FABLED SILVER GOLD CORP. — Interim / Quarterly Report 2021

Nov 11, 2021

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FINANCIAL STATEMENTS

Condensed consolidated interim unaudited financial statements

For the three and nine-month periods ended September 30, 2021 and 2020

(Expressed in thousands of Canadian dollars, except where otherwise indicated)

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TABLE OF CONTENTS

Consolidated statements of financial position ....................................................................................................... 1 Consolidated statements of loss and comprehensive loss ...................................................................................... 2 Consolidated statements of changes in equity ....................................................................................................... 3 Consolidated statements of cash flows .................................................................................................................. 4 Notes to the condensed consolidated interim financial statements ....................................................................... 5

NOUVEAU MONDE GRAPHITE INC. Consolidated statements of financial position (Amounts expressed in thousands of Canadian dollars - unaudited)

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CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Notes	As at September 30, 2021 As at December 31, 2020
ASSETS
CURRENT
Cash 17	81,289 4,520
Grants and other receivables	4,103 829
Restricted cash	- 158
Sales taxes receivable	1,628 736
Tax credits receivable	3,958 3,958
Prepaid expenses	4,615 215
Total current assets	95,593 10,416
NON-CURRENT
Tax credits receivable	4,287 3,802
Property, plant and equipment assets 5	29,352 4,207
Intangible assets	567 920
Right-of-use assets 6	2,322 1,067
Restricted cash and deposits	1,976 744
Total non-current assets	38,504 10,740
Total assets	134,097 21,156
LIABILITIES
CURRENT
Accounts payables and accrued liabilities	15,576 6,988
Deferred grants	- 1,511
Current portion of lease liabilities 7	354 295
Borrowings 8	204 1,793
Total current liabilities	16,134 10,587
NON-CURRENT
Asset retirement obligation 9	917 621
Borrowings 8	1,810 -
Lease liabilities 7	2,018 781
Convertible bond 19	14,647 14,505
Total non-current liabilities	19,392 15,907
Total liabilities	35,526 26,494
EQUITY (DEFICIENCY)
Share capital 10.1	188,200 60,537
Contributed surplus	16,274 10,761
Equity component of convertible bond	364 364
Deficit	(106,267) (77,000)
Total equity (deficiency)	98,571 (5,338)
Total liabilities and equity	134,097 21,156
Commitments 18
Subsequent Events 19

APPROVED BY THE BOARD OF DIRECTORS

(s) Eric Desaulniers – “Director”

(s) Daniel Buron – “Director”

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

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Consolidated statements of loss and comprehensive loss (Amounts expressed in thousands of Canadian dollars - unaudited)

NOUVEAU MONDE GRAPHITE INC.

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CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

	For the three-month periods ended For the nine-month periods ended	For the three-month periods ended For the nine-month periods ended
Notes	September 30, 2021 $ September 30, 2020 $ September 30, 2021 $	September 30, 2020 $
EXPENSES
Exploration and evaluation expenses 11	2,130 1,865 7,137	6,995
Battery Material Plant project expenses 12	1,014 812 2,205	2,056
General and administrative expenses 13	5,692 1,769 19,074	4,399
Other revenues	- - (56)	-
Net smelter royalty	- (4,306) -	(4,306)
Operating loss	8,836 140 28,360	9,144
Net financial costs 14	109 361 907	605
Net loss and comprehensive loss	8,945 501 29,267	9,749
Basic and diluted loss per share 10.1	0.19 0.02 0.74	0.37
Weighted average number of shares outstanding	46,576,710 26,222,927 39,411,021	26,194,372

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

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NOUVEAU MONDE GRAPHITE INC.

Consolidated statements of changes in equity

(Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

	For the nine-month period ended September 30, 2021
Notes	Number Share capital $ Contributed surplus $ Equity component of convertible bond $ Deficit $ Total equity (deficiency) $
Balance as at January 1, 2021	27,299,332 60,537 10,761 364 (77,000) (5,338)
Shares issued from placements 10.1	11,479,977 114,242 - - - 114,242
Warrants exercised	7,821,700 17,825 (198) - - 17,627
Options exercised 10.2	406,201 1,970 (693) - - 1,277
Shares issued for interest payment	76,635 797 - - - 797
Share-based compensation 10.2	- - 6,404 - - 6,404
Share issue costs	- (7,171) - - - (7,171)
Net loss and comprehensive loss	- - - - (29,267) (29,267)
Balance as at September 30, 2021	47,083,845 188,200 16,274 364 (106,267) 98,571

Notes	Number Share capital $ Contributed surplus $ Equity component of convertible bond $ Deficit $ Total equity (deficiency) $
Balance as at January 1, 2020	26,178,281 56,184 9,592 - (59,022) 6,754
Options exercised 10.2	15,000 46 (19) - - 27
Share-based compensation 10.2	103,759 208 430 - - 638
Share issue costs	- (1) - - - (1)
Convertible debenture	- - - 364 - 364
Net loss and comprehensive loss	- - - - (9,749) (9,749)
Balance as at September 30, 2020	26,297,040 56,437 10,003 364 (68,771) (1,967)

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

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NOUVEAU MONDE GRAPHITE INC. Consolidated statements of cash flow

(Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the nine-month periods ended
Notes	September 30, 2021 $ September 30, 2020 $
OPERATING ACTIVITIES
Net loss	(29,267) (9,749)
Depreciation and amortization 5&6	828 900
Unrealized foreign exchange gain	(1,102) -
Loss on disposal of investment	- 22
Share-based compensation 10.2	6,404 638
Financial costs	1,953 467
Net smelter royalty	- (4,306)
Accretion of the rehabilitation obligation 9	2 -
Net change in working capital 15	(6,876) (14)
Cash flows used in operating activities	(28,058) (12,042)
INVESTING ACTIVITIES
Additions to property, plant, and equipment assets 5 & 15	(22,358) (510)
Restricted cash and deposits	(1,074) (270)
Tax credits and grants received	2,141 -
Cash flows used in investing activities	(21,291) (780)
FINANCING ACTIVITIES
Proceeds from the issuance of placements	114,242 -
Proceeds from debt, net of issue costs	1,025 3,781
Proceeds from convertible debenture, net of issue costs	- 14,786
Repayment of borrowings and lease liabilities 7 & 8	(2,257) (2,803)
Proceeds from the exercise of warrants	17,627 -
Proceeds from the exercise of stock options 10.2	1,277 27
Share issue costs	(6,913) (1)
Cash flows from financing activities	125,001 15,790
Effect of exchange rate changes on cash	1,117 -
Net change in cash	76,769 2,968
Cash at the beginning of the period	4,520 4,077
Cash at the end of theperiod	81,289 7,045
Additional information 15

The accompanying notes are an integral part of the condensed consolidated interim financial statement

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NOUVEAU MONDE GRAPHITE INC.

Notes to the condensed consolidated interim financial statements

(Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS AND LIQUIDITY RISK

Nouveau Monde Graphite Inc. (the “Company”) was established on December 31, 2012, under the Canada Business Corporations Act . The Company specializes in exploration, evaluation and development of mineral properties located in Québec and is developing a natural graphite-based anode material that would qualify as battery-grade material to supply the lithium-ion industry.

The Company’s shares are listed under the symbol NMG on the New York Stock Exchange (“NYSE”), NOU on the TSX Venture Exchange, and NM9A on the Frankfurt Stock Exchange. The Company’s registered office is located at 481 Brassard Street, SaintMichel-des-Saints, Québec, Canada, J0K 3B0.

As at September 30, 2021, the difference between the Company’s current assets and current liabilities was $79,459, the Company had an accumulated deficit of $106,267, and had incurred a loss of $29,267 for the nine-month period then ended. Current assets included current tax credits receivable of $3,958 and cash of $81,289.

With the financing completed in the nine-month period ended September 30, 2021, management believes that the Company has sufficient funds to meet its obligations and planned expenditures for the ensuing twelve months as they fall due. In assessing whether the going concern assumption is appropriate, management considers all available information about the future, which is at least, but not limited to, twelve months from the end of the reporting period. The Company’s ability to continue future operations and fund its exploration, evaluation and development activities is dependent on management’s ability to secure additional financing in the future, which may be completed in several ways including, but not limited to, a combination of strategic partnership, project debt finance, offtake financing, royalty financing and other capital markets alternatives. Management will pursue such additional sources of financing when required, and while management has been successful in securing financing in the past, there can be no assurance it will be able to do so in the future or that these sources of funding or initiatives will be available for the Company or that they will be available on terms which are acceptable to the Company.

2. BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE

The Company’s condensed consolidated interim financial statements have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) published by the International Accounting Standards Board (“IASB”), including IAS 34 Interim Financial Reporting , and also using the same accounting policies and procedures as those used for the Company’s audited consolidated financial statements as at December 31, 2020, taking into considerations the new policies described in Note 4.These condensed consolidated interim financial statements do not include all the disclosures and notes required for annual consolidated financial statements and should therefore be read with the Company’s audited consolidated financial statements as at December 31, 2020, which have been prepared in accordance with IFRS.

The condensed consolidated interim financial statements for the three and nine-month periods ended September 30, 2021 were approved and authorized for publication by the Board of Directors on November 10, 2021.

3. ESTIMATES, JUDGEMENTS AND ASSUMPTIONS

In preparing its condensed consolidated interim financial statements, management makes several judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, revenues, and expenses.

Information about the significant estimates and assumptions that have the greatest impact on the recognition and measurement of assets, liabilities, revenues, and expenses is presented below. Actual results may differ significantly.

Technical Feasibility and Commercial Viability

The establishment of technical feasibility and commercial viability of a mineral property is assessed based on a combination of factors. By its nature, this assessment requires significant judgment.

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NOUVEAU MONDE GRAPHITE INC. Notes to the condensed consolidated interim financial statements

(Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)

Following the events of the quarter ended March 31, including the receipt of the Governmental authorisation (“Decree”) for the Matawinie Project, management determined that the technical feasibility and commercial viability for the Matawinie Project was established as at March 31, 2021 and as a result, the project entered the development phase during the second quarter of 2021.

4. SIGNIFICANT ACCOUNTING POLICIES

Matawinie Mine project

Management has established that effective from the beginning of the second quarter of 2021, the Matawinie mine project is in the development phase. Accordingly, all expenditures related to the development of the mine are capitalized under Mine under construction within Property, plant and equipment (see note 5). Capitalized expenditures will be carried at cost until the Matawinie project is placed into commercial production, sold, abandoned, or determined by management to be impaired in value. The equipment, building and the mine site are not yet in use as at September 30, 2021, therefore, the depreciation will begin when the assets are ready for their intended use.

The costs related to the operation of the Matawinie Demonstration Plant will continue to be expensed as incurred under exploration and evaluation expenses , unless the expenditures meet the recognition criterias set in IAS 16 Property, plant and equipment or IAS 38 Intangible asset.

Battery Material Plant project

Costs incurred in the construction and development of the Company’s Battery Material Plant project are capitalized under Battery Material Demonstration Plant within Property, plant and equipment (See note 5). Capitalized expenditures will be carried at cost until the Battery Material Plant project is placed into commercial production, sold, abandoned, or determined by management to be impaired in value. The equipment and building are not yet in use as at September 30, 2021, therefore, the depreciation will begin when the assets are ready for their intended use.

The costs related to the operation of the Battery Material Demonstration Plant will continue to be expensed as incurred under Battery Material Plant project expenses , unless the expenditures meet the recognition criterias set in IAS 16 Property, plant and equipment or IAS 38 Intangible asset.

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NOUVEAU MONDE GRAPHITE INC.

Notes to the condensed consolidated interim financial statements

(Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)

5. PROPERTY, PLANT AND EQUIPMENT

	For the nine-month period ended September 30, 2021	For the nine-month period ended September 30, 2021
	Land $ Buildings $ Equipment $ Computers $ Furniture $ Rolling stock $ Mine under construction $ Battery Material Demonstration Plant under construction $ Total $
COST
As at January 1, 2021	507 2,642 - 56 70 24 - 1,206 4,505
Additions	1,905 114 163 118 - 29 10,665 12,278 25,272
Write-Off/Disposals	- - - (32) - - - - (32)
As at September 30,2021	2,412 2,756 163 142 70 53 10,665 13,484 29,745
ACCUMULATED DEPRECIATION
As at January 1, 2021	- 219 - 39 32 8 - - 298
Depreciation	- 82 13 17 10 5 - - 127
Write-Off/Disposals	- - - (32) - - - - (32)
As at September 30, 2021	- 301 13 24 42 13 - - 393
Net book value as at September 30, 2021	2,412 2,455 150 118 28 40 10,665 13,484 29,352
		For the year ended December 31, 2020
		Land $ Buildings $ Equipment $ Computers $ Furniture $ Rolling stock $ Battery Material Demonstration Plant under construction $ Total $
COST
As at January 1, 2020		467 2,430 63 47 70 9 - 3,086
Additions		40 212 - 9 - 15 1,206 1,482
Write-Off/Disposals		- - (63) - - - - (63)
As at December 31,2020		507 2,642 - 56 70 24 1,206 4,505
ACCUMULATED DEPRECIATION
As at January 1, 2020		- 118 59 14 19 4 - 214
Depreciation		- 101 2 25 13 4 - 145
Write-Off/Disposals		- - (61) - - - - (61)
As at December 31, 2020		- 219 - 39 32 8 - 298
Net book value as at December 31, 2020		507 2,423 - 17 38 16 1,206 4,207

The Battery Material Plant under construction presented net of grants received of $1,202 and $4,780 for the three and nine-month periods ended September 30, 2021, respectively (three and nine-month periods ended September 30, 2020: $96 and $247).

In the quarter ended September 30, 2021, the Company bought back a 1.8% NSR on the Matawinie property for $1.8M that is included in Mine under construction.

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NOUVEAU MONDE GRAPHITE INC.

Notes to the condensed consolidated interim financial statements

(Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)

6. RIGHT-OF-USE ASSETS

	For the nine-month period ended September 30, 2021
	Buildings $ Equipment $ Rolling stocks $ Total $
COST
As at January 1, 2021	1,297 339 273 1,909
New leases	1,617 - - 1,617
End of leases	(252) (339) (109) (700)
As at September 30,2021	2,662 - 164 2,826
ACCUMULATED DEPRECIATION
As at January 1, 2021	386 321 135 842
Depreciation	309 3 36 348
End of leases	(253) (324) (109) (686)
As at September 30, 2021	442 - 62 504
Net book value as at September 30, 2021	2,220 - 102 2,322

	For the year ended December 31, 2020
	Buildings $ Equipment $ Rolling stocks $ Total $
COST
As at January 1, 2020	457 339 158 954
New leases	840 - - 840
Remeasurement of lease	- - 115 115
As at December 31,2020	1,297 339 273 1,909
ACCUMULATED DEPRECIATION
As at January 1, 2020	157 167 67 391
Depreciation	229 154 68 451
As at December 31,2020	386 321 135 842
Net book value as at December 31, 2020	911 18 138 1,067

Depreciation of right-of-use assets included in the exploration and evaluation expenses are $52 and $159 for the three and ninemonth periods ended September 30, 2021, respectively (three and nine-month periods ended September 30, 2020: $90 and $276). Depreciation of right-of-use assets included in the Battery Material Plant project expense are $40 and $121 (three and nine-month periods ended September 30, 2020: nil).

7. LEASE LIABILITIES

	For the nine-month period ended September 30, 2021 $ For the year ended December 31, 2020 $
Opening balance	1,076 609
New liabilities and modifications of leases	1,617 955
Lease write off	(14) -
Principal repayment	(307) (488)
Ending balance	2,372 1,076
Current portion	354 295
Non-current portion	2,018 781

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NOUVEAU MONDE GRAPHITE INC.

Notes to the condensed consolidated interim financial statements (Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)

8. BORROWINGS

	For the nine-month period ended September 30, 2021 $ For the year ended December 31, 2020 $
Opening balance	1,793 4,502
New borrowing	2,162 3,803
Repayments	(1,950) (2,419)
Issue costs	- (21)
Accretion of issue costs	9 25
Interest capitalized	- 209
Debts settled in exchange of Royalty	- (4,306)
Ending balance	2,014 1,793
Current portion	204 1,793
Non-current portion	1,810 -

During the three and nine-month periods ended September 30, 2021, the Company has paid interests to its lenders for a total of $21 and $81, respectively (three and nine-month periods ended September 30, 2020: $41 and $112).

On January 29, 2021, the Company financed the purchase of a land located in Bécancour, Québec, through a financing agreement with the vendor, for a total of $1,137. The financed portion bears interest at 8% per annum and shall be repaid by December 2025. The Company may pay the balance of principal, in whole or in part, at any time without penalty.

During March 2021, the Company received $1,350 as part of a repayable contribution agreement with the Canada Economic Development for Quebec Regions. This contribution agreement bears no interest and will be repayable in 60 equal monthly installments starting September 2023. The loan was measured at the present value of all future payments discounted using a 5.50% interest rate, thus resulting in a loan valued at $1,025. The difference between the carrying value of the contribution and the discounted loan value was recognized as a grant of $325.

On June 30, 2021, the Company fully reimbursed its loan of $1,802 with Investissement Québec, a related party.

9. ASSET RETIREMENT OBLIGATION

	For the nine-month period ended September 30, 2021 $ For the year ended December 31, 2020 $
Opening balance	621 621
New obligations	294 -
Accretion expense	2 -
Ending balance	917 621

The asset retirement obligation that arose during the nine-month period ended September 30, 2021, represents the present value of the estimated amount of undiscounted cash flows required to satisfy the asset retirement obligation in respect of the Matawinie Mine. The estimation was made using a percentage of completion of the total budgeted cost of rehabilitation. The Company has determined the fair value of its rehabilitation obligation by using a discount rate of 3.63%, assuming reclamation work would be completed in 28 years. The liabilities accrete to their future value until the obligations are due. The estimated rehabilitation obligation will increase as the construction of the Matawinie Mine progresses.

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NOUVEAU MONDE GRAPHITE INC.

Notes to the condensed consolidated interim financial statements (Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)

10. EQUITY 10.1 SHARE CAPITAL

Authorized share capital

Unlimited number of common shares voting and participating, with no par value.

	For the nine-month period ended September 30, 2021 For the year ended December 31, 2020
Shares issued at the start of the period	27,299,332 26,178,281
Shares issued from placements	11,479,977 -
Exercise of warrants	7,821,700 872,291
Exercise of options	406,201 145,000
Shares issued for interest payment	76,635 -
Share based compensation	- 103,760
Shares issued at the end of period	47,083,845 27,299,332

On January 20, 2021, the Company concluded an underwritten public offering agreement for 1,034,500 common shares, at a price of $14.50 per share for gross proceeds of $15M. The buyers exercised their option to purchase an additional 155,175 common shares representing 15% of the number of common shares issued. The total gross proceeds obtained from this public offering agreement sum up to $17.25M.

On February 12, 2021, the Company closed a private placement equity financing totaling $5.8M and the Company issued a total of 396,552 common shares at a price of $14.50 per share. Of this amount, Investissement Québec, acting as mandatory for the government of Québec, subscribed for 317,241 common shares, and Pallinghurst, a related party, subscribed for the remainder of the common shares.

On March 24, 2021, the Company performed a ten-to-one share consolidation of the Company’s issued equity instruments including common shares, warrants and options. All information with respect to shares and share-based instruments and related per share amounts have been retrospectively adjusted on a 1:10 basis accordingly.

On June 23, 2021, the Company concluded an underwritten public offering agreement for 7,000,000 common shares, at a price of $9.22 (US$7.50) per share for gross proceeds of $64.5M (US$52.5M). The buyers exercised their option to purchase an additional 915,000 common shares. The total gross proceeds obtained from this public offering agreement sum up to $72.9M (US$59.4M). Of this amount, Pallinghurst purchased 66,666 common shares.

On July 23, 2021, the Company closed a private placement equity financing with Investissement Québec, acting as mandatory for the government of Québec, and issued a total of 1,978,750 common shares at a price of $9.25 per share for total proceeds of $18.3M. This financing was complemented in the context of the underwritten public offering agreement closed on June 23, 2021.

10.2 SHARE-BASED PAYMENTS

The Board of Directors determines the price and the number of options which may be allocated to each director, officer, employee and consultant as well as all other terms and conditions of the option, subject to the rules of the TSXV. The plan has a policy that caps the maximum number of options that can be granted to 10% of the total outstanding shares of the Company.

All share-based payments will be settled in equity. The Company has no legal or contractual obligation to repurchase or settle the options in cash.

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NOUVEAU MONDE GRAPHITE INC.

Notes to the condensed consolidated interim financial statements

(Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)

10. EQUITY (continued)

10.2 SHARE-BASED PAYMENTS (continued)

The Company’s share options are as follows:

	For the nine-month period ended September 30, 2021 For the year ended December 31, 2020
	Number Weighted average exercise price $ Number Weighted average exercise price $
Opening balance	2,400,000 3.20 1,582,500 2.80
Granted	720,000 16.11 1,192,500 3.64
Exercised	(406,201) 3.14 (145,000) 3.05
Expired	(36,300) 7.00 (230,000) 2.66
Cancelled	(10,000) 16.84 - -
Ending balance	2,667,499 6.59 2,400,000 3.20
Options that can be exercised	2,315,000 6.73 2,000,000 3.37

During the nine-month period ended September 30, 2021, the weighted average share price at the date of exercise was $17.05

The weighted average fair value of the share options granted in the nine-month period ended September 30, 2021, were estimated using the Black-Scholes option pricing model based on the following average assumptions:

• Stock price when granted: $16.11

• Expected life: 5 years

• Expected volatility: 68%

• Risk-free rate: 0.80%

• Expected dividend: nil

11. EXPLORATION AND EVALUATION EXPENSES

	For the three-month periods ended For the nine-month periods ended
	September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
	$ $ $ $
Wages and benefits	974 428 2,563 1,417
Share-based compensation	172 1 376 192
Engineering	32 890 1,834 3,110
Professional fees	3 38 130 370
Materials, consumables, and supplies	401 510 880 1,152
Subcontracting	493 341 1,134 1,114
Geology and drilling	21 104 135 298
Utilities	139 4 311 238
Depreciation and amortization	57 89 164 275
Other	55 49 131 216
Grants	- (164) (36) (164)
Tax credits	(217) (425) (485) (1,223)
Exploration and evaluation expenses	2,130 1,865 7,137 6,995

The exploration and evaluation expenses relate to the Matawinie Mine in Quebec. The wages and benefits are net of the grants received as part of the Canada Emergency Wage Subsidy program of nil and $473 for the three and nine-month periods ended September 30, 2021, respectively (three and nine-month periods ended September 30, 2020: $334 and $507).

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NOUVEAU MONDE GRAPHITE INC.

Notes to the condensed consolidated interim financial statements

(Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)

12. BATTERY MATERIAL PLANT PROJECT EXPENSES

	For the three-month periods ended For the nine-month periods ended
	September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
	$ $ $ $
Wages and benefits	191 139 503 437
Engineering	1,069 549 1,627 1,870
Professional fees	255 441 677 637
Materials, consumables, and supplies	117 26 418 33
Subcontracting	52 71 141 305
Depreciation and amortization	42 - 127 -
Other	7 (20) 23 38
Grants	(719) (394) (1,311) (1,264)
Battery Material Plant project expenses	1,014 812 2,205 2,056

The wages and benefits are net of the grants received as part of the Canada Emergency Wage Subsidy program of nil and $81 for the three and nine-month periods ended September 30, 2021, respectively (three and nine-month periods ended September 30, 2020: $54 and $101).

13. GENERAL AND ADMINISTRATIVE EXPENSES

For the three-month periods ended For the nine-month periods ended	For the three-month periods ended For the nine-month periods ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
	$ $ $ $
Wages and benefits	1,137 765 3,330 1,614
Share-based compensation	293 292 6,028 445
Professional fees	144 184 2,348 683
Consulting fees	461 37 896 112
Travelling, representation and convention	206 87 411 263
Office and administration	3,201 181 4,669 547
Stock exchange, authorities, and communication	71 33 831 72
Depreciation and amortization	170 209 535 623
Other financial fees	9 (19) 26 40
General and administrative expenses	5,692 1,769 19,074 4,399

Included in the office and administration expenses are $1.2M in connection with the settlement of a litigation in September 2021.

14. NET FINANCIAL COSTS

For the three-month periods ended For the nine-month periods ended	For the three-month periods ended For the nine-month periods ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
	$ $ $ $
Unrealized foreign exchange loss (gain)	(490) 6 (1,011) 14
Interest income	(117) (8) (214) (31)
Interest expense on lease liabilities	28 5 86 21
Accretion and interest on borrowings and bond	688 321 2,037 558
Accretion of debt issue costs	- 21 9 21
Loss on disposal of investment	- 16 - 22
Net financial costs	109 361 907 605

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NOUVEAU MONDE GRAPHITE INC.

Notes to the condensed consolidated interim financial statements

(Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)

15. ADDITIONAL CASH FLOW INFORMATION

	For the nine-month periods ended	For the nine-month periods ended
	September 30, 2021 $ September 30, 2020 $
Grants receivable	(635) (252)
Deferred grants		(1,511) 2,216
Mining tax credits	(485) (1,223)
Sales taxes receivable		(892) 66
Prepaid expenses	(4,400) 132
Accounts payable and accrued liabilities		1,047 (953)
Total net change in working capital	(6,876) (14)
Items not affecting cash
Property and equipment included in accounts payable and accrued liabilities.	6,263 173
Share issue costs included in accounts payables and accrued liabilities	258 -
Shares issued for interest payment		797 -

16. RELATED PARTY TRANSACTIONS

During the three and nine-month periods ended September 30, 2021, share-based compensation expenses for directors and officers totalled $123 and $5.7M (three and nine-month periods ended September 30, 2020: $290).

In January 2021, the Company issued 76,635 shares in repayment of accrued interests of $797 on the convertible bond due to Pallinghurst.

Pallinghurst purchased 237,932 common shares as part of the financing closed on January 20,2021, 79,311 common shares as part of the financing closed on February 12,2021 and 66,666 common shares as part of the financing closed on June 23, 2021 (see note 10.1).

During the three and nine-month periods ended September 30, 2021, the Company had accrued interests payable to Pallinghurst of $622 and $1,781 (three and nine-month periods ended September 30, 2020: $26) (note 19).

Investissement Québec, acting as mandatory for the Government of Quebec, purchased 317,241 common shares as part of the financing closed on February 12, 2021 and purchased all of the 1,978,750 common shares issued as part of the financing closed on July 23, 2021.

17. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Fair value

Certain of the Company's accounting policies and disclosures require the determination of fair value. Fair value represents the amount at which a financial instrument could be exchanged between willing parties, based on current markets for instruments with the same risk, principal, and remaining maturity. Fair value estimates are based on quoted market values and other valuation methods. Fair values have been determined for measurement and/or disclosure purposes based on the fair value hierarchy contained in the Company’s financial instrument accounting policy. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

For all financial assets and liabilities, their net carrying amount is a reasonable approximation of fair value given their relatively short maturities.

Financial Risks

The Company is exposed to various financial risks resulting from its operations. The Company does not enter into derivative financial instruments for speculative purposes.

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NOUVEAU MONDE GRAPHITE INC. Notes to the condensed consolidated interim financial statements

(Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)

The main financial risks to which the Company is exposed as well as its policies for managing such risk are detailed below:

Liquidity risk

Liquidity risk is the risk that the Company encounters difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

The Company manages its liquidity risk by using budgets that enable it to determine the amounts required to fund its exploration, evaluation, and development expenditure programs. The Company’s liquidity and operating results may be adversely affected if the Company’s access to the capital markets or other alternative forms of financing is hindered, whether because of a downturn in stock market conditions generally or related to matters specific to the Company. The Company has historically generated cash flow primarily from its financing activities.

As at September 30, 2021, all of the Company’s short-term liabilities totalled $15,488 ($10,587 as at December 31, 2020), have contractual maturities of less than one year and are subject to normal trade terms. The Company regularly evaluates its cash position to ensure preservation and security of capital as well as maintenance of liquidity.

With the financing completed in the nine-month period ended September 30, 2021, and the exercise of warrants during the same period, management believes that the Company has sufficient funds to meet its obligation and planned expenditures for the ensuing twelve months as they fall due (see note 1).

					As at September 30, 2021	As at September 30, 2021
	Carrying	Contractual	Remainder	Year 2022	Year 2023	2024 and
	amount	cash flows	of the year			Onward
Account payables and accrued liabilities	15,576	15,576	15,576	-	-	-
Lease liabilities	2,372	2,979	257	427	410	1,885
Borrowings	2,014	2,044	49	208	225	1,562
Convertible bond	14,647	19,628	646	2,427	16,555	-

Credit risk

Credit risk results from the possibility that a loss may occur from the failure of another party to perform according to the terms of the contract. The Company’s credit risk is primarily related to receivables and cash. The receivables consist mainly of the refund of the goods and services tax receivable from the governments of Canada and Quebec, as well as tax credits receivable from the Government of Quebec. The Company mitigates credit risk by maintaining cash with Canadian chartered banks.

Currency risk

Given that most of the Company’s expenditures are in Canadian dollars, the currency risk exposure is limited by maintaining most of its cash in Canadian dollars. The Company periodically carries a portion of its accounts payable and accrued liabilities in US dollars and Euros and is subject to currency risk on these balances. However, the Company considers this risk to be minimal. The balances of cash in currencies are as follows as at September 30, 2021 and December 31, 2020.

	As at September 30, 2021 $ As at December 31, 2020 $
Cash in US dollar	13,113 -
Canadian dollar equivalents	16,707 -

18. COMMITMENTS

In the normal course of business, the Company enters into contracts that give rise to commitments. As at September 30, 2021, the Company had issued $8,202 of purchase orders for the acquisition of PPE and $2,704 in relation to the operations.

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NOUVEAU MONDE GRAPHITE INC.

Notes to the condensed consolidated interim financial statements

(Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)

19. SUBSEQUENT EVENTS

In October 2021, the Company issued 7,500,000 common shares following the conversion of all outstanding convertible bond held by Pallinghurst group. In addition, and pursuant to the terms of the convertible bond, the Company has elected to settle the accrued and unpaid interest of $1,900,463 by issuing an additional 220,471 common shares at $8.62 per share.

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