exploration activities intensified between 2008 and 2011, with multiple drilling campaigns, large-scale trenching programs, and geophysical surveys targeting several deposits, including Jaky, Manga, Mainty, Fotsy, Fondrana, and Boko. In 2011, focused exploration led to the discovery of the Molo graphite deposit, which subsequently became the primary development target. No material exploration activities affecting the current Mineral Resource estimate have been undertaken since 2014. Metallurgical test work has been conducted to support process development. Initial testing in 2012 involved a 200 kg sample sent to Mintek and Lac des Iles for carbon recovery analysis. In 2013, a 200-t bulk trench sample was collected and processed at SGS Lakefield for pilot plant testing. This sample forms the basis for the current process design. There has been no historical production from the property prior to development by NEXT. The Project is now fully permitted and has entered production, with Phase 1 operations currently being optimized to produce SuperFlake® graphite concentrate. 6. Geologic Setting, Mineralization, and Deposit Type The Project is situated within the Ampanihy Shear Zone in southwestern Madagascar, a regional structural feature characterized by strong, north-south trending foliation and steeply dipping rock sequences. The deposit is hosted within late Neoproterozoic metamorphic rocks that have undergone upper amphibolite facies metamorphism and significant deformation. Graphite mineralization at the Molo graphite deposit is derived from sedimentary protoliths, including mudstones, siltstones, and sandstones, which have been subjected to multiple phases of metamorphism and deformation. Mineralization is characterized by a bimodal grade distribution, with low-grade (>2% C) and high- grade (>4% C) domains. Higher-grade graphite is generally associated with finer-grained metasedimentary units, while coarser-grained rocks, interpreted as metamorphosed sandstones, are more favourable hosts for large and jumbo flake graphite. The principal economic mineralization at the Project consists of metamorphic flake graphite formed through the graphitization of organic-rich sedimentary precursors during high-grade regional metamorphism. Graphite mineralization is primarily hosted within metamorphic rocks, with petrographic and mineralogical analyses confirming the presence of flake graphite in varying concentrations and textural associations. These textural differences between high- and low-grade mineralization have implications for metallurgical response and flake size distribution, with coarser, discrete flake populations generally favourable to produce large and jumbo flake graphite products. Overall, the mineralization at Molo graphite deposit is consistent with high-quality flake graphite deposits formed under complex metamorphic conditions, supporting its suitability for commercial exploitation.
Page 31
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 A-5 7. Exploration and Drilling Significant exploration was carried out in 2011 that included activities of prospecting, grab and trench sampling, and diamond drilling. The exploration programme included the use of geophysical techniques to delineate additional graphite mineralisation. Initial graphitic carbon results from the 2011 trenching were encouraging in that they showed multiple graphic horizons present in each zone, of significant widths and grades. Additional trenching was undertaken on the Molo graphite deposit during 2013 as part of a bulk sampling exercise. Subsequently an additional nine trenches, totaling 1,876 m, have been excavated as part of the 2014 exploration programme. The 2011 diamond drilling included several wide spaced holes on the Molo deposit. Most of these drill holes, over a strike length of 1.2 km, that intersected graphitic mineralisation to a vertical depth of 75 m, with down- hole thicknesses of between 60 m and 150 m in width. Additionally, 41 diamond drill holes, comprising 8,502.7 m of diamond drilling was completed on Molo during 2012. During 2014, an additional 32 diamond drill holes, totaling 2,063 m was completed. With this most recent drill programme, a total of 80 diamond drill holes, totaling 11,660 m, was completed on the Molo graphite deposit, and these were used for the mineral resource estimations. No additional exploration was required for this FS. 8. Mineral Processing and Metallurgical Testing Extensive metallurgical and mineral processing test work has been conducted on the Project between 2012 and 2025, including laboratory, pilot plant, optimization, variability, and vendor testing programs. The primary objectives were to develop a robust process flowsheet capable of producing a graphite concentrate exceeding 94– 95% total carbon, maximize recovery while preserving flake size, and confirm process consistency across the mineral resource. Early metallurgical investigations were undertaken by Mintek (2012) and SGS Lakefield (2013–2015). The Mintek program focused primarily on maximizing carbon recovery, achieving rougher recoveries of up to 99% and cleaner concentrate grades of approximately 82.7% total carbon. However, this work did not prioritize flake size preservation, which is critical to graphite pricing. Subsequent SGS programs focused on flowsheet optimization to balance recovery, concentrate grade, and flake size distribution. Laboratory and pilot-scale test work established a flotation-based flowsheet. Open- circuit laboratory tests achieved concentrate grades above 95% total carbon across all size fractions. Pilot plant testing using a 200-t bulk sample confirmed flowsheet robustness. These results demonstrated that the Molo graphite deposit mineralization is amenable to conventional flotation processing using well established process equipment, with good potential for high-grade concentrate production. A metallurgical test program was initiated in the second half of 2024 to optimize the current Phase 1 flowsheet to ensure consistent concentrate grades. The work was conducted at SGS Lakefield using a composite that represented the first several years of projected mining. The test program was undertaken to refine the flowsheet based on operational experience from the commercial plant. The program focused on improving consistency and simplifying the circuit. Metallurgical testing over more than a decade demonstrates that the Molo graphite deposit is amenable to conventional flotation processing, with the ability to produce high-quality graphite concentrate. However, the presence of intercalated gangue minerals necessitates the inclusion of stirred media mills to consistently achieve premium-grade products.
Page 32
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 A-6 The final recommended process flowsheet consists of: • Crushing and grinding • Rougher flotation • Multi-stage polishing and cleaner flotation • Attrition in stirred media mill and cleaner flotation This flowsheet can produce a final concentrate grading approximately 97% total carbon with robust recoveries and acceptable flake size distribution. The process design utilizes well-established technologies and has been validated through laboratory testing, pilot plant campaigns, and operational experience. The optimized flowsheet is considered reliable, scalable, and suitable for commercial implementation. Overall, the metallurgical program confirms the technical viability of the Project and supports its development as a high-grade graphite operation. 9. Mineral Resource Estimates The current surface mineable mineral resource estimate for the Project is summarised in Table 1-1. A relative density of 2.36 t/m3 was assigned to the mineralised domains. The mineral resources are classified as Measured, Indicated and Inferred categories according to the CIM Definition Standards. The mineral resource was based on the mineral reserve estimation parameters but used a 15-year forward-looking graphite price. The cut-off grade of 2.0% C was calculated using a weighted graphite price of US$1,172.00/t, mining cost of US$3.58/t and processing cost of US$19.32/t. Resources within the “lower grade” domain are stated at a 2% C cut- off. The “higher grade” domains that contain very little material below 4% C is stated at a 4% C cut-off. Whilst the “higher grade” resources occur within the “lower grade” resources, they are estimated and reported separately. The total Measured and Indicated Resources is estimated at 100.25 Mt, grading at 6.26% C. Inferred Resources is estimated at 40.91 Mt, grading at 5.78% C. The effective date of the mineral resource estimate as of 31 March 2025 (Table 1-1).
Page 33
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 A-7 Table 1-1: Surface Mineable Mineral Resource Statement for the Molo Mine – 31 March 2025 Classification Material Type Tonnes Grade - C% Graphite - T Measured "Lower-Grade" 13,025,009 4.64 603,829 Measured "Higher-Grade" 10,479,508 8.40 879,810 Total Measured 23,504,517 6.31 1,483,639 Indicated "Lower-Grade" 39,539,375 4.73 1,871,074 Indicated "Higher-Grade" 37,206,545 7.86 2,925,266 Total Indicated 76,745,920 6.25 4,796,339 Measured + Indicated "Lower-Grade" 52,564,384 4.71 2,474,903 Measured + Indicated "Higher-Grade" 47,686,053 7.98 3,805,075 Total Measured + Indicated 100,250,438 6.26 6,279,978 Inferred "Lower-Grade" 24,233,049 4.46 1,080,666 Inferred "Higher-Grade" 16,681,343 7.70 1,285,031 Total Inferred 40,914,392 5.78 2,365,697 C% = carbon percentage; Graphite – T = Tonnes of graphite Notes: • Mineral Resources are classified according to the Canadian Institute of Mining definitions. • Mineral Resources are defined as surface mineable only, constrained within a Mineable Economic Shell. Mineral Resources are reported Inclusive of Mineral Reserves. • “Lower Grade” Resources are stated at a cut-off grade of 2% C. • “Higher grade” Resources are stated at a cut-off grade of 4% C. • Eastern and western high-grade assays are capped at 15% C. • A relative density of 2.36 tonnes per cubic meter (t/m3) was assigned to the mineralized zones for the resource tonnage estimation. • Totals may not represent the sum of the parts due to rounding. • Mineral resources are not mineral reserves and do not have demonstrated economic viability. There is no certainty that any mineral resource will be converted into a mineral reserve. 10. Mineral Reserve Estimates Based on available information, a portion of the resources stated in the Mineral Resource statement can be viably mined, processed, sold, and will support a sustainable mining and processing operation. Applying the mining modifying factors, process recovery, operating costs and product prices, the project is shown to be profitable and viable. This work supports the declaration of Mineral Reserves under NI 43-101. The results of the DFS have shown that the mining inventory included in the study, which is derived from only Measured and Indicated Mineral Resources, can be viably mined based on the techno-economic assumptions documented in this report.
Page 34
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 A-8 In estimating the Mineral Reserves, only material from the Measured and Indicated Mineral Resources has been included in the inventory. Mineral Reserves resulting from Measured Mineral Resources have been considered as Proven Mineral Reserves, while those generated from Indicated Mineral Resources are categorised as Probable Mineral Reserves. Table 1-2 shows a summary of the total Mineral Reserves. Table 1-2: Mineral Reserve Summary as of March 31, 2025 Category Tonnes (Million) Grade (C%) Contained C (Mt) Proven Mineral Reserves 21.356 6.39 1.365 Probable Mineral Reserves 61.228 6.23 3.815 Total Mineral Reserves 82.584 6.27 5.181 Notes: 1. The Mineral Reserve has been reported in accordance with the requirements and guidelines of NI-43101. 2. Apparent computational errors due to rounding are not considered significant. 3. The Mineral Reserves are reported with appropriate modifying factors of dilution and recovery. 4. The Mineral Reserves are reported at the head grade and at delivery to plant. 5. The Mineral Reserves are stated at a basket price of US$1085 per tonne of concentrate as at 31st March 2025. 6. Although stated separately, the Mineral Resources are inclusive of the Mineral Reserves. 7. Only Measured and Indicated Mineral Resources have been converted to Mineral Reserves. 8. Quantities are reported in metric tonnes. 9. The input studies are to the prescribed level of accuracy. 10. The Mineral Reserve estimates contained herein may be subject to legal, political, environmental or other risks that could materially affect the potential exploitation of such Mineral Reserves. 11. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. 11. Mining Methods The mining method at the Project is conventional open-pit mining, making use of relatively small-scale trucks and diesel-hydraulic excavators, selected to match the mining conditions and required production rates. A production schedule was developed, reporting all the material types produced from the pit over the LOM. The mining operation for the Project will be conducted by the mine operations team on an owner basis. Ore and waste will be drilled and blasted, then excavated using a hydraulic shovel and loaded onto dump trucks for hauling out of the pit to the ROM stockpile or waste dumps. Waste will be transported to the waste dump sites, which are either the tailings storage facility (TSF) or at designated areas where waste rock is required for construction purposes. The waste rock will be co-disposed with the plant dry-stack tailings onto the tailings dam. During early mining and site construction, a limited amount of waste will be used as construction material and fill. Ore will be transported to the ROM pad adjacent to the processing plant in preparation for feeding to the plant. Ore will be placed in specific low- and high-grade stockpile areas on the ROM pad. The ore will be fed into the primary crusher using a front-end loader (FEL). Blending of the ore and feeding of the crusher will be the responsibility of the plant operations personnel. Waste and ore will be transported from the pit to the waste dump, ROM pad or stockpile by dump trucks of 37 t capacity. Loading and hauling of waste and ore will be a two-shift-per-day operation. The first ten years of the mining schedule are designed to create a void within the pit to enable the potential for in-pit dumping. The concept of in-pit dumping remains at a conceptual stage and will be subject to future trade- off studies and further exploration drilling to ensure that no mineral resources are sterilised and to potentially lower mine operating costs and improve the mine closure outcomes.
Page 35
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 A-9 The mining schedule produced included all material in the mining inventory discussed previously and reports ore tonnes, ore grade, contained carbon, and waste tonnes. Ore and waste streams are reported according to the degree of material weathering (topsoil, weathered, transitional, and fresh) and the ore stream is broken down into the selected ore bins (low and high grade) and by resource category (Measured and Indicated). Inferred Resources are also reported to give an indication of possible additional mineralised tonnes which can be upgraded through additional geological knowledge. However, for the purpose of this FS, the Inferred Resources have been treated as waste. The final schedule produced 82.6 Mt of ROM tonnes with 5.18 Mt of contained carbon at an average ROM grade of 6.27% C, with a strip ratio of 0.68 tonnes of waste rock per one tonne of ROM. The LOM generated is approximately 37 years, 31 of which the mine is at full production producing 150 kt of concentrate per annum. A total of 21.4 Mt of Measured Resource is mined over the LOM, at an average grade of 6.4% C and represents 26% of the total ROM tonnes. The remaining 74% of the ROM tonnes are classified as Indicated Resources, with a total of 61.2 Mt at an average grade of 6.2% C. As previously mentioned, the Inferred Resources have been included in the waste stream while the potential remains for these resources to be upgraded with further geological information. A total of 5.6 Mt of Inferred Resources above the cut-off grade are included within the pit design at an average grade of 5.6% C. 12. Recovery Methods The capacity of the processing plant (Concentrator) is increased in stages to the final overall capacity of 150,000 t per annum of graphite product from a final dry ROM annual throughput of 2.48 Mt. The capacity of the proposed processing plant is achieved in three incremental design stages – designated as Phase 2A, Phase 2B and Phase 2C. The concentrate capacity and annual ROM feed rate for each concentrator is 50 ktpa of graphite concentrate with a ROM feed of 829 ktpa. The process is expected to achieve an overall graphite recovery of 92.0% at a minimum concentrate grade of 95% graphite from an average feed head grade 6.27% total carbon. The graphite concentrate product is dry screened to specific size fraction products as required by the market. The size fraction ratios can be tuned within the process plant to an extent allowed by the ore lithology and grade to bias production towards market demand at the time. Ore receiving and crushing includes a three-stage crushing circuit has the capacity to treat the final throughput plant capacity for all expansion phases. This approach has been pursued to minimise the overall capital cost and plant footprint, however the installation of some equipment can be delayed until Phase 2B&C construction. The final crushing circuit (following Phase 2C installation) is designed to operate at a dry solids mass feed rate of 424 tph. To achieve the lower annual production targets for Phases 2A and 2B, the utilisation of the crushing plant is altered to treat the required annual ROM tonnage. For Phases 2A, 2B, and 2C the crushing circuit will operate for 12, 16, and 24 hours per day respectively. The milling and flotation circuits are designed to operate 365 days per annum for 24 hours per day at 91% utilization. The final concentrate is pumped from the tenth cleaner circuit into the final concentrate tanks and distributed between the two agitated final concentrate filter feed tanks. From each of these tanks the concentrate is pumped to the final concentrate filter. The filtration of the final concentrate is a batch operation. The filter cake is discharged on to the filter discharge conveyor and conveyed to a surge bin ready for concentrate drying.
Page 36
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 A-10 The concentrate from surge bin is fed via gravity to the diesel-fired concentrate dryer. The dryer produces a dry graphite concentrate powder which is pneumatically transferred to the air swept classifier feed bin. The graphite powder from the bin is passed through the air swept classifier to remove fine dust. The de-dusted graphite concentrate powder is stored in the final concentrate sizing feed bin ready for sizing. The bin is fitted with a dust collection system. Concentrate screening is affected using two screening circuits operating in parallel. For each circuit, the dry concentrate powder is screened by multi-deck screens producing the five increasingly fine graphite product size intervals. Final tailings are fed from a combined tailings sump to the tailings thickener. The overflow reports the process water tank, and the underflow is pumped to the tailings filter feed tanks. 13. Project Infrastructure The existing infrastructure on site supporting the mining and processing infrastructure will be added to and increased in size to accommodate the increased mining and additional processing capacity and requirements brought on by the expansion. A two-facility approach has been adopted and ensures sufficient storage capacity for both waste streams while maintaining the operational and environmental benefits of a co-disposal methodology. The co-disposal storage facilities are designed for two site locations which are referred to as co-disposal storage facility 1 (Facility 1) and co-disposal storage facility 2 (Facility 2), respectively. Design and methodology associated with Facility 1 apply to Facility 2. New infrastructure will be developed to support existing infrastructure and to add capacity increases due to the expansion work. A new purpose-built mining services workshop will be constructed for the maintenance of the haul trucks and mining fleet. The bulk refueling facility will expand and consist of five containerized, double-walled fuel storage tanks (60,000 L capacity each), with sufficient storage capacity for two weeks operation. The Explosives Magazine Facility, constructed in Phase 1 of the works, is required to be relocated westward to accommodate the proposed Facility 1 footprint. The new facility will be increased to hold a monthly explosive required capacity plus 20% in case of delivery delay. A second ROM tip location will be required for the MEP adjacent to the Phase 1 ROM tip area. This ROM tip will be constructed into the existing edge of the ROM structure already constructed on site. The process plant infrastructure required to support the operation established during Phase 1 comprises of offices, workshop, laboratory, change house and stores. The shared infrastructure and services required to support the operation established during Phase 1 comprises of water including wellfield, power generation from solar and thermal sources, access roads, gate house, accommodation camp, storage yards, fuel storage and distribution and information and communication backbone. Product Transport The main route for transportation of product is the port of Tulear. Tulear is viewed as the primary option based on its proximity to the Project, better economical transport cost, port and warehousing facilities and costs, regional political expediency, etc.
Page 37
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 A-11 Due to the location of the Project and the general infrastructure in the region, product can only be transported in bulk bags with flat-bed trucks to the nearest ports for export. Consideration for proposals using rail is discounted as the existing infrastructure within Madagascar and the volumes forecast make clear that it is not viable for the Project. The existing road from the Project to Tulear Port has been used for transport of product and goods during the Project operations and proved to be viable for Phase I volumes of cargo movement. Whilst the port of Fort Dauphin in Madagascar’s south-east has been evaluated as a port of export from Madagascar for graphite, it will remain a second option for the time being but should be considered as a contingency alternative should some catastrophic event take place in or on the route to Tulear. 14. Markets and Contracts An independent graphite market assessment was completed by Benchmark Mineral Intelligence (Benchmark), a recognized specialist in graphite supply, demand, and pricing. Benchmark's analysis supports long-term market forecasts for natural flake graphite and forms the basis for the pricing assumptions used in the FS. Graphite pricing is primarily influenced by flake size, carbon purity, morphology, and product origin. Larger flake sizes and higher carbon content generally command premium pricing. For graphite products exceeding 95% carbon content, Benchmark applies a Value-in-Use (VIU) premium of approximately 4.3% for each additional percentage point of carbon above the 94-95% carbon benchmark grade. Increasing emphasis on secure, non- Chinese supply chains and sustainably produced materials may provide additional pricing premiums in North American and European markets. Pricing assumptions used in the FS were derived from Benchmark's long-term forecasts and adjusted to reflect the expected product specifications from the Project, including flake size distribution, carbon purity, and a Free on Board (FOB) Madagascar sales basis. Based on the projected concentrate production profile, the average weighted basket price adopted for the study is US$1,138. NEXT has established several long-term commercial arrangements supporting future sales of Molo graphite products. These include: • A binding 10-year offtake agreement with a major Japanese trading company for up to 20,000 tpa of graphite concentrate for battery anode applications, with an automatic five-year renewal provision. • A binding 10-year offtake agreement with ThyssenKrupp Materials Trading GmbH for up to 35,000 tpa of graphite concentrate for industrial, expandable graphite, and battery applications across multiple international markets, including Europe and North America. • A binding multi-year agreement with Mitsubishi Chemical Corporation to support the supply of approximately 9,000 tpa of anode active material for the North American EV market. This arrangement is expected to require approximately 20,000 tpa of -100 mesh graphite concentrate and remains subject to certain development milestones associated with the planned UAE Battery Anode Facility.
Page 38
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 A-12 15. Environmental Studies, Permitting and Social or Community Impact The proposed 150 ktpa capacity triggers a higher level of environmental and social scrutiny under both Malagasy national legislation and international standards beyond the existing Phase 1 environmental authorization. Madagascar’s Décret N°2025-080, the new Environmental and Social Impact Assessment Table 1-3: Summary of Project Expansion Footprint and Land Requirements by Phase Component 50 ktpa Expansion Phase (Phase 2A) - Total Size (ha) 100 ktpa Expansion Phase (Phase 2B) - Total Size (ha) Land Tenure Implication Pit expansion footprint + buffer 100.00 0.00 Amended Emphyteutic Lease Accommodation Camp expansion footprint 2.00 0.00 Amended Emphyteutic Lease Co-disposal (Facility #1 & 2) expansion footprint 120.00 260.00 Amended Emphyteutic Lease Solar Farm expansion footprint 36.00 0.00 Amended Emphyteutic Lease Borehole expansion (estimate only) 9.00 9.50 Amended Emphyteutic Lease Magazine relocation 5.00 0.00 Amended Emphyteutic Lease General expansion area 85.00 0.00 Amended Emphyteutic Lease Total footprint expansion areas 357.00 269.50 Amended Emphyteutic Lease Estimated affected parcels (crops/fields) 71.40 80.85 Monetary Compensation The Project's waste storage design strategy has undergone significant evolution, shifting from a conventional dry stack TSF to a co-disposal of both filtered tailings and waste rock. Increased volumes of waste material projected by the updated mine plan requires two separate co-disposal sites designed to accommodate the full waste compliment. The shift to a co-disposal, dry-stack tailings strategy offers environmental advantages over conventional slurry deposition methods through a reduction in net water abstraction requirements. These benefits include a significantly lower seepage rate, which results in a reduced impact zone on groundwater and surface water quality whilst enabling water re-use for raw water make-up. Dry stacking co-disposal offers flexibility in material placement but increases the potential for dust generation. Specific social sensitivities are concentrated around the proposed TSF sites. A village is situated close to the southern end of the TSF 1 site footprint, and tombs and gravesites are dispersed throughout its southern half. While fewer, a limited number of gravesites were also identified at the TSF 2 site. The relocation of villages and gravesites represents a key social impact consideration, particularly in the TSF 1 area, and is explicitly identified as a potential community-related risk. The MEP will build upon existing social programs by requiring additional Relocation Action Plan (RAP) and Social Development Plan (SDP) actions. This includes a planned amendment to the Phase 1 RAP and the development of an ancillary SDP. These plans will outline strategies for livelihood restoration for Project Affected Persons (PAPs) and broader community benefits. The Project also intends to continue its voluntary Community Social Investment (CSI) Program throughout the expansion phase.
Page 39
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 A-13 The Project's expansion inherently leads to a wider Area of Influence (AOI), extending beyond the immediate physical footprint of the new infrastructure. While the term "Area of Influence" is not consistently applied across all provided documents, the concept of an expanded impact zone is clear through various project components that includes groundwater requirements, land acquisition (Camp & Solar), TSF failure zone of influence and logistical impact. The expansion of the project's AOI necessitates a comprehensive re-evaluation of baseline conditions across a wider geographic area. Key implications for environmental and social management include: • Comprehensive Groundwater Modelling • Updated Biodiversity Surveys • Broader Social Baseline Assessments • Revised Environmental Management Plans • Enhanced Stakeholder Engagement The Project expansion necessitates a comprehensive suite of environmental and social studies, permits, and authorizations to ensure compliance with both Malagasy national legislation and international standards, particularly those of the IFC and GISTM. The phased nature of the expansion should explore the possibility of a sequential in-country study and permitting approach, with initial assessments and approvals for the 50 ktpa phase, followed by updates or new applications for the 100 ktpa modules to reach the 150 ktpa total. However, for IFC approvals the pre-requisites are linked to the entire 150ktpa project scope. 16. Capital and Operating Costs A Class 3 estimate was produced in support of the brownfield’s expansion of the Project, with a target accuracy of –15% to +25%, with an estimated base date of April 1, 2026. An area-level summary of the total Project CAPEX is provided in Table 1-4, totalling to US$363M. Total sustaining capital amounts to US$59.4M over the LOM and includes Open-Pit Equipment, Mine Residue Facilities, and associated EPCM costs. The LOM average all-in-sustaining cost (FOB, Tulear) is included in Table 1-4. Table 1-4: Summary of Project CAPEX Metric Total (US $’000) Direct Capital Costs 183,270 Operating Equipment & Consumables 70,630 Infrastructure 68,447 Services 44,193 Indirect Capital Costs 107,518 Indirect 42,753 Capitalized Operating Costs 32,487 Contingency 32,278 Sustaining Capital & Closure Capital 72,203 Sustaining Capital 59,403 Closure Capital 12,800 Total: Project CAPEX 362,991
Page 40
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 A-14 Sustaining CAPEX includes all capitalised costs incurred after Commercial Production is achieved and includes the amount required periodically to maintain the designed productivity and efficiency of the mining and processing operations. For the MEP, Sustaining CAPEX is estimated at approximately US$59.4M over the LOM. The largest component relates to the replacement and recapitalization of the open-pit mining fleet and associated equipment, totaling US$35.3M, representing approximately 59.5% of the total Sustaining CAPEX estimate. Additional sustaining capital is allocated to the Mine Residue Facilities (US$19.9M), which includes the ongoing expansion and maintenance requirements of the tailings management infrastructure throughout the LOM. A further US$1.3M is allocated to EPCM services, while cost contingency of US$2.8M has been included to account for uncertainty in the estimate. No material sustaining capital has been allocated to processing plant recapitalization, indirect costs, operating costs, closure costs, or other infrastructure categories. The Sustaining CAPEX cashflow profile is shown in Figure 1-1. Figure 1-1: Sustaining CAPEX Cashflow The closure and rehabilitation costs are not included in the CAPEX estimate but has been cash-flowed in the Project’s Techno-Economic Model based on the Project securing a typical mine closure guarantee product. Independent consultancy GlobeSight (Pty) Ltd estimated the total closure and rehabilitation cost for the Project at US$11.7M, which translates into a total closure provision of US$12.8M inclusive of the 2.0% financing charge. A summary of the LOM OPEX per Main Activity is shown below in Table 1-5. The total site OPEX cost equates to US$419/t of concentrate, which increases to US$650/t on inclusion of selling costs and royalties. Total All-in Sustaining costs equates to US$665/t, as it includes Reclamation & Closure, and Sustaining Capital Costs.
Page 41
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 A-15 Table 1-5: OPEX Summary per Main Activity Area Sub-Activity LOM Total (US$ '000) Unit Cost (US$ / t ROM) Unit Cost (US$ / t concentrate) Phase 1 OPEX 15,880 0.19 3.24 Mining 464,990 5.63 94.75 Tailings 116,260 1.41 23.69 Processing 636,220 7.70 129.63 Infrastructure 521,250 6.31 106.20 Site G&A 300,600 3.64 61.24 Sub-Total: Site OPEX Cost 2,055,180 24.89 418.76 Selling Costs 652,930 7.91 133.04 Royalties 483,090 5.85 98.43 Sub-Total: Site Cash Cost 3,191,210 38.64 650.23 Reclamation and Closure 12,800 0.15 2.61 Sustaining Capital 59,400 0.72 12.10 Total All-in Sustaining Cost 3,263,410 39.52 664.94 Figure 1-2: OPEX Cashflow per Main Activity Area
Page 42
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 A-16 Figure 1-3: OPEX Unit Cost Summary per Main Activity Area 17. Economic Analyses The economic assessment was conducted using a discounted cash flow (DCF) approach, incorporating project- specific financial inputs and assumptions. The results are reported on both a pre-tax and post-tax basis to illustrate the potential financial performance of the Project under the stated assumptions. A financial model was constructed to evaluate the financial performance of the Project. The model calculates real, post-tax, unlevered cash flows—on the basis that the Project is fully equity-financed—and applies a real discount rate to determine the Project’s Net Present Value (NPV). All financial outputs, including the projected free cash flow profile, are presented in United States dollars (US$). The key assumptions used in the economic evaluation are summarized in Table 1-6 and Table 1-7. Table 1-6: Basis of Evaluation Assumptions Factor Assumption Method of Analysis Discounted Cash Flow Analysis Cash Flow Terms Real Terms Base Currency United States Dollar (US$) Base Date of Economic Evaluation July 1, 2026 Discount Rate 8.0%
Page 43
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 A-17 Table 1-7: Macro-Economic Inputs Metric Unit of Measurement Expert Forecast Weighted Average Superflake® Graphite Price US$/t of concentrate 1,138 Foreign Exchange Rate: MGA to US$ MGA/US$ 4,198.28 Key economic results are shown in Table 1-8. Table 1-8: Key Economic Results Metric Unit of Measurement LOM Total Unit / T Ore Unit / T Conc. Gross Revenue US$M 6,474.1 78.39 1,319.13 Total OPEX US$M 2,708.1 32.79 551.79 Operating Income US$M 3,560.8 43.12 725.54 EBITDA US$M 2,607.3 31.57 531.26 Net Income (After-Tax) US$M 2,038.2 24.68 415.29 Valuation (Before-Tax) NPV @ 8% (Real) US$M 402.5 4.87 82.01 IRR (Real) % 18.5 Payback (commercial prod) Years 7.0 Payback (first investment) Years 9.0 Valuation (After-Tax) NPV @ 8% (Real) US$M 348.4 4.22 70.98 IRR (Real) % 17.5 NPV @ 8% (Nominal) US$M 567.8 6.88 115.7 IRR (Nominal) % 20.0 Payback (commercial prod) Years 7.2 Payback (first investment) Years 9.2 The Project demonstrates positive economic returns, generating a real post-tax NPV (8%) of US$348.4M, a real post-tax IRR of 17.5% (nominal post-tax IRR of 20.0%), and a payback period of 7.2 years from commercial production (9.2 years from first investment). Over the LOM, the Project is expected to generate approximately US$6.5 billion in gross revenue, US$2.6 billion in EBITDA, and US$2.0 billion in after-tax net income, supporting a robust and value-accretive business case. Sensitivity analyses were conducted on a post-tax basis to evaluate the impact of changes in key technical, operating, and economic assumptions on Project value. Deterministic sensitivity analysis was undertaken to assess the responsiveness of the Project’s NPV to individual parameter variations and to identify the primary value drivers. The results of this analysis are illustrated in Figure 1-4.
Page 44
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 A-18 Figure 1-4: Spider Chart – NPV Movement The sensitivity analysis indicates that the Project's value is most sensitive to changes in Discount Rate, Head Grade, and Operating Costs (OPEX). At the base case (0% variation), the Project generates a post-tax NPV of approximately US$348M. However, variations in key assumptions result in significant changes to Project value. Head Grade is the most significant value driver. A 30% increase in head grade increases the NPV to approximately US$707M, while a 30% decrease results in a slightly negative NPV, highlighting the importance of achieving the forecast resource grade and maintaining ore quality throughout the Life of Mine. Operating Costs (OPEX) also have a material impact on project economics. A 30% reduction in operating costs increases the NPV to approximately US$581M, whereas a 30% increase reduces the NPV to approximately US$112M, emphasizing the importance of cost control and operational efficiency. Changes in CAPEX have a more moderate effect on Project value. A 30% reduction in capital costs increases the NPV to approximately US$434M, while a 30% increase reduces it to approximately US$263M, indicating that the Project is less sensitive to upfront capital costs than to operating performance and revenue drivers. Overall, the analysis demonstrates that Project economics are primarily driven by ore quality (head grade), operating cost performance, and the selected discount rate, while capital costs and processing size fractions have comparatively lower impacts on value. The Project remains economically positive across a broad range of assumptions, although significant adverse changes in head grade, operating costs, or discount rate could materially reduce project returns.
Page 45
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 A-19 A robust assessment was conducted using the forecast macroeconomic scenario. The results indicate that the MEP remains value-accretive across all scenarios analyzed, supporting the conclusion that the Project exhibits strong economic resilience and a robust investment case. 18. Interpretations and Conclusions Metallurgical testwork completed during previous feasibility studies demonstrated that the Project graphite mineralization can be processed using conventional and well-established crushing, grinding, flotation, and concentrate upgrading technologies. The selected process flowsheet has been validated through variability testwork and supports the production of high-grade graphite concentrates. Process risks associated with ore variability have been substantially mitigated through the inclusion of a concentrate upgrading circuit, with opportunities for further optimization identified during future detailed engineering. The Mineral Resource Estimate remains materially unchanged from the 2023 Feasibility Study, apart from minor depletion resulting from mining activities. The Mineral Reserve Estimate has increased by approximately 53% due to updated pit optimization parameters, including revised operating costs, metallurgical recoveries, and graphite pricing assumptions. Proven and Probable Mineral Reserves total 82.6 Mt at an average grade of 6.27% graphitic carbon (Cg). The mine plan is based exclusively on Proven and Probable Mineral Reserves, with no Inferred Mineral Resources included in the production schedule. The open-pit operation is designed to support planned concentrate production over an estimated 37-year mine life. The Project's tailings and waste management strategy utilizes a co-disposal approach whereby filtered tailings and waste rock are placed within engineered storage facilities. Waste rock forms the structural containment for the facilities while filtered tailings are encapsulated within the storage cells. The selected approach is consistent with current industry practice and provides a technically viable basis for project advancement, subject to further geotechnical, geochemical, hydrological, and water management investigations during subsequent project phases. The Project currently benefits from approved environmental and mining authorizations associated with the existing operation. However, the proposed expansion is expected to require updates to the MECIE, amendments to environmental management plans, modifications to resettlement planning documents, and updates to certain mining and sectoral permits. While the principal environmental and mining permits are already in place, additional approvals will be required to support the expanded operation. Advancement of the Project will require continued environmental and social studies, proactive stakeholder engagement, and coordinated management of permitting activities to maintain the proposed development schedule. According to JWF, the Government of Madagascar enacted Decree No. 2026-831 in May 2026, which designates several minerals (including graphite) as Strategic Mineral Substances and provides for direct State participation in projects involving certain strategic commodities. The decree establishes an entitlement of a minimum non-dilutable State participation of 10%, exercisable through designated State entities and without any requirement for the State to contribute funding for such interest. It also provides the State with enhanced governance, information, and oversight rights and introduces provisions relating to domestic supply obligations and strategic resource management. The Strategic Minerals Decree also states that the mining company, whose exploitation permit covers strategic mining substance, a potential obligation to sell up to, but no more than, 30% of production to the national market or national industries. It goes on to state that once the assessment of the domestic demand is known, the Ministry of Mines shall, by ministerial order, determine the production quota that each relevant permit holder is required to sell to local industries. At this point NEXT has no information regarding the pricing or pricing mechanisms associated with this decree.
Page 46
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 A-20 The financial assessment presented in this FS has been prepared on the basis of the current project ownership structure and does not include the impact on NEXT of a potential 10% free-carried State interest. It also doesn’t include any alternative pricing that may be associated with a 30% sale of product to a national market/industries. Should the provisions of the decree be determined to apply to the ownership of the Project and/or the sale of product, the resulting reduction in attributable project cash flows, net present value and investor returns could have a material adverse effect on economics and overall project viability for NEXT. 19. Recommendations This FS and associated economic analyses demonstrate positive economic returns for the Project. The following recommendations summarize the Phase 2 expansion work packages that will be required to support a comprehensive investment decision for the MEP. The proposed co-disposal facility concept provides a suitable basis for advancement of the Project; however, additional investigations are required to support detailed design and confirm long-term performance. Recommended work includes site-specific geotechnical investigations to confirm foundation conditions, stability, seepage characteristics, and construction material availability; updated geochemical testing of tailings and waste rock to assess long-term seepage behaviour and containment requirements; expanded hydrological studies to evaluate catchment interactions, stormwater management, return water storage capacity, and overall water management planning; and verification of tailings dewatering performance to ensure achievement of target moisture content. Further engagement with environmental and social specialists is also required to assess the implications of village relocation and confirm the suitability of the proposed facility locations. A preliminary assessment of raw water supply requirements has been completed for the proposed expansion, with further detailed investigations planned to refine borehole locations and undertake drilling, testing, and predictive wellfield modelling. The expansion will require the development of a dynamic LOM water balance model that integrates the water management infrastructure. Detailed stormwater management systems, including diversion trenches, berms, sediment or pollution control dams, sumps, and pumping systems, will be designed to facilitate reuse of contact water, maintain free drainage of clean water, and prevent uncontrolled discharges to the receiving environment. The water management strategy will be informed by groundwater, geochemical, water balance, and mass load modelling to assess downstream water quality and ensure compliance with applicable Malagasy and international standards. The existing water monitoring program will also be expanded to support expansion operations and ongoing environmental management programs. To support successful project development and permitting, it is recommended that an integrated Environmental and Social (E&S) and permitting management framework be established to ensure effective coordination across all project disciplines and timely regulatory compliance. A proactive and culturally appropriate stakeholder engagement program should be maintained throughout the Project lifecycle to facilitate meaningful consultation with PAPs and local communities, particularly regarding land acquisition and resettlement activities. Ongoing identification, assessment, and management of environmental and social risks should be undertaken through a comprehensive risk register and mitigation planning process, while adequate financial, technical, and human resources should be allocated to complete the studies, assessments, and social programs required to meet Malagasy regulatory requirements and international standards. Engagement of specialized legal and technical advisors is also recommended to support compliance with the evolving regulatory framework and to facilitate alignment with international environmental and social best practices. A detailed engineering phase of work, specifically relating to the process facilities and project infrastructure will be required to support final invest decision. The following table summarizes the estimated costs associated with the above noted work packages and the subsequent detailed engineering (Table 1-9).
Page 47
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 A-21 Table 1-9: Recommended MEP Cost Estimate Work Packages Cost (US$ '000) Mine Waste and Tailings Storage Facilities 713 Mine Water Management Systems 1,140 Environmental and Permitting Systems 3,590 Detailed Engineering 4,410 Grand Total 9,853
Page 48
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 B-1 SCHEDULE “B”– AUDIT COMMITTEE CHARTER A. Purpose: Responsibilities and Authority The audit committee (the “Audit Committee”) shall carry out its responsibilities under applicable laws, regulations, and stock exchange requirements with respect to the employment, compensation and oversight of the Company’s independent auditor, and other matters under the authority of the Audit Committee. The Audit Committee shall also assist the Board in carrying out its oversight responsibilities relating to the Company’s financial, accounting and reporting processes, the management of financial and non-financial risks, the Company’s system of internal accounting and financial controls, the Company’s compliance with related legal and regulatory requirements, and the fairness of transactions between the Company and related parties. In furtherance of this purpose, the Audit Committee shall have the following responsibilities and authority: (a) External Auditors. (i) The Audit Committee shall recommend to the Board the external auditor to be nominated for the purpose of preparing or issuing an auditor’s report or performing other audit, review, or attest services for the Company, and shall set the compensation for the external auditor and shall ensure that the external auditor reports directly to the Audit Committee. (ii) The Audit Committee shall be directly responsible for overseeing the work of the external auditor, including the resolution of disagreements between management and the external auditor regarding financial reporting. (iii) The Audit Committee shall review the external auditor’s audit plan, including scope, procedures, and timing of the audit. (iv) The Audit Committee shall pre -approve all non -audit services to be provided by the external auditor. (v) The Audit Committee shall review and approve the Company’s hiring policies regarding partners, employees and former partners and employers of the present and former external auditor. (vi) The Audit Committee shall review fees paid by the Company to the external auditor and other professionals in respect of audit and non-audit services on an annual basis. (b) Financial Reporting and Internal Controls. (i) The Audit Committee shall review the annual audited financial statements to satisfy itself that they are presented in accordance with generally accepted accounting principles, that the information contained therein is not erroneous, misleading, or incomple te and that the audit function has been effectively carried out. (ii) The Audit Committee shall report to the Board with respect to its review of the annual audited financial statements and recommend to the Board whether same should be approved prior to their being publicly disclosed. (iii) The Audit Committee shall review the Company’s annual and interim financial statements, management’s discussion and analysis relating to annual and interim financial statements, and earnings press releases prior to any of the foregoing being publicly disclosed by the Company. (iv) The Audit Committee shall satisfy itself that adequate procedures are in place for the review of the Company’s public disclosure of financial information extracted or derived from the Company’s financial statements other than the disclosure referred to in Section (b)(iii) of this Charter, and periodically assess the adequacy of these procedures. (v) The Audit Committee shall oversee the preparation of reports relating to the Audit Committee required under applicable laws, regulations and stock exchange requirements.
Page 49
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 B-2 (vi) The Audit Committee shall oversee any investigations of alleged fraud and illegality relating to the Company’s finances. (vii) The Audit Committee shall establish whistleblowing procedures for: (1) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters; and (2) the confidential, anonymous su bmission by employees of the Company or concerns regarding questionable accounting or auditing matters. (c) Risk Management (i) The Audit Committee shall meet no less frequently than annually with the external auditor and the Chief Financial Officer to review accounting practices, internal controls, management information systems, cybersecurity, auditing matters and such other matt ers as the Audit Committee deems appropriate. (ii) The Audit Committee shall inquire of management and the external auditor regarding significant financial and non-financial risks or exposures to which the Company may be subject and shall assess the adequacy of the steps that management has taken to minimize, manage and respond to such risks. (iii) The Audit Committee shall discuss with management and the external auditor any correspondence with regulators or governmental agencies and any employee complaints or reports which raise material issues regarding the Company’s financial statements or accounting policies. (iv) The Audit Committee shall oversee the internal audit functions (as applicable). (v) The Audit Committee shall exercise oversight with respect to whistleblower and anti -fraud programs and controls. (vi) The Audit Committee shall establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters. (vii) The Audit Committee shall review the availability and or adequacy of insurance coverage for insurable risks. (viii) The Audit Committee shall review legal and regulatory compliance matters that could have a material impact on the Company’s business, operations or financial statements. (d) Additional Responsibilities and Authority (i) The Audit Committee shall have the authority to: (i) to engage independent counsel and other advisors as it determines necessary to carry out its duties, (ii) to set and pay the compensation for any advisors employed by the Audit Committee, and (iii) to communicate directly with the internal (as applicable) and external auditors. (ii) The Audit Committee shall perform any other responsibilities consistent with this Charter and any applicable laws as the Audit Committee or Board deems appropriate. (iii) Conduct an annual performance evaluation of the Audit Committee and identify opportunities for improved effectiveness. B. Limitation of Audit Committee’s Role While the Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements and disclosures are complete and accurate a nd are in accordance with GAAP and applicable rules and regulations. These are the responsibilities of management and the external auditor.
Page 50
NEXTSOURCE MATERIALS INC. ANNUAL INFORMATION FORM For the year ended June 30, 2026 B-3 C. Structure and Membership a. Number and minimum qualifications The Audit Committee shall consist of a minimum of three persons. All members of the Audit Committee shall meet the experience and financial literacy requirements of National Instrument NI 52-110 and the rules of the Toronto Stock Exchange. b. Independence Requirements All the members of the Audit Committee shall be “independent” as required for audit committees by National Instrument 52-110 and the rules of the Toronto Stock Exchange. c. Financial Literacy National Instrument 52-110 Section 3.1(4) states that each audit committee member must be financially literate. Section 1.6 defines the meaning of financial literacy as follows: “For the purposes of this Instrument, an individual is financially literate if he or she has the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the issuer’s financial statements.”