NMG Pays Interest in Shares, Signals Strategic Cash Preservation

MONTRÉAL, QC – January 02, 2026 – Nouveau Monde Graphite Inc. (NMG) has settled its fourth-quarter 2025 interest payment to a key investor not with cash, but with company stock, a move that underscores its strategy of preserving capital as it advances its ambitious vertically integrated graphite production plans in Québec.

The company announced it will issue 131,659 common shares to Investissement Québec (IQ), the investment arm of the provincial government. Priced at US$2.44 per share, the issuance covers an aggregate interest payment of US$321,248 due on an unsecured convertible note originally part of a 2022 private placement. This transaction, pending approval from the New York and Toronto stock exchanges, provides a clear window into NMG's financial management priorities.

A Calculated Move to Conserve Capital

For a development-stage company like Nouveau Monde Graphite, cash is king. The decision to pay interest in shares is a direct reflection of this reality. While the company's stock has seen significant gains over the past year, its underlying financials, with a reported negative EBITDA of over $40 million, highlight the capital-intensive nature of its current phase. NMG is focused on the enormous task of building North America's first fully integrated carbon-neutral battery anode material production system, a venture that requires substantial and sustained investment.

The interest payment stems from a US$50 million private placement of convertible notes that closed in November 2022, in which Investissement Québec participated with a US$12.5 million subscription. The terms of these notes, which carry a three-year maturity, were structured to give NMG flexibility, explicitly allowing for interest to be paid in common shares at the company's discretion, subject to exchange approval. By exercising this option, NMG avoids a cash outlay, retaining crucial funds for its operational runway and project development.

This move allows the company to direct its liquid assets toward more critical, value-creating activities. This includes advancing detailed engineering, procuring long-lead-time equipment, and funding other critical-path activities for its two cornerstone projects: the Matawinie Mine and the Bécancour Battery Material Plant. For investors, this signals a management team intensely focused on bringing its assets to commercial production, prioritizing long-term project execution over short-term cash expenditures.

Deepening a Strategic Provincial Partnership

The recipient of the shares, Investissement Québec, is far more than a typical creditor or shareholder. As a holder of more than 10% of NMG's securities, IQ is a strategic partner, and this transaction further cements the symbiotic relationship between the aspiring graphite producer and the province of Québec. IQ's mandate is to foster economic development and support key industries, and its continued backing of NMG is a cornerstone of Québec's strategy to become a leader in the global battery supply chain.

Investissement Québec's financial commitment to NMG has been significant and multi-faceted. Beyond the initial US$12.5 million convertible note in 2022, IQ participated in another major financing round in December 2024. In that private placement, both IQ and the federally-backed Canada Growth Fund Inc. invested approximately US$25 million each, acquiring millions of common shares and warrants. This brought IQ's total direct investment in NMG to roughly US$37.5 million, demonstrating a robust and sustained belief in the company's vision.

By accepting payment in shares, Investissement Québec signals its long-term alignment with NMG's growth trajectory. This is not merely a financial transaction but a reaffirmation of a public-private partnership aimed at building a strategic industrial asset. This continued support from a government-backed entity provides NMG with a significant degree of stability and credibility as it navigates the path to full-scale production and seeks further project financing.

Navigating Governance and Shareholder Value

Because Investissement Québec is a major shareholder, the issuance of shares to settle an interest payment is formally classified as a “transaction with a related party” under Canadian securities laws, specifically Regulation 61-101. This regulation is designed to protect minority shareholders by ensuring that transactions with insiders are fair and transparent.

However, NMG has determined that the transaction is exempt from the more stringent requirements of the regulation, such as obtaining a formal valuation or securing minority shareholder approval. The company is invoking exemptions available for transactions where the value does not exceed 25% of the company's total market capitalization. With a value of just over US$321,000, the interest payment falls comfortably below this threshold, allowing for a more streamlined process.

For existing shareholders, the primary concern with such transactions is dilution. The issuance of 131,659 new shares will have a minimal dilutive effect, representing approximately 0.055% of the company's nearly 240 million shares outstanding. While this single event is negligible, it is part of a broader strategy of using equity to fund growth and obligations. Investors have so far responded positively to the company's progress, with NMG's stock appreciating over 50% in the past year. This transaction, and the cash preservation it enables, is likely to be viewed as a prudent step in protecting and ultimately enhancing long-term shareholder value by ensuring the company's ambitious projects remain on track.

The Path to a North American Graphite Hub

This routine interest payment is a small but telling piece of a much larger puzzle: NMG's quest to establish a secure, sustainable, and local supply of graphite for the electric vehicle and energy storage markets. The company is concurrently developing its Matawinie Mine, set to be one of the largest graphite operations in the Western world, and its advanced Bécancour Battery Material Plant, which will process the mined concentrate into coated spherical purified graphite (CSPG) for battery anodes.

The recent capital infusions from Investissement Québec and the Canada Growth Fund are critical catalysts for these projects, pushing them toward a Final Investment Decision (FID). Successfully reaching commercial production would position NMG as a strategic supplier in a market currently dominated by China. By leveraging flexible financing arrangements, like paying interest in shares, NMG is carefully managing its resources to navigate the final development hurdles. This latest move demonstrates a disciplined financial approach aimed squarely at achieving its ultimate goal of becoming a cornerstone of North America's green energy transition.