NextSource Materials Inc. — Regulatory Filings 2021

Mar 15, 2021

FORM 51-102F3 MATERIAL CHANGE REPORT UNDER NATIONAL INSTRUMENT 51-102

Item 1. Name and Address of Company

NextSource Materials Inc. (“ NextSource ” or the “ Company ”) 130 King Street West, Exchange Tower Suite 1940 Toronto, Ontario, M5X 2A2 Canada

Item 2. Date of Material Change

March 15, 2021

Item 3. News Release

A news release was issued by the Company on March 15, 2021 through the facilities of Issuer Direct and was subsequently filed on SEDAR.

Item 4. Summary of Material Change

NextSource has appointment Sir Mick Davis, Former CEO of Xstrata, as Chair of the Board of Directors and has closed a USD$6.1 million private placement by Vision Blue Resources.

Item 5. Full Description of Material Change

On March 15, 2021, the Company announced the appointment of Sir Mick Davis, former CEO of Xstrata Plc, as Chair of the Board and the closing of the first tranche of a non-brokered private placement (the “Initial Private Placement”) of common shares of the Company previously announced on February 8, 2021.

The Initial Private Placement is the first part of the previously announced Total Financing Package of US$29.5 million committed by Vision Blue Resources Limited ("Vision Blue"), a newly created battery commodity/resource-focused private investment company founded by Sir Mick Davis. The Total Financing Package includes a US$6.1M equity private placement of common shares; a US$12.4 million equity private placement of units to close following shareholder approval; and US$11.0 million in non-dilutive royalty financing, which will be used to fund construction of the Company’s Molo graphite mine in Madagascar.

Pursuant to the Initial Private Placement, the Company issued a total of 120,000,000 common shares of the Company, at a price of C$0.065 per common share, to Vision Blue in return for proceeds to the Company of approximately US$6.1 million (C$7.8 million), representing an approximate 16.7% equity ownership in NextSource.

The Company has obtained conditional approval from the Toronto Stock Exchange (the “TSX”) for the listing of all common shares issued pursuant to the Initial Private Placement. The common shares acquired by Vision Blue in connection with the Initial Private Placement will be subject to a 1-year lock-up with a periodic release schedule.

The proceeds of this Initial Private Placement will allow the Company to immediately commence the construction phase of the Molo graphite mine through the ordering of longer lead items for the processing plant and to fast track the completion of two technical studies. The studies will be commissioned in order to confirm the capital and operating costs for the next phase of mine expansion, and to construct a stand-alone, value-added graphite plant to produce spherical and purified graphite (“SPG”) for lithium-ion batteries in electric vehicles (“EVs”).

Early Warning Disclosure

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Following closing of the Initial Private Placement, Vision Blue has beneficial ownership of, or control and direction over 120,000,000 common shares, representing approximately 16.7% of NextSource’s issued and outstanding common shares. Prior to closing of the Initial Private Placement, Vision Blue did not own, directly or indirectly, or exercise control or direction over any securities of NextSource.

Under the investment agreement between NextSource and Vision Blue, NextSource agreed to appoint Sir Mick Davis, who is also a director of Vision Blue, as a director and Chairman of the Board of NextSource. In addition, for so long as Vision Blue owns no less than 10% of the issued common shares of NextSource, Vision Blue may nominate one other person as a non-executive director of NextSource (or, if Sir Mick Davis is not then entitled to be nominated as director, two other persons).

On closing of the Second Private Placement, Vision Blue will own approximately 37.0% of the issued and outstanding common shares of NextSource, or approximately 49.4% on a partially diluted basis, based on the current issued and outstanding common shares of NextSource. The common shares acquired by Vision Blue will be subject to a 1-year lock-up from the closing of the Initial Private Placement with a periodic release schedule, which lock-up will terminate if the Second Private Placement does not occur for any reason. The Second Private Placement is subject to the approval of a majority of the shareholders of NextSource in accordance with the policies of the TSX at the Special Meeting.

Vision Blue acquired the Common Shares for investment purposes and intends to review its investment in NextSource on a continuing basis. Vision Blue may, depending on market and other conditions, increase or decrease its beneficial ownership, control or direction, over securities of NextSource through market transactions, private agreements, treasury issuances or otherwise. Vision Blue’s head office is located at Third Floor, 1 Le Truchot, St Peter Port, Guernsey GY1 1WD.

Item 6. Reliance on subsection 7.1(2) of National Instrument 51-102

Not applicable.

Item 7. Omitted Information

Not applicable.

Item 8. Executive Officer

Marc Johnson Chief Financial Officer (416) 364-4911

Item 9. Date of Report

March 15, 2021.