Hydro-Québec (HQ) and Nouveau Monde Graphite (NMG) recently signed a license and a research and development agreements concerning the processing of graphite for use in lithium-ion batteries. This collaboration is intended to enable NMG to commercialize battery material technologies developed by HQ over the past 30 years, helping to position Québec strategically in the lithium-ion battery market.

The agreement provides for HQ to assist NMG in setting up a small-scale process in its demonstration plant in Saint-Michel-des-Saints, starting by the end of this year. The success of this small-scale process will lead NMG to eventually build an anode material fabrication plant with a capacity of up to 100,000 tonnes per year.

This anode material fabrication plant is in addition to and complements NMG’s mining project. NMG will support in part the needs for graphite of the anode material fabrication plant. To support these projected 100,000 tonnes per year, NMG intends to enter into supply agreements with other graphite suppliers. Some high-level samples testing are already being conducted to determine the compatibility of graphite coming from another supplier, further sampling testing will be done.

The deal between HQ and NMG includes a license and a Research and development agreement respecting the processing of graphite for use in lithium-ion batteries. The agreements will enable NMG to use HQ’s patented technologies for the micronization, spheronization, purification and natural graphite coating to serve the lithium-ion battery market.

The partnership’s objectives are as follows:

• HQ and NMG will develop a functional and cost-effective process to transform flake graphite into high-quality graphite products suitable for lithium-ion batteries.

• HQ will assist NMG in its material qualification processes with leading lithium-ion battery manufacturers.

• HQ will assist NMG in the small-scale industrialization of its process in its demonstration plant in Saint-Michel-des-Saints.

• Any new intellectual property developed from this partnership will be jointly owned by HQ and NMG on a 50/50 basis.

In connection with these agreements, NMG also closed a non-brokered private placement of 6,666,667 units in the capital of HQ, at a price of $0.30 per unit for an aggregate gross proceeds of $2,000,000 (the “Offering”). Each Unit consists of one common share and one half of one common share purchase warrant. Each full warrant will entitle its holder to subscribe one common share of NMG at a price of $0.40 for a period of 24 months following the closing of the Offering.