Financial statements
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NextSource Materials Inc. Unaudited Condensed Interim Consolidated Financial Statements For the three and six months ended December 31, 2025, and 2024 Expressed in US Dollars
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NextSource Materials Inc. Unaudited Condensed Interim Consolidated Statements of Financial Position (Expressed in US Dollars) As at December 31, 2025 As at June 30, 2025 Assets Current Assets: Cash and cash equivalents $ 2,982,063 $ 3,281,768 Amounts receivable 290,874 483,449 Inventories (note 6) 5,453,096 6,013,127 Prepaid expenses (note 7) 2,086,912 862,789 Prepayments and deposits (note 8) 883,462 889,184 Total Current Assets 11,696,407 11,530,317 Property, plant, and equipment (notes 9 and 11) 69,519,226 72,664,784 Total Assets $ 81,215,633 $ 84,195,101 Liabilities Current Liabilities: Accounts payable and accrued liabilities (note 10) $ 5,180,829 $ 4,962,951 Current portion of lease obligations (note 11) 1,382,750 1,400,976 Current portion of royalty obligations (note 12) 2,846,250 1,897,500 Share-based compensation liability (note 19) 259,939 57,228 Borrowings (note 13) 29,281,634 15,437,022 Total Current Liabilities 38,951,402 23,755,677 Share-based compensation liability (note 19) 90,114 32,479 Withholding tax provision 728,633 568,200 Lease obligations (note 11) 7,326,156 7,428,877 Royalty obligations (note 12) 8,594,481 8,694,866 Commercial production obligation (note 14) 572,618 536,127 Asset retirement obligation (note 15) 1,878,286 2,192,186 Total Liabilities 58,141,690 43,208,412 Shareholders’ Equity Share capital (note 17) 216,834,329 216,433,563 Accumulated deficit (191,356,467) (174,708,355) Accumulated other comprehensive loss (2,403,919) (738,519) Total Shareholders’ Equity 23,073,943 40,986,689 Total Liabilities and Shareholders’ Equity $ 81,215,633 $ 84,195,101 Nature of operations (note 1) Basis of presentation and going concern (note 2) Commitments (note 16) The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
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NextSource Materials Inc. Unaudited Condensed Interim Consolidated Statements of Operations and Comprehensive Loss (Expressed in US Dollars, except number of shares) Six months ended December 31, 2025 Six months ended December 31, 2024 Three months ended December 31, 2025 Three months ended December 31, 2024 Revenues (note 5) $ 553,275 $ 51,589 $ 132,397 $ 51,589 Expenses and other income Cost of Sales 767,066 31,286 253,542 31,286 General and administrative expenses (note 20) 3,812,726 4,904,108 1,720,917 2,225,326 Exploration and evaluation expenses 50,078 8,094 21,032 4,890 Madagascar Government Royalties 12,250 — 4,461 — Share-based compensation and RSU expense 300,814 189,365 151,091 285,145 Depreciation of property, plant, equipment and development (note 9) 8,978 276,275 4,575 139,575 BAF Evaluation costs 2,151,893 — 2,151,893 — Change in value of lease liability — 25,761 — — Change in value of royalty obligation (note 12) 1,069,054 (1,013,943) 60,963 (189,877) Change in value of commercial production obligation (note 14) — (67,047) — (43,513) Impairment of foreign VAT receivable 27,547 1,013,356 — 606,286 Write-down of inventory to net realizable value 5,912,771 — 3,306,616 — Unrealized foreign exchange loss 343,652 416,573 372,970 344,418 Realized foreign exchange loss 25,459 329,567 11,044 273,113 Total Expenses and other income 14,482,288 6,113,395 8,059,104 3,676,649 Loss before income taxes and net financing cost $ (13,929,013) $ (6,061,806) $ (7,926,707) $ (3,625,060) Finance cost 2,236,376 739,621 1,242,848 396,512 Finance income (45,480) (67,190) (16,256) (13,421) Current income tax expense 528,203 162,788 289,624 85,174 Net loss $ (16,648,112) $ (6,897,025) $ (9,442,923) $ (4,093,325) Other comprehensive loss Translation adjustment for foreign operations (1,665,400) (1,548,558) (1,644,645) (1,088,294) Net loss and comprehensive loss $ (18,313,512) $ (8,445,583) $ (11,087,568) $ (5,181,619) Weighted-average common shares (basic and diluted) 184,982,375 168,452,822 185,053,643 181,221,426 Net loss per common share (basic and diluted) $ (0.09) $ (0.04) $ (0.05) $ (0.02) The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
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NextSource Materials Inc. Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity (Expressed in US Dollars, except number of shares) Common Shares Outstanding Share Capital Accumulated Deficit Other Comprehensive Loss Total Equity Balance as at June 30, 2024 155,823,007 $ 205,025,476 $ (151,452,062) $ (1,270,410) $ 52,303,004 Share option expense — 368,738 — — 368,738 Shares issued from private placement 29,088,100 11,228,651 — — 11,228,651 Issuance cost from private placement — (130,704) — — (130,704) Net loss — — (6,897,025) — (6,897,025) Cumulative translation adjustment — — — (1,548,558) (1,548,558) Balance as at December 31, 2024 184,911,107 $ 216,492,161 $ (158,349,087) $ (2,818,968) $ 55,324,106 Shares issued from private placement (note 17) — — — — — Issuance cost from private placement — — — — — Share options granted under long-term incentive plan — (58,598) — — (58,598) Net loss — — (16,359,268) — (16,359,268) Cumulative translation adjustment — — — 2,080,449 2,080,449 Balance as at June 30, 2025 184,911,107 $ 216,433,563 $ (174,708,355) $ (738,519) $ 40,986,689 Shares issued from Restricted Share Units (note 19) 671,957 166,826 — — 166,826 Share options granted under long-term incentive plan (note 18) — 233,940 — — 233,940 Net loss — — (16,648,112) — (16,648,112) Cumulative translation adjustment — — — (1,665,400) (1,665,400) Balance as at December 31, 2025 185,583,064 $ 216,834,329 $ (191,356,467) $ (2,403,919) $ 23,073,943
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NextSource Materials Inc. Unaudited Condensed Interim Consolidated Statements of Cash Flows (Expressed in US Dollars) Six Months Ended December 31, 2025 Six Months Ended December 31, 2024 Operating activities Net loss and comprehensive loss $ (16,648,112) $ (6,897,025) Adjustments for non-cash items: Depreciation of property, plant, equipment and development (note 9) 8,978 276,275 Income tax expense 528,203 162,788 Change in value of royalty obligations (note 12) 1,069,054 (1,013,943) Change in value of lease obligations (note 11) — 25,761 Change in value of commercial production obligation — (67,047) Change in impairment of VAT receivable 27,547 1,013,356 Write-down of inventory to net realizable value 5,912,771 — Unrealized foreign exchange loss 343,652 416,573 Finance cost 2,236,376 739,621 Share-based compensation expense 300,814 189,365 (6,220,717) (5,154,276) Change in working capital balances: Increase in amounts receivable 161,118 (1,690,787) Increase in inventories (3,611,339) (4,587,435) Increase in prepaid expenses (note 7) (1,235,879) — Increase in accounts payable and accrued liabilities 180,901 1,137,806 Net cash used in operating activities (10,725,916) (10,294,692) Investing activities Increase in long-term prepayments and deposits — (3,571) Additions to property, plant, equipment, and development (note 9) (155,531) (6,426,367) Net cash used in investing activities (155,531) (6,429,938) Financing activities Proceeds from issuance of common shares (note 17) — 11,228,651 Common shares issuance costs (note 17) — (130,704) Lease obligation principal and interest payments (note 11) (861,548) (852,654) Repayment of royalty obligation (note 12) (948,750) (948,750) Drawdown of borrowings (note 13) 12,500,000 — Debt issuance cost (note 13) (93,439) — Net cash provided by financing activities 10,596,263 9,296,543 Effect of exchange rate changes on cash and cash equivalents (14,521) (24,823) Net decrease in cash and cash equivalents (299,705) (7,452,910) Cash and cash equivalents, beginning of period 3,281,768 10,770,381 Cash and cash equivalents, end of period $ 2,982,063 $ 3,317,471 The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
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1. Nature of operations NextSource Materials Inc. (the “Company” or “NextSource”) was continued under the Canada Business Corporations Act from the State of Minnesota on December 27, 2017, with its fiscal year ending June 30. The Company’s registered head office and primary location of records is situated at 130 King Street West, Exchange Tower, Suite 1943, Toronto, Ontario, Canada, M5X 2A2. The Company’s common shares are listed on the Toronto Stock Exchange (“TSX”) under the symbol “NEXT,” and on the OTCQB under the symbol “NSRCF. NextSource is committed to establishing itself as a global, vertically integrated supplier of battery materials through the mining and value-added processing of graphite concentrate and other minerals. The Company’s principal business activity involves the development and operation of the Molo Graphite Mine in Madagascar, and it announced on August 5, 2025, plans to construct its inaugural Battery Anode Facility (“BAF”) in the United Arab Emirates. On October 1, 2025, the Company announced that it has signed an agreement to secure an industrial building in the Industrial City of Abu Dhabi for the construction of a proposed BAF. In addition, the Company owns two exploration and evaluation stage projects: the Green Giant Vanadium Project in Madagascar and the Sagar Project in Quebec. The Company does not pay dividends, nor is it expected to do so in the immediate or near future. These condensed interim consolidated financial statements were approved by the Board of Directors of the Company on February 17, 2026. 2. Basis of presentation and going concern Statement of compliance with International Financial Reporting Standards (IFRS) These unaudited condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“ IFRS”) applicable to the preparation of interim financial statements under International Accounting Standard 34, Interim Financial Reporting. These unaudited condensed interim consolidated financial statements do not include all the disclosures required by IFRS for annual audited consolidated financial statements. These unaudited condensed interim consolidated financial statements should be read in conjunction with the Company’s annual audited consolidated financial statements for the year ended June 30, 2025 , including the accounting policies and notes thereto, which were prepared in accordance with IFRS. In the opinion of management, these unaudited condensed interim consolidated financial statements reflect all adjustments, which consist of normal and recurring adjustments necessary to present fairly the financial position as at December 31, 2025, and June 30, 2025, and the results of operations and cash flows for the three and six months ended December 31, 2025, and 2024. Operating results for the three and six months ended December 31, 2025 , are not necessarily indicative of the results that may be expected for the full year ending June 30, 2026. Basis of measurement The unaudited c ondensed interim consolidated financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern, which assume assets will be realized and liabilities settled in the ordinary course of business. Assets and liabilities are reported on a historical cost basis, except for certain financial instruments that are measured at fair value, as described in the Note 3 to the Company’s audited consolidated financial statements for the year ended June 30, 2025. Basis of consolidation The unaudited condensed interim consolidated financial statements include the statement of financial position, the statements of results of operations and comprehensive loss, statements of cash flows and statements of changes in shareholder’s equity of the Company and its wholly owned subsidiaries. Intercompany balances and transactions, including gains and losses relating to subsidiaries, have been eliminated on consolidation. NextSource Materials Inc. is the holding company that owns 100% of NextSource Materials (Mauritius) Ltd. (“MATMAU”), a Mauritius subsidiary, NextSource Materials (UK) Ltd., a UK subsidiary, and 2391938 Ontario Inc., an Ontario subsidiary. MATMAU owns 100% of NextSource Minerals (Mauritius) Ltd. (“MINMAU”), a Mauritius subsidiary, NextSource Graphite (Mauritius) Ltd (“GRAMAU”), a Mauritius subsidiary, NextSource CSPG (Mauritius) Ltd (“CSPGMAU”), a Mauritius subsidiary, and NextSource Materials (Madagascar) SARLU (“MATMAD”), a Madagascar subsidiary. MINMAU owns 100% of NextSource Minerals (Madagascar) SARLU (“MINMAD”), a Madagascar subsidiary. GRAMAU owns 100% of ERG (Madagascar) SARLU (“ERGMAD”), a Madagascar subsidiary. NextSource Materials Inc. Notes to the Unaudited Condensed Interim Consolidated Financial Statements For the three and six months ended December 31, 2025 and 2024 (All amounts expressed in US Dollars unless designated otherwise)
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Going Concern Assumption The Company's ability to continue operations and fund development is dependent on management's ability to secure additional financing. As of December 31, 2025 , the Company had cash and cash equivalents of $2,982,063 which is insufficient to fund its working capital requirements (including current liabilities of $38,951,402) as well as ongoing general and administrative costs and anticipated capital and operating cash outflows. The Company does not expect to generate substantial revenues from current operations for the foreseeable future. Therefore the Company will need to obtain financing in the form of equity, debt, or a combination thereof to continue with its planned ongoing strategic and operational activities. Management is proactively seeking funding and while it has been successful at doing so in the past, there can be no assurance it will be able to do so in the future or on terms that are acceptable to the Company. As such the ability of the Company to raise additional funding to meet their obligations as they come due results in a material uncertainty that may cast significant doubt regarding the Company’s ability to continue as going concern. The accompanying unaudited condensed interim consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. 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. These unaudited condensed interim consolidated financial statements do not give the effect of adjustments to the carrying values of the assets and liabilities and the reported expenses and balance sheets classifications that would be necessary should the Company be unable to continue as a going concern and thereof need to realize its assets and liquidate its liabilities and commitments in other than the normal course of business and at amounts different from those in the unaudited condensed interim consolidated financial statements. These adjustments could be material. 3. Material accounting policy information These unaudited condensed interim consolidated financial statements follow the same accounting policies and methods of their application as disclosed in Note 3 to the Company’s audited consolidated financial statements for the year ended June 30, 2025. 4. Significant judgments, estimates and assumptions The Company prepares its financial statements in accordance with IFRS, which requires estimates, judgments, and assumptions that affect reported assets and liabilities, as of the date of the unaudited condensed interim consolidated financial statements and the reported values of revenues and expenses during the reporting period . These estimates are inherently uncertain, and actual results may differ. Such estimates impact the unaudited condensed interim consolidated financial statements and may need adjustment as circumstances change. Revisions to estimates are recorded in the period revised and future periods if applicable. Significant accounting judgments, estimates, and assumptions are continually reviewed. The areas involving significant judgments, estimates and assumptions have been detailed in Note 4 to the Company’s audited consolidated financial statements for the year ended June 30, 2025. 5. Revenues For the three and six months ended December 31, 2025, the Company recognized revenue generated by the sales of Superflake® Graphite Concentrate of $132,397 (December 31, 2024: $51,589) and $553,275 (December 31, 2024: $51,589), respectively. Six months ended December 31, 2025 Six months ended December 31, 2024 Three months ended December 31, 2025 Three months ended December 31, 2024 Sales of Superflake® Graphite Concentrate $ 553,275 $ 51,589 $ 132,397 $ 51,589 Total Revenues $ 553,275 $ 51,589 $ 132,397 $ 51,589 NextSource Materials Inc. Notes to the Unaudited Condensed Interim Consolidated Financial Statements For the three and six months ended December 31, 2025, and 2024 (All amounts expressed in US Dollars unless designated otherwise)
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6. Inventories As at December 31, 2025 As at June 30, 2025 Consumable materials $ 2,088,378 $ 2,256,031 Run-of-mine (ROM) stockpile 1,387,610 1,451,654 Superflake® Graphite concentrate 1,977,108 2,305,442 Total Inventories $ 5,453,096 $ 6,013,127 As at December 31, 2025 , ROM stockpile was written down by $20,469 (June 30, 2025 : $851,655) and the Superflake® Graphite Concentrate was written down by $5,892,302 (June 30, 2025 : $2,835,501). Both amounts are reflected in the unaudited condensed interim consolidated statements of operations and comprehensive loss. The cost of inventories recognized as cost of sales for the three and six months ended December 31, 2025 , was $265,720 (December 31, 2024: $Nil) and $755,082 (December 31, 2024: $974,143), respectively. 7. Prepaid Expenses As at December 31, 2025 As at June 30, 2025 Vendor Advances $ 1,653,334 $ 275,446 Insurance & Services 433,578 587,343 Total Prepaid $ 2,086,912 $ 862,789 8. Prepayments and deposits As of December 31, 2025, the carrying value of prepayments and deposits for assets was $ 883,462 (June 30, 2025: $889,184) and consists mainly of Port Louis lease (Note 11) security deposit paid, which was still owing as at December 31, 2025 and as at June 30, 2025. 9. Property, plant, and equipment For the six months ended December 31, 2025 , the Company had additions of $317,113 (June 30, 2025 : $16,808,900) and capitalized development costs of $Nil (June 30, 2025: $3,333,729). The additions for the six months ended December 31, 2025, primarily represent costs incurred related to the updated Molo Phase 2 expansion study and the recognition of a new ROU asset associated with the lease of a warehouse in Toliara. Additions for the year ended June 30, 2025 , repr esent in part the capitalization of BAF equipment for $11,972,733 of which $8,609,740, was accounted for as a prepayment as at June 30, 2024. In the prior year, continued ramp-up and commissioning costs of the Molo Graphite Mine and processing plant were capitalized until the end of Q3 2025. Capitalization ceased at the start of Q4 2025 as the decision was made to utilize the existing plant for campaign production. Accordingly, the capitalized Molo Graphite Mine plant costs were transferred from assets-under-construction to plant, and depreciation commenced. NextSource Materials Inc. Notes to the Unaudited Condensed Interim Consolidated Financial Statements For the three and six months ended December 31, 2025, and 2024 (All amounts expressed in US Dollars unless designated otherwise)
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9. Property, plant, and equipment (continued) Right-of-use Assets Under Property Plant Equipment Assets Construction Total As at June 30, 2024 $ 3,567,652 $ 7,886,795 $ 2,607,348 $ 21,091,718 $ 34,667,112 $ 69,820,625 Additions 226,424 163,242 146,951 — 16,272,283 16,808,900 Development costs — — — — 3,333,729 3,333,729 Transfers — 32,264,210 — — (32,264,210) — Depreciation (8,943) (832,229) (470,032) (600,003) 1,246,369 (664,838) Lease termination and write off — — — (12,939,442) (4,089,318) (17,028,760) Impact of foreign exchange 19,194 1,158,179 5,342 42,599 (830,186) 395,128 As at June 30, 2025 $ 3,804,327 $ 40,640,197 $ 2,289,609 $ 7,594,872 $ 18,335,779 $ 72,664,784 Additions — 153,376 — 161,583 2,154 317,113 Development costs — — — — — — Transfers (18,008) 2,910,359 — 108,829 (3,001,180) — Depreciation (68,309) (1,132,325) (249,182) (75,899) — (1,525,715) Change in asset retirement obligation (344,253) — — — — (344,253) Impact of foreign exchange (107,716) (1,302,519) (60,366) (233,436) 111,334 (1,592,703) As at December 31, 2025 $ 3,266,041 $ 41,269,088 $ 1,980,061 $ 7,555,949 $ 15,448,087 $ 69,519,226 Cost 3,821,774 41,962,064 3,397,173 7,903,596 18,335,779 75,420,386 Accumulated depreciation (17,447) (1,321,867) (1,107,564) (308,724) — (2,755,602) As at June 30, 2025 $ 3,804,327 $ 40,640,197 $ 2,289,609 $ 7,594,872 $ 18,335,779 $ 72,664,784 Cost 3,367,494 43,644,899 3,296,912 7,822,992 15,448,087 73,580,384 Accumulated depreciation (101,453) (2,375,811) (1,316,851) (267,043) — (4,061,158) As at December 31, 2025 $ 3,266,041 $ 41,269,088 $ 1,980,061 $ 7,555,949 $ 15,448,087 $ 69,519,226 During the three and six months ended December 31, 2025, the Company did not capitalize any evaluation costs related to its exploration and evaluation projects. Finance costs that were capitalized as assets-under-construction for the three and six months ended December 31, 2025 related to: • accretion of the royalty obligation of $Nil (June 30, 2025: $1,158,612). • accretion of the commercial production obligation of $Nil (June 30, 2025: $66,006). • accretion related to lease obligations of $Nil (June 30, 2025: $1,170,590 ), and • interest and accretion related to the Vision Blue drawdown credit facility of $Nil (June 30, 2025: $227,975). For the three and six months ended December 31, 2025 , depreciation of $764,672 (December 31, 2024: $Nil) and $1,516,737 (December 31, 2024: $Nil) respectively, were capitalized as cost of inventory. On June 2, 2025, the Company announced the relocation of the inaugural BAF from Mauritius to the Middle East. The Company decided to exercise its option to terminate the Port Louis lease agreement on May 31, 2025 and withdrew its EIA application at no further cost (Note 11). The carrying value of $12,939,442 of the Port Louis right-of-use asset was derecognized and o ffset against the lease liability. Each remaining asset was evaluated separately, and certain capitalized studies and certain site-specific equipment linked to the Mauritius BAF facility of $ 4,089,318 was written off as at June 30, 2025. On December 1, 2025, the Company entered into a new lease agreement for a warehouse in Toliara and recognized an ROU asset and lease obligation of $163,639 (Note 11). The lease obligation was calculated using an incremental borrowing rate of 11.5% based on initial term of 2 years. The lease payments are payable monthly in advance. NextSource Materials Inc. Notes to the Unaudited Condensed Interim Consolidated Financial Statements For the three and six months ended December 31, 2025, and 2024 (All amounts expressed in US Dollars unless designated otherwise)
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Exploration and Evaluation Expenditures Since early 2012, the Company has focused its efforts on the Molo Graphite Mine and as such only a limited amount of work has been completed on the Green Giant Vanadium Project, located in Madagascar, and the Sagar Project, located in Quebec. The associated exploration license fees are expensed as incurred. 10. Accounts payable and accrued liabilities As at December 31, 2025 As at June 30, 2025 Accounts payable $ 2,734,886 $ 1,875,357 Accrued liabilities 2,445,943 3,087,594 Total accounts payable and accrued liabilities $ 5,180,829 $ 4,962,951 11. Right-of-Use assets and lease obligations The Company has recognized the following Right-of-Use (“ROU”) assets and lease obligations • On November 6, 2023, the Company signed a lease for an administrative office in Antananarivo and recognized a ROU asset and lease obligation of $365,119. The lease obligation was calculated using an incremental borrowing rate of 11.5% based on an initial term of 3 years. The lease payments are payable monthly in advance. • For the year ended June 30, 2024 the company recognized a lease obligation of $7,871,192 and a right of use asset for the energy services agreement (“ESA”) w ith CrossBoundary Energy Madagascar (“CBE”). As of December 31, 2025 , the carrying value of the lease obligation amounted to $8,448,106 (June 30, 2025:$8,648,128). This contract is for the hybrid solar and thermal power plant, owned and operated by CBE, and for the supply of all electricity to the Molo Graphite Mine. The lease obligation was calculated using an incremental borrowing rate of 13.8% based on an initial term of 20 years plus a renewal of 5 years . The ESA requires the Company to purchase a minimum energy output of 11,200,000 kWh per annum at a base tariff of $0.09051 per kWh (2025: $0.08830 per kWh) and subject to an annual 2.5% escalation which is equivalent to approximately $1,013,727 per annum (June 30, 2025: $989,002). If the energy use exceeds this minimum annual kWh, the Company will pay the same tariff per kWh for the excess, which is considered a variabl e lease payment. Variable lease payments amounting to $717,130 were made during the six months ended December 31, 2025 (June 30, 2025: $647,423). Total cash outflows made for six months ended December 31, 2025 for this lease was $776,690 (June 30, 2025 : $1,005,002). For the six months ended December 31, 2025 , no depreciation (June 30, 2025 : $63,627), and no accretion expense ( June 30, 2025 : $1,170,590) were capitalized in relation to this lease as Assets-under- Construction. • On December 1, 2025, the Company entered into a lease agreement for a warehouse in Toliara and recognized an ROU asset and lease obligation of $ 163,639. The lease obligation was calculated using an incremental borrowing rate of 11.5% based on initial term of 2 years. The lease payments are payable monthly in advance. The following table sets out the carrying amounts of lease obligations included in the unaudited condensed interim consolidated statements of financial position and the movements between the reporting periods: Port-Louis BAF Lease CBE Power Facility Lease Tana Office Lease Toliara Lease Total Obligations As at June 30, 2024 $ 12,420,137 $ 8,482,539 $ 301,233 $ — $ 21,203,909 Finance costs 1,424,501 1,170,590 26,408 — 2,621,499 Lease payments (863,384) (1,005,002) (143,839) — (2,012,225) Remeasurement of lease liability 94,291 — — — 94,291 Lease termination (note 9) (13,075,545) — — — (13,075,545) Foreign exchange adjustments — — (2,076) — (2,076) As at June 30, 2025 $ — $ 8,648,127 $ 181,726 $ — $ 8,829,853 Additions — — — 163,639 163,639 Finance costs — 576,669 8,312 1,472 586,453 Lease payments — (776,690) (78,290) (7,412) (862,392) Remeasurement of lease liability — — — — — Lease termination (note 9) — — — — — Foreign exchange adjustments — — (3,777) (4,870) (8,647) As at December 31, 2025 $ — $ 8,448,106 $ 107,971 $ 152,829 $ 8,708,906 NextSource Materials Inc. Notes to the Unaudited Condensed Interim Consolidated Financial Statements For the three and six months ended December 31, 2025, and 2024 (All amounts expressed in US Dollars unless designated otherwise)
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11. Right-of-Use assets and lease obligations (continued) The following table sets out the lease obligations included in the unaudited condensed interim consolidated statements of financial position: Port-Louis BAF Lease CBE Power Facility Lease Tana Office Lease Toliara Lease Total Obligations Current portion of lease obligations $ — $ 1,267,183 $ 133,793 $ — $ 1,400,976 Long-term portion of lease obligations — 7,380,944 47,933 — 7,428,877 As at June 30, 2025 $ — $ 8,648,127 $ 181,726 $ — $ 8,829,853 Port-Louis BAF Lease CBE Power Facility Lease Tana Office Lease Toliara Lease Total Obligations Current portion of lease obligations $ — $ 1,194,319 $ 107,971 $ 80,460 $ 1,382,750 Long-term portion of lease obligations — 7,253,788 — 72,368 7,326,156 As at December 31, 2025 $ — $ 8,448,107 $ 107,971 $ 152,828 $ 8,708,906 Future minimum lease payments required to meet obligations that have initial or remaining non-cancellable lease terms are set out in the following table: CBE Power Facility Lease Tana Office Lease Toliara Lease Total Obligations Within 12 months $ 1,194,319 $ 107,971 $ 80,460 $ 1,382,750 Between 13 and 24 months 1,194,319 — 72,368 1,266,687 Between 25 and 36 months 1,194,319 — — 1,194,319 Between 37 and 48 months 1,194,319 — — 1,194,319 Between 49 and 60 months 1,194,319 — — 1,194,319 Over 60 months 19,706,174 — — 19,706,174 Total undiscounted lease obligations $ 25,677,769 $ 107,971 $ 152,828 $ 25,938,568 Short term leases of less than 12 months and leases with variable payments proportional to the rate of use of the underlying assets do not give rise to lease obligations. During the three and six months ended December 31, 2025 , the Company recognized short-term lease expenses of $19,158 (December 31, 2024 : $22,741) and $47,092 (December 2024: $60,933) respectively, in the unaudited condensed interim consolidated statements of operations and comprehensive loss. 12. Royalty obligation On February 8, 2021 , the Company announced a financing agreement with Vision Blue for gross proceeds of $29.5 million consisting of private placements and a royalty financing agreement. As part of the royalty financing agreement: (a) the Company received the initial royalty funding of $8.0 million (less a $1.5 million royalty financing fee) on June 28, 2021 , and received the remaining $3.0 million on August 17, 2022. (b) beginning on the biannual period ending June 30,2022, the Company must pay the greater of: (i) $825,000 (the “Minimum Repayment”) or (ii) 3% of the gross sales revenues from graphite concentrate sales (the “GSR”). Once Vision Blue has received cumulative royalty payments of $16.5 million, the Minimum Repayment will cease, and the royalty will only be based on the GSR. The Company has the option at any time to reduce the GSR to 2.25% by paying $20 million to Vision Blue. Each of the biannual Minimum Repayments can be deferred by 12 months, subject to accrued interest of 15% per annum. The royalty payments are subject to 15% withholding tax; and (c) Vision Blue received a royalty of 1.0% of the gross revenues from sales of vanadium pentoxide (“V 2O5”) from the Green Giant Vanadium Project for a period of 15 years following commencement of production of V2O5. The royalty payments are subject to 15% withholding tax. NextSource Materials Inc. Notes to the Unaudited Condensed Interim Consolidated Financial Statements For the three and six months ended December 31, 2025, and 2024 (All amounts expressed in US Dollars unless designated otherwise)
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12. Royalty obligation (continued) On June 30, 2021 , the Company recognized a royalty obligation at the fair value of $ 6.5 million , which was equal to the present value using an effective discount rate of 13.8% of (1) the deferred $ 3.0 million royalty funding, (2) the minimum royalty payments, (3) the accrued interest on the deferral of minimum royalty payments, and (4) the perpetual 3.0% GSR for the remaining 30-year life of mine for Phase 1. The discount rate was determined at recognition by calculating the internal rate of return (IRR) of the expected cash flows. Upon recognition, a total of $169,279 of capitalized legal fees was netted against the obligation resulting in an initial carrying value of $6,330,721. The carrying value of the royalty obligation will be remeasured at each reporting period based on the revised expected future cash flows using the original discount rate under the amortized cost method. On December 31, 2025, the obligation was remeasured at $11,440,731 (June 30, 2025: $10,592,366). Total As at June 30, 2024 $ 11,591,878 Accretion 1,578,580 Minimum repayments (1,897,500) Remeasurement (680,592) As at June 30, 2025 $ 10,592,366 Accretion 728,061 Minimum repayments (948,750) Remeasurement 1,069,054 As at December 31, 2025 $ 11,440,731 Total Current portion of royalty obligations $ 2,846,250 Long-term portion of royalty obligations 8,594,481 As at December 31, 2025 $ 11,440,731 Total Current portion of royalty obligations $ 1,897,500 Long-term portion of royalty obligations 8,694,866 As at June 30, 2025 $ 10,592,366 During the six months ended December 31, 2025 , the obligation increased due to accretion of $ 728,061 (December 31, 2024 : $ 738,088), and a remeasurement loss of $1,069,054 (December 31, 2024: gain of $1,013,943), resulting from the deferral of the second bi-annual payment. This is offset by repayments made during the six months ended December 31, 2025, of $948,750 (June 30, 2025: $1,897,500). Future undiscounted minimum royalty payments including accrued interest on deferrals are set out in the following table: Total Within 12 months $ 2,846,250 Between 13 and 24 months 1,897,500 Between 25 and 36 months 1,897,500 Between 37 and 48 months 1,897,500 Between 49 and 60 months 1,897,500 Over 60 months 4,743,750 Total undiscounted minimum royalty payments $ 15,180,000 NextSource Materials Inc. Notes to the Unaudited Condensed Interim Consolidated Financial Statements For the three and six months ended December 31, 2025, and 2024 (All amounts expressed in US Dollars unless designated otherwise)
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13. Borrowings On January 30, 2025 the Company secured a drawdown credit facility of up to $20,000,000 with Vision Blue. The proceeds of the facility, which is non-dilutive to shareholders, was used as needed to progress the Company’s Battery Anode Facility strategy, support the continued development and growth of Molo Graphite Mine, and for general working capital purposes. The credit facility is available pursuant to up to four advances; each such advance shall be a maximum principal amount of $5,000,000. Interest shall be payable at a rate of 15.0% per annum (inclusive of 25% withholding tax), compounding quarterly. From June 30, 2025, Vision Blue can call upon all outstanding advances, including accrued and unpaid interest, from the Company. The credit facility is secured by s hare pledges of the Company's investments in the subsidiaries in Madagascar and Mauritius and by guarantees from each of the subsidiaries that hold these assets and unsold inventory. On October 29, 2025, the Company announced that it has agreed to an extension to its drawdown credit facility of up to a further $10 million with Vision Blue. On October 29, 2025 the Company drew down $5 million of the amended facility and on December 15, 2025, the Company drew down and additional $2.5 million of the amended facility. As of the date of these financial statements, the amended facility was fully drawn. During the six months ended December 31, 2025, the Company received three advances from Vision Blue of $12,500,000 (June 30, 2025: $15,00,000) which were recognized net of transaction costs of $93,439 ( June 30, 2025: $425,102) As at December 31, 2025, the outstanding amount of the loan is $29,281,634 (June 30, 2025: $15,437,022) and related interest and accretion of $1,438,051 were recorded for the six months ended December 31, 2025 (December 31, 2024 : $Nil). The t otal outstanding amount became payable on demand as of June 30, 2025, t herefore the full amount outstanding is included in current liabilities. Total As at June 30, 2024 $ — Drawdowns 14,574,898 Interest and accretion 862,124 As at June 30, 2025 $ 15,437,022 Drawdowns 12,406,561 Interest and accretion 1,438,051 As at December 31, 2025 $ 29,281,634 14. Commercial production obligation On April 16, 2014, the Company signed a Sale and Purchase Agreement and a Mineral Rights Agreement (together “the Agreements”) with Capricorn Metals (formerly Malagasy Minerals) to acquire the remaining 25% interest in the Molo Graphite Mine. Pursuant to the Agreements, a further cash payment of CAD$ 1,000,000 is due within 30 days of the commencement of commercial production. On June 30, 2022 , the Company recognized a provision of $708,514 using a 13.8% discount rate based on an initial expectation of settlement on or around June 30, 2023. The provision was recorded at amortized cost and capitalized as property under property, plant, equipment, and development. The obligation is expected to be settled upon the declaration of commercial production of the Molo Graphite Mine. On December 31, 2025, the obligation was remeasured to $572,618 (June 30, 2025: $536,127). During the six months ended December 31, 2025, the Company recognized no remeasurement gain or loss (December 31, 2024: gain of $67,047), and accretion of $36,309 (December 31, 2024: $45,641). During the six months ended December 31, 2025 the Company recognized a f oreign exchange loss of $182 (December 31, 2024: gain of $34,759), in the unaudited condensed interim consolidated statements of operations and comprehensive loss. Total As at June 30, 2024 $ 707,850 Accretion 68,119 Remeasurement (231,688) Effect of foreign exchange (8,154) As at June 30, 2025 $ 536,127 Accretion 36,309 Remeasurement — Effect of foreign exchange 182 As at December 31, 2025 $ 572,618 NextSource Materials Inc. Notes to the Unaudited Condensed Interim Consolidated Financial Statements For the three and six months ended December 31, 2025, and 2024 (All amounts expressed in US Dollars unless designated otherwise)
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15. Asset retirement obligation The Company has recognized provisions for asset retirement obligations at its Molo Graphite Mine. The provision for these obligations is based on an independent third-party estimate. The estimate considered current disturbance and applicable regulations. The timing and future costs for site closure and rehabilitation are uncertain and depend on several factors including but not limited to, changes in the life-of-mine plan. Closure activities will include the demolition of the processing plant and infrastructure, land rehabilitation, water treatment and water treatment monitoring costs. The undiscounted closure and rehabilitation costs were estimated at $4,220,535 as at December 31, 2025 (June 30, 2025: $4,220,535). Total As at June 30, 2024 $ 1,920,269 Accretion 90,720 Remeasurement 164,476 Effect of foreign exchange 16,721 As at June 30, 2025 $ 2,192,186 Accretion 34,329 Remeasurement (344,253) Effect of foreign exchange (3,976) As at December 31, 2025 $ 1,878,286 As of December 31, 2025, the present value of estimated future cash flows required to settle the Company’s closure and decommissioning costs as of the reporting date was estimated at $1,878,286 (June 30, 2025 : $2,192,186) using a long-term US Dollar risk-free interest rate of 2.47% (June 30, 2025: 2.31%). 16. Commitments The Company is subject to contractual commitments related to royalties and the commercial production obligation as described in notes 12 and 14, respectively. 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 automotive equipment manufacturers (“OEMs”), entered a binding, multi-year 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. The Company 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 designates the Company as the sole supplier of c. 9,000tpa of intermediate AAM to MCC for a multi-year term from the commencement of production of the Company’s BAF. NextSource Materials Inc. Notes to the Unaudited Condensed Interim Consolidated Financial Statements For the three and six months ended December 31, 2025, and 2024 (All amounts expressed in US Dollars unless designated otherwise)
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17. Share capital As of December 31, 2025 , the Company had 185,583,064 common shares issued and outstanding ( June 30, 2025 : 184,911,107). The Company’s common shares have no par value, and the authorized share capital is composed of an unlimited number of common shares. The following changes occurred during the three and six months ended December 31, 2025: (a) The Company recorded an increase in Share Capital of $166,826 and corresponding decrease in Share-based compensation liability for 671,957 RSUs settled on November 28, 2025, related to short term incentives for non-executive employees (Note 19). (b) The Company recorded an increase in Share Capital of $121,056 for 600,000 stock options granted to the Directors of the Company on November 6, 2025. The grant date fair value of the options was CAD$0.28 (Note 18). The following changes occurred during the year ended June 30, 2025: (a) On October 11, 2024 , the Company closed the first tranche of a non-brokered private placement offering, issuing 27,728,100 common shares of the Company at a price of CAD $0.53 per share for an aggregate gross proceeds of $10,703,661 (CAD $14,695,893). The Company incurred issuance cost of $82,294 for net proceeds of $10,621,367. (b) On November 13, 2024 the Company closed a second and final tranche of the October 2024 announced non-brokered private placement offering, issuing an additional 1,360,000 common shares of the Company at a price of CAD $0.53 per share for aggregate gross proceeds of $524,990 (CAD$720,800). The Company incurred issuance cost of $48,410 for net proceeds of $476,580. In total the non-brokered private placement resulted in the issuance of 29,088,100 common shares of the Company at a price of CAD $0.53 per share for an aggregate gross proceeds of $11,228,651 (CAD$15,416,693). The Company incurred issuance cost in total of $130,704 for net proceeds of $11,097,947. 18. Stock options The Company determined the fair value of stock options using the Black-Scholes-Merton valuation model, which has several inputs including the closing market price, the exercise price, compound risk-free interest rate, the Company annualized share price volatility, and the number of years until expiration. The fair value is recorded in equity and expensed through the statements of operations and comprehensive loss over the vesting period. Each stock option entitles the holder to purchase one common share of the Company at the respective exercise price prior to, or on its expiration date. As of December 31, 2025 , the Company had 3,350,000 stock options outstanding ( June 30, 2025 : 2,750,000) with a weighted average expiration of 6.16 years (June 30, 2025: 8.00 years) exercisable into 3,350,000 common shares ( June 30, 2025: 2,750,000) at a weighted average exercise price of CAD$0.73 (June 30, 2025: CAD$0.89). Exercise Price As at As at Grant Date Vesting Date Expiration Date CAD June 30, 2025 Awarded Cancelled Exercised December 31, 2025 May 28, 2024 November 1, 2027 May 27, 2034 0.89 1,000,000 — — — 1,000,000 December 1, 2024 December 1, 2027 December 1, 2034 0.89 950,000 — — — 950,000 December 1, 2024 December 1, 2025 December 1, 2032 0.89 200,000 — — — 200,000 December 1, 2024 December 1, 2024 December 1, 2029 0.89 600,000 — — — 600,000 November 6, 2025 November 6, 2025 November 6, 2030 0.54 150,000 — — 150,000 November 6, 2025 November 6, 2025 November 6, 2030 0.54 150,000 — — 150,000 November 6, 2025 November 6, 2025 November 6, 2030 0.54 150,000 — — 150,000 November 6, 2025 November 6, 2025 November 6, 2030 0.54 150,000 — — 150,000 Total Stock Options issued 2,750,000 600,000 — — 3,350,000 On November 6, 2025, the Company granted 600,000 stock options exercisable at price CAD$0.54 that vested on November 6, 2025. The options were valued at $121,056 based on a risk-free rate of 2.39%, a term of 5 years, annualized volatility of 86.54% and a closing market price on December 31, 2025 of CAD$0.34. These stock options vested on November 6, 2025, and the value of the options has been expensed in the three months ended December 31, 2025. NextSource Materials Inc. Notes to the Unaudited Condensed Interim Consolidated Financial Statements For the three and six months ended December 31, 2025, and 2024 (All amounts expressed in US Dollars unless designated otherwise)
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19. Restricted share units (RSUs) The Company accounts for the RSUs as cash-settled as the holder has the option to take the RSU amounts in cash or equity, subject to agreement by the Company. As at December 31, 2025, an RSU obligation of $350,053 (June 30, 2025: $89,707) was accrued. As at December 31, 2025 As at June 30, 2025 Current portion of RSU obligations $ 259,939 $ 57,228 Long-term portion of RSU obligations 90,114 32,479 Total RSU Liability $ 350,053 $ 89,707 Cash settled RSU obligations are remeasured at fair value based on the closing market price of the Company’s common shares at each reporting date up to and including the settlement date, with changes in fair value recognized in the unaudited condensed interim consolidated statement of operations and comprehensive loss. As of December 31, 2025 , the Company had 7,103,570 RSUs outstanding ( June 30, 2025 : 800,000) that are subject to satisfying their respective vesting conditions. The RSUs have a weighted average time until vesting of 1.46 years (June 30, 2025: 3.46 years). Grant Date Vesting Date Expiration Date Vesting Condition As at June 30, 2025 Awarded Settled As at December 31, 2025 May 28, 2024 September 30, 2024 September 30, 2026 E 25,000 — 25,000 — May 28, 2024 December 31, 2024 December 31, 2026 E 25,000 — 25,000 — May 28, 2024 March 31, 2025 March 31, 2027 E 25,000 — 25,000 — May 28, 2024 June 30, 2025 June 30, 2027 E 25,000 — 25,000 — May 28, 2024 September 30, 2025 September 30, 2027 E 25,000 — 25,000 — May 28, 2024 December 31, 2025 December 31, 2027 E 25,000 — 25,000 — May 28, 2024 February 1, 2025 February 1, 2028 E,V 41,666 — 41,666 — May 28, 2024 March 31, 2026 March 31, 2028 E 25,000 — — 25,000 May 28, 2024 May 1, 2025 May 1, 2028 E,V 41,666 — 41,666 — May 28, 2024 June 30, 2026 June 30, 2028 E 25,000 — — 25,000 May 28, 2024 August 1, 2025 August 1, 2028 E,V 41,666 — 41,666 — May 28, 2024 September 30, 2026 September 30, 2028 E 25,000 — — 25,000 May 28, 2024 November 1, 2025 November 1, 2028 E,V 41,666 — 41,666 — May 28, 2024 December 31, 2026 December 31, 2028 E 25,000 — — 25,000 May 28, 2024 February 1, 2026 February 1, 2029 E,V 41,667 — — 41,667 May 28, 2024 March 31, 2027 March 31, 2029 E 25,000 — — 25,000 May 28, 2024 May 1, 2026 May 1, 2029 E,V 41,667 — — 41,667 May 28, 2024 June 30, 2027 June 30, 2029 E 25,000 — — 25,000 May 28, 2024 August 1, 2026 August 1, 2029 E,V 41,667 — — 41,667 May 28, 2024 November 1, 2026 November 1, 2029 E,V 41,667 — — 41,667 May 28, 2024 February 1, 2027 February 1, 2030 E,V 41,667 — — 41,667 May 28, 2024 May 1, 2027 May 1, 2030 E,V 41,667 — — 41,667 May 28, 2024 August 1, 2027 August 1, 2030 E,V 41,667 — — 41,667 May 28, 2024 November 1, 2027 November 1, 2030 E,V 41,663 — — 41,663 November 5, 2025 September 30, 2026 September 30, 2036 E — 1,859,558 — 1,859,558 November 5, 2025 September 30, 2027 September 30, 2037 E — 1,859,558 — 1,859,558 November 5, 2025 September 30, 2028 September 30, 2038 E — 1,859,580 — 1,859,580 November 5, 2025 November 28, 2025 November 28, 2035 E — 429,368 355,293 74,075 November 5, 2025 March 5, 2026 March 5, 2036 E — 967,467 — 967,467 Totals 800,000 6,975,531 671,957 7,103,570 Legend: E - Vesting conditional on employment on vesting date, V - Variable vesting date NextSource Materials Inc. Notes to the Unaudited Condensed Interim Consolidated Financial Statements For the three and six months ended December 31, 2025, and 2024 (All amounts expressed in US Dollars unless designated otherwise)
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The following changes occurred during the six months ended December 31, 2025. a. On September 30, 2024, a total of 25,000 RSUs vested. The vested RSU’s were settled through share issuance on November 28, 2025. b. On December 31, 2024, a total of 25,000 RSUs vested. The vested RSU’s were settled through share issuance on November 28, 2025. c. On February 1, 2025, a total of 41,667 RSUs vested. The vested RSU’s were settled through share issuance on November 28, 2025. d. On March 31, 2025, a total of 25,000 RSUs vested. The vested RSU’s were settled through share issuance on November 28, 2025. e. On May 1, 2025, a total of 41,667 RSUs vested. The vested RSU’s were settled through share issuance on November 28, 2025. f. On June 30, 2025, a total of 25,000 RSUs vested. The vested RSU’s were settled through share issuance on November 28, 2025. g. On August 1, 2025, a total of 41,667 RSUs vested. The vested RSU’s were settled through share issuance on November 28, 2025. h. On September 30, 2025, a total of 25,000 RSUs vested. The vested RSU’s were settled through share issuance on November 28, 2025. i. On November 1, 2025, a total of 41,667 RSUs vested. The vested RSU’s were settled through share issuance on November 28, 2025. j. On December 31, 2025, a total of 25,000 RSUs vested. The vested RSU’s were settled through share issuance on November 28, 2025. k. On November 5, 2025, a total of 429,368 RSU’s were granted and vested on November, 28, 2025. The vested RSU’s were settled through share issuance on November 28, 2025. l. On November 5, 2025, a total of 1,859,558 RSU’s were granted through the long-term incentive plan and will vest on September 30, 2026. Expiration date of September 30, 2036. m. On November 5, 2025, a total of 1,859,558 RSU’s were granted through the long-term incentive plan and will vest on September 30, 2027. Expiration date of September 30, 2037. n. On November 5, 2025, a total of 1,859,558 RSU’s were granted through the long-term incentive plan and will vest on September 30, 2028. Expiration date of September 30, 2038. o. On November 5, 2025, a total of 967,467 RSU’s were granted and will vest on March 5, 2026. Expiration date of March 5, 2036. The following changes occurred during the year ended June 30, 2025: a. On September 30, 2024, a total of 25,000 RSUs vested. The vested RSU’s were not settled. b. On December 31, 2024, a total of 25,000 RSUs vested. The vested RSU’s were not settled. c. On March 31, 2025, a total of 25,000 RSUs vested. The vested RSU’s were not settled. d. On June 30, 2025, a total of 25,000 RSU’s vested. The vested RSU’s were not settled. NextSource Materials Inc. Notes to the Unaudited Condensed Interim Consolidated Financial Statements For the three and six months ended December 31, 2025, and 2024 (All amounts expressed in US Dollars unless designated otherwise)
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20. General and administrative expenses Six months ended December 31, 2025 Six months ended December 31, 2024 Three months ended December 31, 2025 Three months ended December 31, 2024 Payroll and salaries $ 1,734,827 $ 1,856,520 $ 900,079 $ 1,062,277 Professional and legal 823,276 1,045,346 304,090 298,551 Consultants 130,212 968,274 64,960 484,133 General administration 726,090 464,838 159,292 133,970 Travel 239,950 281,011 177,578 106,652 Public company expenses 104,616 184,302 80,280 88,792 Sales and marketing — 64,989 — 31,921 Insurance 53,755 38,828 34,638 19,030 Total $ 3,812,726 $ 4,904,108 $ 1,720,917 $ 2,225,326 NextSource Materials Inc. Notes to the Unaudited Condensed Interim Consolidated Financial Statements For the three and six months ended December 31, 2025, and 2024 (All amounts expressed in US Dollars unless designated otherwise)
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21. Segment reporting The Company has two operating segments, consisting of mine development and BAF development. The Company’s President and Chief Executive Officer and Chief Financial Officer are the operating decision-makers and direct the allocation of resources to its segments. The Company’s reportable segments are presented as follows: Six months ended December 31, 2025 Six months ended December 31, 2024 Mine BAF Total Mine BAF Total Revenues $ 553,275 $ — $ 553,275 $ 51,589 $ — $ 51,589 Expenses Cost of Sales 767,066 — 767,066 31,286 — 31,286 General and administrative expenses 276,676 60,260 336,936 — — — BAF Evaluation costs — 2,151,893 2,151,893 — — — Write-down of inventory to net realizable value 5,912,771 — 5,912,771 — — — Finance costs 33,955 — 33,955 43,698 695,923 739,621 Depreciation — 5,544 5,544 — 271,864 271,864 Impairment of foreign VAT receivable — 27,547 27,547 1,013,356 — 1,013,356 Exploration and evaluation expenses 36,323 — 36,323 8,094 — 8,094 Madagascar Government Royalties 12,250 — 12,250 — — — Change in value of lease liability — — — — 25,761 25,761 Realized foreign exchange (gain)/loss (57) 2,940 2,883 — — — Unrealized foreign exchange loss 329,551 — 329,551 — — — Segment loss (6,815,260) (2,248,184) (9,063,444) (1,044,845) (993,548) (2,038,393) Other (Expenses)/Income General and administrative expenses (3,475,789) (4,904,108) Share-based compensation (300,814) (189,365) Depreciation (3,434) (4,411) Exploration and evaluation expenses (13,755) — Change in value of royalty obligation (1,069,054) 1,013,943 Change in value of commercial production obligation — 67,047 Realized foreign exchange loss (22,576) (329,567) Unrealized foreign exchange loss (14,101) (416,573) Finance cost (2,202,422) — Finance income 45,480 67,190 Loss before income taxes (16,119,909) (6,734,237) Current income tax expense (528,203) (162,788) Net loss (16,648,112) (6,897,025) Other comprehensive loss Translation adjustment for foreign (1,665,400) (1,548,558) Net loss and comprehensive loss $ (18,313,512) $ (8,445,583) NextSource Materials Inc. Notes to the Unaudited Condensed Interim Consolidated Financial Statements For the three and six months ended December 31, 2025, and 2024 (All amounts expressed in US Dollars unless designated otherwise)
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Three months ended December 31, 2025 Three months ended December 31, 2024 Mine BAF Total Mine BAF Total Revenues $ 132,397 $ — $ 132,397 $ 51,589 $ — $ 51,589 Expenses Cost of Sales 253,542 — 253,542 31,286 — 31,286 General and administrative expenses 60,873 26,109 86,982 — — — BAF Evaluation costs — 2,151,893 2,151,893 — — — Write-down of inventory to net realizable value 3,306,616 — 3,306,616 — — — Exploration and evaluation expenses 14,004 — 14,004 4,890 — 4,890 Madagascar Government Royalties 4,461 — 4,461 — — — Finance costs 11,303 — 11,303 43,698 352,814 396,512 Change in value of lease liability — — — — — — Depreciation — 3,041 3,041 137,344 137,344 Impairment of foreign VAT receivable — — — 606,286 — 606,286 Realized foreign exchange loss (gain) (142) 1,220 1,078 — — — Unrealized foreign exchange loss 344,826 42 344,868 — — — Segment loss (3,863,086) (2,182,305) (6,045,391) (634,571) (490,158) (1,124,729) Other Operating Expenses General and administrative expenses (1,633,934) (2,225,326) Share-based compensation (151,091) (285,145) Depreciation (1,534) (2,231) Exploration and evaluation expenses (7,028) — Change in value of royalty obligation (60,963) 189,877 Change in value of commercial production obligation — 43,513 Realized foreign exchange loss (9,967) (344,418) Unrealized foreign exchange loss (28,101) (273,113) Finance cost (1,231,546) — Finance income 16,256 13,421 Loss before income taxes (9,153,299) (4,008,151) Current income tax expense (289,624) (85,174) Net Loss (9,442,923) (4,093,325) Other comprehensive income Translation adjustment for foreign operations (1,644,645) (1,088,294) Net loss and comprehensive loss $ (11,087,568) $ (5,181,619) NextSource Materials Inc. Notes to the Unaudited Condensed Interim Consolidated Financial Statements For the three and six months ended December 31, 2025, and 2024 (All amounts expressed in US Dollars unless designated otherwise)
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21. Segment reporting (continued) The information by geographic region is as follows: Canada Mauritius Madagascar Total Cash and cash equivalents $ 2,293,077 $ 196,752 $ 492,234 $ 2,982,063 Amounts receivable 70,658 67,736 152,480 290,874 Inventories — — 5,453,096 5,453,096 Prepaid expenses 1,729,735 455 356,722 2,086,912 Prepayments and deposits — 700,000 183,462 883,462 Property, plant, equipment and development 53,318 12,054,572 57,411,335 69,519,225 Total assets as at December 31, 2025 $ 4,146,788 $ 13,019,515 $ 64,049,329 $ 81,215,632 Canada Mauritius Madagascar Total Cash and cash equivalents $ 2,460,621 $ 333,442 $ 487,705 $ 3,281,768 Amounts receivable 372,896 21,847 88,706 483,449 Inventories — — 6,013,127 6,013,127 Prepaid expenses 444,913 455 417,421 862,789 Prepayments and deposits — 700,000 189,184 889,184 Property, plant, equipment, and development 12,464 11,967,934 60,684,386 72,664,784 Total assets as at June 30, 2025 $ 3,290,894 $ 13,023,678 $ 67,880,529 $ 84,195,101 Property, plant and equipment in Mauritius represent BAF equipment, currently in storage. Property, plant and equipment in Madagascar represent the Molo Graphite Mine, processing plant, associated infrastructure and equipment. Madagascar mineral property included in Property Pant and equipment, includes Molo Graphite Mine and the Green Giant Vanadium project. 22. Related party transactions Parties are related if one party has the direct or indirect ability to control or exercise significant influence over the other party in making operating and financial decisions. Parties are also related if they are subject to common control or common significant influence. Related parties include the Company subsidiaries, significant shareholders, and key management. Vision Blue is a significant shareholder that owns 47.51% of the common shares. Key management consists of the Board of Directors, Chief Executive Officer, Chief Financial Officer, and Senior Vice Presidents. Related parties also include companies controlled by key management. Related party transactions occur when there is a transfer of economic resources or financial obligations between related parties. Related party transactions in the normal course of business that have commercial substance are initially measured at fair value. Balances and transactions between the Company and its wholly owned subsidiaries have been eliminated and are not disclosed in this note. The following key management related party transactions occurred during the following reporting periods: Six months ended December 31, 2025 Six Months Ended December 31, 2024 Three months ended December 31, 2025 Three Months Ended December 31, 2024 Payroll and benefits $ 1,025,059 $ 742,048 $ 567,116 $ 218,432 Management consulting fees — 194,125 — 101,125 Share-based compensation 300,814 189,365 151,091 285,145 $ 1,325,873 $ 1,125,538 $ 718,207 $ 604,702 NextSource Materials Inc. Notes to the Unaudited Condensed Interim Consolidated Financial Statements For the three and six months ended December 31, 2025, and 2024 (All amounts expressed in US Dollars unless designated otherwise)
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22. Related party transactions (continued) The following key management related party balances existed at the end of the following reporting periods: Related party transactions contained within As at December 31, 2025 As at June 30, 2025 Amounts receivable $ 88,764 $ 21,029 Current portion of Share-based compensation liability 259,939 57,228 Long-term portion of Share-based compensation liability 90,114 32,479 Borrowings from Vision Blue 29,281,634 15,437,022 Current portion of royalty obligations 2,846,250 1,897,500 Long term portion of royalty obligations 8,594,481 8,694,866 During the year ended June 30, 2025, Vision Blue participated in the private placement offering completed on October 15, 2024 by subscribing to 15,582,300 common shares for gross proceeds of $5,992,323 (CAD$8,258,619). Amounts receivable is for short-term loans to assist with the exercise of stock options and relocation. Accounts payable and accrued liabilities is for normal course accounts payable, accrued bonuses, and accrued director fees. The royalty obligations are owed to Vision Blue. 23. Capital management There were no changes in the Company's approach to capital management during the three and six months ended December 31, 2025. The Company’s investment policy is to invest excess cash in low risk financial instruments such as term deposits or by holding funds in high yield savings accounts with major Canadian banks. The Company is not subject to any externally imposed capital requirements. To date, the Company has funded operations by raising equity, issuing debt and obtaining royalty financing. The Company manages its capital structure (consisting of shareholders’ equity and debt obligations) on an ongoing basis and in response to changes in economic conditions and risk characteristics of its underlying assets. Changes to the capital structure can involve the issuance of new equity, obtaining working capital loans, construction financing, issuing debt, the acquisition or disposition of assets, or adjustments to the amounts held in cash, cash equivalents and short-term investments. Capital Resource Analysis As of December 31, 2025 , the Company had cash and cash equivalents of $2,982,063 which is insufficient to fund its working capital requirements (including current liabilities of $38,951,402) as well as ongoing general and administrative costs and anticipated capital and operating cash outflows. Refer to Note 2 basis of presentation and going concern. NextSource Materials Inc. Notes to the Unaudited Condensed Interim Consolidated Financial Statements For the three and six months ended December 31, 2025, and 2024 (All amounts expressed in US Dollars unless designated otherwise)
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24. Financial Instruments and Risk Management Financial instruments are exposed to certain financial risks, which may include liquidity risk, credit risk, interest rate risk, commodity price risk, and currency risk: Liquidity risk The following obligations have contractual maturities over the next twelve months and beyond: • Accounts payable and accrued liabilities, which are due within 30 days. • Minimum repayments under the royalty agreement that are due semi-annually on June 30 and December 31. • Commercial production obligation that is due upon the declaration of commercial production at the Molo Mine. • Lease payment obligations that are due annually. • Vision Blue drawdown credit facility is an on-demand borrowing since June 30, 2025. As of December 31, 2025 , the Company had cash and cash equivalents of $2,982,063 ( June 30, 2025 : $3,281,768) to settle current liabilities of $38,951,402 (June 30, 2025: $23,755,677). Contractual maturities of financial liabilities Due in the next 12 months Between 1-2 years Between 2-5 years More than 5 years Total contractual cash flows Accounts payable and accrued liabilities (note 10) $ 5,180,829 $ — $ — $ — $ 5,180,829 Royalty obligation (note 12) 2,846,250 1,897,500 5,692,500 4,743,750 15,180,000 Commercial obligation repayments (note 14) — 572,618 — — 572,618 Lease obligations (note 11) 1,382,750 1,266,687 3,582,955 19,706,174 25,938,566 Share-based compensation liability (note 19) 259,939 40,940 — — 300,879 Borrowings (note 13) 29,281,634 — — — 29,281,634 December 31, 2025 $ 38,951,402 $ 3,777,745 $ 9,275,455 $ 24,449,924 $ 76,454,526 For the year ended June 30, 2025: Contractual maturities of financial liabilities Due in the next 12 months Between 1-2 years Between 2-5 years More than 5 years Total contractual cash flows Accounts payable and accrued liabilities (note 10) $ 4,200,261 $ — $ — $ — $ 4,200,261 Royalty obligation (note 12) 1,897,500 1,897,500 1,897,500 10,436,250 16,128,750 Commercial obligation repayments (note 14) — 536,127 — — 536,127 Lease obligations (note 11) 1,400,976 1,315,116 1,267,183 24,076,472 28,059,747 Share-based compensation liability (note 19) 57,228 32,479 — — 89,707 Borrowings (note 13) 15,437,022 — — — 15,437,022 As at June 30, 2025 $ 22,992,987 $ 3,781,222 $ 3,164,683 $ 34,512,722 $ 64,451,614 Liquidity risk is the risk that the Company will not be able to meet its obligations associated with financial liabilities. Liquidity risk arises from the Company’s financial obligations and in the management of its assets, liabilities, and capital structure. To minimize liquidity risk, the Company has implemented cost control measures including a construction budget and the minimizing of discretionary expenditures unless the project has sufficient economic or geologic merit. In managing liquidity, the Company’s primary objective is to ensure the entity can continue as a going concern while obtaining sufficient funding to meet its obligations as they come due. The Company's ability to continue operations and fund development is dependent on management's ability to secure additional financing. Although management is actively pursuing additional funding, and while it has been successful at doing so in the past, there can be no assurance it will be able to do so in the future. As such, the ability of the Company to raise additional funding in order to meet their obligations as they come due results in a material uncertainty that may cast significant doubt regarding the Company's ability to continue as a going concern (Note 2). Based on management’s past ability to manage its working capital, the Company believes it will be able to satisfy its current and long-term obligations as they become due. NextSource Materials Inc. Notes to the Unaudited Condensed Interim Consolidated Financial Statements For the three and six months ended December 31, 2025, and 2024 (All amounts expressed in US Dollars unless designated otherwise)
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24. Financial Instruments and Risk Management (continued) The Company manages this risk by regularly evaluating its liquid financial resources to fund current and long-term obligations and to meet its capital commitments in a cost-effective manner. The main factors that affect liquidity include working capital requirements, capital-expenditure requirements, and equity capital market conditions. The Company’s liquidity requirements are met through a variety of sources, including cash and cash equivalents, debt, and equity capital markets. Additional funds will be required for general and administrative costs, general working capital, construction of the BAF, and development costs related to the operation and expansion of the Molo Mine. Credit risk The Company has credit risk arising from refundable taxes classified as amounts receivable as well as outstanding receivables from commercial sales. The Company has credit risk arising from officer loans classified as amounts receivable. The Company has credit risk arising from the potential from counterparty default on cash and cash equivalents held on deposit with financial institutions. The Company manages this risk by ensuring that deposits are only held with large Canadian banks and financial institutions, whereas any offshore deposits are held with reputable foreign financial institutions. The Company also limits the deposits held with foreign financial institutions. Interest rate risk This is the sensitivity of the fair value or of the future cash flows of a financial instrument to changes in interest rates. The Company does not have any financial assets or liabilities that are subject to variable interest rates other than the interest earned on cash balances held in Canadian banks, which is subject to variable interest rate risk. Commodity price risks This is the sensitivity of the fair value of, and future cash flows, generated from its mineral projects to changes in commodity prices. The Molo Mine property and assets under construction are carried at historical cost. As a result, the recoverability of the carrying values are exposed to commodity price risks. The royalty obligation remeasurement includes an estimate of the present value of royalties paid on graphite revenues and as a result, is exposed to graphite price risk with a sensitivity to a 10% change in graphite prices of 1%. Graphite does not have an established forward pricing or futures market that could be used to hedge against this exposure. The Company manages this risk by monitoring mineral and commodity price trends to determine the appropriate timing for funding the development, acquisition or disposition of its mineral exploration and development project Currency risk This is the sensitivity of the fair value or of the future cash flows of financial instruments to changes in foreign exchange rates. The Company transacts in currencies other than the US dollar, including the Canadian dollar, the Madagascar Ariary, the Mauritius Rupee, United Arab Emirates dirham and the South African Rand . The Company purchases services and has certain salary commitments in those foreign currencies. The Company also has monetary and financial instruments that may fluctuate due to changes in foreign exchange rates. Derivative financial instruments are not used to reduce exposure to fluctuations in foreign exchange rates. The Company is not sensitive to foreign exchange exposure on revenues since it has not made commitments to deliver products quoted in foreign currencies. Since construction of the Molo Mine, the Company is sensitive to foreign exchange risk arising from the translation of the financial statements of subsidiaries with a functional currency other than the US dollar, whereby changes in the carrying amounts of certain assets, liabilities and equity are measured through other comprehensive loss. NextSource Materials Inc. Notes to the Unaudited Condensed Interim Consolidated Financial Statements For the three and six months ended December 31, 2025, and 2024 (All amounts expressed in US Dollars unless designated otherwise)
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24. Financial Instruments and Risk Management (continued) As at December 31, 2025, the Company had the following balances in foreign currency: As at December 31, 2025 As at June 30, 2025 Cash and cash equivalents CAD $ 230,398 $ 198,261 Cash and cash equivalents MGA 44,761 478,361 Cash and cash equivalents MUR 107,407 156,404 Amounts receivable CAD 44,455 56,176 Amounts receivable MGA 243,713 (15,668) Amounts receivable MUR 21,029 — Amounts receivable ZAR (7,876) — Prepaid expenses CAD 80,954 131,784 Prepaid expenses MGA 215,686 630,656 Accounts payable and accrued liabilities CAD (978,823) (972,460) Accounts payable and accrued liabilities MGA (1,774,148) (2,197,248) Accounts payable and accrued liabilities MUR 31,273 111,749 Accounts payable and accrued liabilities GBP (22,680) 49,429 Accounts payable and accrued liabilities ZAR (75,330) (169,873) Accounts payable and accrued liabilities EUR (3,214) — Accounts payable and accrued liabilities AED (409,748) — Commercial production obligations CAD (572,618) $ (536,127) Current portion of lease obligations MGA (1,382,750) $ (1,400,976) Net foreign exchange exposure in USD $ (4,207,511) $ (3,479,532) Impact of 10% increase in CAD/USD exchange rates CAD ($119,563) ($112,236) Impact of 10% increase in MGA/USD exchange rates MGA ($265,274) ($250,488) Impact of 10% increase in AED/USD exchange rates AED ($40,975) — Impact of 10% increase in MUR/USD exchange rates MUR $15,971 $26,815 Impact of 10% increase in ZAR/USD exchange rates ZAR ($8,321) ($16,987) Impact of 10% increase in EUR/USD exchange rates EUR ($321) — Impact of 10% increase in GBP/USD exchange rates GBP ($2,268) $4,943 Total $ (420,751) $ (347,953) As at December 31, 2025, the Company estimated that a 10% decrease of the USD versus foreign exchange rates would result in a gain of $ 420,751 (June 30, 2025: gain of $347,953) and a 10% increase in the USD versus foreign exchange rates would result in a loss of $420,751 (June 30, 2025: loss of $347,953). NextSource Materials Inc. Notes to the Unaudited Condensed Interim Consolidated Financial Statements For the three and six months ended December 31, 2025, and 2024 (All amounts expressed in US Dollars unless designated otherwise)
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25. Subsequent events On February 2, 2026, the Company drew down $2.5 million from the amended Vision Blue drawdown credit facility. This amended facility was fully drawn on this date (See note 13). On February 9, 2026, the Company launched a “best-efforts” private placement of 58,823,500 units of the Company (the "Units") at a price of $0.425 per Unit for aggregate gross proceeds of CAD$24,999,987.50. The Company also entered into an amended and restated loan facility with Vision Blue (the “Amended Facility”) which increased the maximum capacity under the existing facility from $30,000,000 to $50,000,000. Drawdowns remain at the discretion of Vision Blue and there is no assurance that additional advances will be available to the Company under the Amended Facility. However, the Company expects that, at closing of the Offering, the Company and Vision Blue will enter into a consent agreement under which Vision Blue will commit to advancing $5,000,000 under the Amended Facility subject to the satisfaction of certain conditions precedent and will extend the maturity date under the Amended Facility to the date that is 12 months and 1 day following the Closing Date. The amendment of the facility will result in the net working capital as at December 31, 2025, to change from a deficit of $27,254,995 to a surplus of $2,026,639 (Note 23). NextSource Materials Inc. Notes to the Unaudited Condensed Interim Consolidated Financial Statements For the three and six months ended December 31, 2025, and 2024 (All amounts expressed in US Dollars unless designated otherwise)