Document:

Exhibit
4.12 

 

 

     

     

    

 

 

 

	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 consolidated financial statements	5-31

 

     

     

    

 

 

 

Independent
auditor’s report

 

To
the Shareholders of Nouveau Monde Graphite Inc.

 

 

Our
opinion

 

In
our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position
of Nouveau Monde Graphite Inc. and its subsidiaries (together, the Company) as at December 31, 2020 and 2019 and January 1, 2019,
and its financial performance and its cash flows for the years ended December 31, 2020 and 2019 in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS).

 

What
we have audited

The
Company’s consolidated financial statements comprise:

 

	•	the consolidated statements of financial position as
at December 31, 2020 and 2019 and January 1, 2019;

 

	•	the consolidated statements of loss and comprehensive
loss for the years ended December 31, 2020 and 2019;

 

	•	the consolidated statements of changes in equity for
the years ended December 31, 2020 and 2019;

 

	•	the consolidated statements of cash flows for the years
ended December 31, 2020 and 2019; and

 

	•	the notes to consolidated financial statements, which
include significant accounting policies and other explanatory information.

 

 

Basis
for opinion

 

We
conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards
are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section
of our report.

 

We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

Independence

We
are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated
financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements.

 

PricewaterhouseCoopers
LLP/s.r.l./s.e.n.c.r.l.

1250
René-Lévesque Boulevard West, Suite 2500, Montréal, Quebec, Canada H3B 4Y1

T: +1 514 205 5000, F: +1 514
876 1502

 

“PwC”
refers to PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l., an Ontario limited liability partnership.

 

     

     

    

 

 

 

 

Other
information

 

Management
is responsible for the other information. The other information comprises the Management’s Discussion and Analysis.

 

Our
opinion on the consolidated financial statements does not cover the other information, and we do not express any form of assurance
conclusion thereon.

 

In
connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified
above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements
or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

 

If,
based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact. We have nothing to report in this regard.

 

 

Responsibilities
of management and those charged with governance for the consolidated financial statements

 

Management
is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS, and
for such internal control as management determines is necessary to enable the preparation of consolidated financial statements
that are free from material misstatement, whether due to fraud or error.

 

In
preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

 

Those
charged with governance are responsible for overseeing the Company’s financial reporting process.

 

 

Auditor’s
responsibilities for the audit of the consolidated financial statements

 

Our
objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing
standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements.

 

     

     

    

 

 

 

As
part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:

 

	•	Identify and assess the risks of material misstatement
of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting
a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.

 

	•	Obtain an understanding of internal control relevant
to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Company’s internal control.

 

	•	Evaluate the appropriateness of accounting policies
used and the reasonableness of accounting estimates and related disclosures made by management.

 

	•	Conclude on the appropriateness of management’s
use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Company to cease to continue as a going concern.

 

	•	Evaluate the overall presentation, structure and content
of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent
the underlying transactions and events in a manner that achieves fair presentation.

 

	•	Obtain sufficient appropriate audit evidence regarding
the financial information of the entities or business activities within the Company to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible
for our audit opinion.

 

     

     

    

 

 

 

We
communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant
audit findings, including any significant deficiencies in internal control that we identify during our audit.

 

We
also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards.

 

The
engagement partner on the audit resulting in this independent auditor’s report is Marc-Stéphane Pennee.

 

/s/PricewaterhouseCoopers
LLP

 

Montréal,
Quebec

April 6, 2021

 

     

     

    

 

 

 

NOUVEAU
MONDE GRAPHITE INC.

Consolidated
statements of financial position

(Amount
expressed in thousands of Canadian dollars) 

 

Consolidated
statements of financial position

 

	 	 	Notes	 	 	December 31, 2020	 	 	December
31, 2019

 (Adjusted note 27)
 
	 	 	January
1, 2019

 (Adjusted note 27)
 
	 
	ASSETS	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	CURRENT	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cash	 	 	 	 	 	 	4,520	 	 	 	4,077	 	 	 	3,794	 
	Grants and other receivables	 	 	11	 	 	 	829	 	 	 	233	 	 	 	236	 
	Restricted cash	 	 	 	 	 	 	158	 	 	 	158	 	 	 	-	 
	Investment	 	 	 	 	 	 	-	 	 	 	22	 	 	 	20	 
	Sales taxes receivable	 	 	 	 	 	 	736	 	 	 	668	 	 	 	979	 
	Tax credits receivable	 	 	 	 	 	 	3,958	 	 	 	4,151	 	 	 	1,339	 
	Prepaid expenses	 	 	 	 	 	 	215	 	 	 	300	 	 	 	53	 
	Total current assets	 	 	 	 	 	 	10,416	 	 	 	9,609	 	 	 	6,421	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	NON-CURRENT	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Tax credits receivable	 	 	 	 	 	 	3,802	 	 	 	2,203	 	 	 	2,812	 
	Property and equipment assets	 	 	7	 	 	 	4,207	 	 	 	2,872	 	 	 	1,289	 
	Intangible assets	 	 	8	 	 	 	920	 	 	 	1,526	 	 	 	2,127	 
	Right-of-use assets	 	 	9	 	 	 	1,067	 	 	 	563	 	 	 	-	 
	Restricted cash and deposits	 	 	 	 	 	 	744	 	 	 	621	 	 	 	779	 
	Total non-current assets	 	 	 	 	 	 	10,740	 	 	 	7,785	 	 	 	7,007	 
	Total assets	 	 	 	 	 	 	21,156	 	 	 	17,394	 	 	 	13,428	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	LIABILITIES	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	CURRENT	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Accounts payables and accrued liabilities	 	 	10	 	 	 	6,988	 	 	 	4,908	 	 	 	5,786	 
	Deferred grants	 	 	11	 	 	 	1,511	 	 	 	-	 	 	 	-	 
	Current portion of lease liabilities	 	 	12	 	 	 	295	 	 	 	459	 	 	 	-	 
	Borrowings	 	 	13	 	 	 	1,793	 	 	 	4,502	 	 	 	931	 
	Total current liabilities	 	 	 	 	 	 	10,587	 	 	 	9,869	 	 	 	6,717	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	NON-CURRENT	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Asset retirement obligation	 	 	 	 	 	 	621	 	 	 	621	 	 	 	621	 
	Borrowings	 	 	 	 	 	 	-	 	 	 	-	 	 	 	2,377	 
	Lease liabilities	 	 	12	 	 	 	781	 	 	 	150	 	 	 	-	 
	Convertible bond	 	 	14	 	 	 	14,505	 	 	 	-	 	 	 	-	 
	Other Liabilities	 	 	 	 	 	 	-	 	 	 	-	 	 	 	448	 
	Total non-current liabilities	 	 	 	 	 	 	15,907	 	 	 	771	 	 	 	3,446	 
	Total liabilities	 	 	 	 	 	 	26,494	 	 	 	10,640	 	 	 	10,163	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	EQUITY (DEFICIENCY)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Share capital	 	 	15.1	 	 	 	60,537	 	 	 	56,184	 	 	 	36,243	 
	Warrants	 	 	15.3	 	 	 	867	 	 	 	2,224	 	 	 	4,780	 
	Contributed surplus	 	 	 	 	 	 	9,894	 	 	 	7,368	 	 	 	4,219	 
	Equity component of convertible bond	 	 	14	 	 	 	364	 	 	 	-	 	 	 	 	 
	Deficit	 	 	 	 	 	 	(77,000	)	 	 	(59,022	)	 	 	(41,977	)
	Total equity (deficiency)	 	 	 	 	 	 	(5,338	)	 	 	6,754	 	 	 	3,265	 
	Total liabilities and equity (deficiency)	 	 	 	 	 	 	21,156	 	 	 	17,394	 	 	 	13,428	 
	Commitments	 	 	25	 	 	 	 	 	 	 	 	 	 	 	 	 
	Subsequent Events	 	 	26-27	 	 	 	 	 	 	 	 	 	 	 	 	 

 

APPROVED
BY THE BOARD OF DIRECTORS

(s)
Eric Desaulniers – “Director”

(s)
Daniel Buron – “Director”

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

    1

     

    

 

NOUVEAU
MONDE GRAPHITE INC.

Consolidated statements of loss and comprehensive loss

(Amount expressed in thousands of Canadian
dollars, except per share amount) 

 

Consolidated
statements of loss and comprehensive loss

 

	 	 	 	 	 	For the years ended	 
	 	 	Notes	 	 	December 31, 2020
$	 	 	December 31, 2019
(Adjusted, note 27)$	 
	EXPENSES	 	 	 	 	 	 	 	 	 
	Exploration and evaluation expenses	 	 	16	 	 	 	10,340	 	 	 	9,832	 
	Value added products expenses	 	 	17	 	 	 	2,911	 	 	 	1,605	 
	General and administrative expenses	 	 	18	 	 	 	7,770	 	 	 	5,804	 
	Net smelter royalty	 	 	13	 	 	 	(4,306	)	 	 	-	 
	Operating loss (income)	 	 	 	 	 	 	16,715	 	 	 	17,241	 
	Net financial costs	 	 	19	 	 	 	1,263	 	 	 	252	 
	Loss before tax	 	 	 	 	 	 	17,978	 	 	 	17,493	 
	Deferred tax recovery	 	 	20	 	 	 	-	 	 	 	(448	)
	Net loss and comprehensive loss	 	 	 	 	 	 	17,978	 	 	 	17,045	 
	Basic and diluted loss per share	 	 	15.2-26	 	 	 	(0.684	)	 	 	(0.750	)
	Weighted average number of shares outstanding	 	 	26	 	 	 	26,287,106	 	 	 	22,723,974	 

 

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

    2

     

    

 

 

NOUVEAU
MONDE GRAPHITE INC.

Consolidated
statements of changes in equity

(Amount
expressed in thousands of Canadian dollars, except per share amount)

 

Consolidated
statements of changes in equity

 

	 	 	Notes	 	 	Number	 	 	Share
                                         capital

$

	 
 
	 	Warrants

$

	 
 
	 	Contributed 

surplus

$

	 
 
	 	Equity
                                         component of convertible

bond

$

	 
 
	 	Deficit

$

	 
 
	 	Total
                                         equity (deficiency)

$

	 
 

	Balance as at January 1, 2020 – as previously reported	 	 	 	 	 	 	261,782,814	 	 	 	56,184	 	 	 	2,224	 	 	 	7,368	 	 	 	-	 	 	 	(28,417	)	 	 	37,359	 
	Cumulative effect - change in accounting policy	 	 	27	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(30,605	)	 	 	(30,605	)
	Balance adjusted as at January 1, 2020	 	 	 	 	 	 	261,782,814	 	 	 	56,184	 	 	 	2,224	 	 	 	7,368	 	 	 	-	 	 	 	(59,022	)	 	 	6,754	 
	Warrants expired	 	 	15.3	 	 	 	-	 	 	 	-	 	 	 	(836	)	 	 	836	 	 	 	-	 	 	 	-	 	 	 	-	 
	Warrants exercised	 	 	15.3	 	 	 	8,722,914	 	 	 	3,574	 	 	 	(521	)	 	 	-	 	 	 	-	 	 	 	-	 	 	 	3,053	 
	Options exercised	 	 	15.6	 	 	 	1,450,000	 	 	 	572	 	 	 	-	 	 	 	(132	)	 	 	-	 	 	 	-	 	 	 	440	 
	Share-based payment	 	 	15.6	 	 	 	1,037,587	 	 	 	208	 	 	 	-	 	 	 	1,822	 	 	 	-	 	 	 	-	 	 	 	2,030	 
	Share issue costs	 	 	 	 	 	 	-	 	 	 	(1	)	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(1	)
	Convertible bond	 	 	14	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	364	 	 	 	-	 	 	 	364	 
	Net loss and comprehensive loss	 	 	 	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(17,978	)	 	 	(17,978	)
	Balance as at December 31, 2020	 	 	 	 	 	 	272,993,315	 	 	 	60,537	 	 	 	867	 	 	 	9,894	 	 	 	364	 	 	 	(77,000	)	 	 	(5,338	)

 

	 	 	Notes	 	 	Number	 	 	Share
                                         capital

$

	 
 
	 	Warrants

$

	 
 
	 	Contributed
                                         surplus

$

	 
 
	 	Deficit
                                         (Adjusted, note 27)

$

	 
 
	 	Total
                                         equity

$

	 
 

	Balance as at January 1, 2019 – as previously reported	 	 	 	 	 	 	175,311,126	 	 	 	36,243	 	 	 	4,780	 	 	 	4,219	 	 	 	(21,586	)	 	 	3,264	 
	Cumulative effect - change in accounting policy	 	 	27	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(20,391	)	 	 	(20,391	)
	Balance adjusted as at January 1, 2019	 	 	 	 	 	 	175,311,126	 	 	 	36,243	 	 	 	4,780	 	 	 	4,219	 	 	 	(41,977	)	 	 	3,264	 
	Shares issued from private placement	 	 	15.1	 	 	 	86,170,213	 	 	 	20,250	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	20,250	 
	Warrants expired	 	 	15.3	 	 	 	-	 	 	 	-	 	 	 	(2,573	)	 	 	2,573	 	 	 	-	 	 	 	-	 
	Options exercised	 	 	15.6	 	 	 	250,000	 	 	 	79	 	 	 	-	 	 	 	(29	)	 	 	-	 	 	 	50	 
	Shares issued for consulting fees	 	 	15.1	 	 	 	51,475	 	 	 	14	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	14	 
	Share-based payment	 	 	15.6	 	 	 	-	 	 	 	-	 	 	 	17	 	 	 	605	 	 	 	-	 	 	 	622	 
	Share issue costs	 	 	15.1	 	 	 	-	 	 	 	(401	)	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(401	)
	Net loss and comprehensive loss	 	 	 	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(17,045	)	 	 	(17,045	)
	Balance as at December 31, 2019	 	 	 	 	 	 	261,782,814	 	 	 	56,184	 	 	 	2,224	 	 	 	7,368	 	 	 	(59,022	)	 	 	6,754	 

 

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

    3

     

    

 

 

NOUVEAU
MONDE GRAPHITE INC.

Consolidated statements of cash flows

(Amount expressed in thousands of Canadian dollars) 

 

Consolidated
statements of cash flows

 

	 	 	 	 	For the years ended
	 	 	Notes	 	 	December
                                         31, 2020

$ 

	 
	 	December
                                         31, 2019

(Adjusted
note 27)$

	 
 

	OPERATING ACTIVITIES	 	 	 	 	 	 	 	 	 	 	 	 
	Net loss	 	 	 	 	 	 	(17,978	)	 	 	(17,045	)
	Depreciation and amortization	 	 	7-9	 	 	 	1,202	 	 	 	1,082	 
	Loss (gain) on disposal of investment	 	 	 	 	 	 	22	 	 	 	(3	)
	Loss on asset disposal	 	 	7	 	 	 	2	 	 	 	-	 
	Deferred income tax expenses	 	 	 	 	 	 	-	 	 	 	(448	)
	Share-based compensation	 	 	15.6	 	 	 	2,030	 	 	 	637	 
	Financial costs	 	 	 	 	 	 	1,114	 	 	 	137	 
	Net smelter royalty	 	 	13	 	 	 	(4,306	)	 	 	-	 
	Net change in working capital	 	 	21	 	 	 	(135	)	 	 	(3,014	)
	Cash flows used in operating activities	 	 	 	 	 	 	(18,049	)	 	 	(18,654	)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	INVESTING ACTIVITIES	 	 	 	 	 	 	 	 	 	 	 	 
	Additions to property, plant, and equipment assets	 	 	7	 	 	 	(1,269	)	 	 	(1,673	)
	Restricted cash and deposits	 	 	 	 	 	 	(123	)	 	 	-	 
	Tax credits and grants received	 	 	7	 	 	 	731	 	 	 	-	 
	Cash flows used in investing activities	 	 	 	 	 	 	(661	)	 	 	(1,673	)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	FINANCING ACTIVITIES	 	 	 	 	 	 	 	 	 	 	 	 
	Proceeds from the issuance of private placement	 	 	15.1	 	 	 	-	 	 	 	20,250	 
	Proceeds from convertible bond, net of issue costs	 	 	13	 	 	 	14,786	 	 	 	-	 
	Proceeds from debt, net of issue costs	 	 	13	 	 	 	3,781	 	 	 	2,000	 
	Repayment of borrowings and lease liabilities	 	 	12, 13	 	 	 	(2,906	)	 	 	(1,289	)
	Proceeds from the exercise of warrants	 	 	15.3	 	 	 	3,053	 	 	 	-	 
	Proceeds from the exercise of stock options	 	 	15.6	 	 	 	440	 	 	 	50	 
	Share issue costs	 	 	 	 	 	 	(1	)	 	 	(401	)
	Cash flows from financing activities	 	 	 	 	 	 	19,153	 	 	 	20,610	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net change in cash	 	 	 	 	 	 	443	 	 	 	283	 
	Cash at the beginning of the year	 	 	 	 	 	 	4,077	 	 	 	3,794	 
	Cash at the end of the year	 	 	 	 	 	 	4,520	 	 	 	4,077	 
	Additional information	 	 	21	 	 	 	 	 	 	 	 	 

 

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

    4

     

    

		NOUVEAU
    MONDE GRAPHITE INC.
	 	Notes to consolidated
    financial statements
	 	(Amount expressed
    in thousands of Canadian dollars)

 

Notes
to consolidated 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 NOU on the TSX Venture Exchange, NMGRF on the OTCQX Market and NM9 on the Frankfurt
Stock Exchange. The Company’s registered office is located at 331 Brassard Street, Saint-Michel-des-Saints, Québec,
Canada, J0K 3B0.

 

As
at December 31, 2020, the Company had a negative working capital of $171, had an accumulated deficit of $77,000, and had incurred
a loss of $17,978 for the year then ended. Working capital included current tax credits receivable of $3,958 and cash of

$4,520.

 

With
the financing completed in January 2021 (described in note 26) 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 consolidated financial statements have been prepared in accordance with the International Financial Reporting
Standards (“IFRS”), as published by the International Accounting Standards Board (“IASB”).

 

The
accounting policies set out in note 4 were consistently applied to all years presented in these consolidated financial statements.
Refer to note 27 for the voluntary change in accounting policy that occurred during 2020.

 

The
consolidated financial statements for the year ended December 31, 2020 (including comparative statements) were approved and authorized
for publication by the Board of Directors on April 6, 2021.

 

		3.	NEW
                                         ACCOUNTING STANDARDS

 

Amendments
to IAS 1 Presentation of Financial Statements

 

The
IASB has made amendments to IAS 1 Presentation of Financial Statements which use a consistent definition of materiality
throughout IFRS and the Conceptual Framework for Financial Reporting, clarify when information is material and incorporate
some of the guidance in IAS 1 about immaterial information. In particular, the amendments clarify that information is material
if omitting, misstating, or obscuring it could reasonably be expected to influence decisions that the primary users of general-purpose
financial statements make based on those financial statements. Materiality depends on the nature or magnitude of information,
or both. An entity assesses whether information, either individually or in combination with other information, is material in
the context of its financial statements taken as a whole. The Company adopted IAS 1 on January 1, 2020, which did not have a significant
impact on the consolidated financial statements disclosures.

 

    5

     

    

 

		NOUVEAU
    MONDE GRAPHITE INC.
	 	Notes to consolidated
    financial statements
	 	(Amount expressed
    in thousands of Canadian dollars)

 

		4.	SIGNIFICANT
                                         ACCOUNTING POLICIES

 

		4.1	BASIS
                                         OF CONSOLIDATION

 

The
Company’s consolidated financial statements consolidate those of the parent company and its subsidiary. The parent controls
a subsidiary if it is exposed, or has rights, to variable returns from its involvement with the subsidiary, and could affect those
returns through its power over the subsidiary.

 

All
transactions and balances between group companies are eliminated upon consolidation, including unrealized gains and losses on
transactions between group companies. Amounts reported in the financial statements of the subsidiary have been adjusted where
necessary to ensure consistency with the accounting policies adopted by the Company.

 

Profit
and loss and other comprehensive income of subsidiaries acquired or sold during the period are recognized from the effective date
of the acquisition, or up to the effective date of disposal, as applicable.

 

Subsidiary

 

Information
on the Company’s subsidiaries as at December 31, 2020, all of which are wholly-owned, is as follows:

 

	NAME
    OF SUBSIDIARY	 	PRINCIPAL
    ACTIVITY	 	COUNTRY
                                         OF
 INCORPORATION
	 	YEAR
                                         OF 

                                         INCORPORATION
	 
	Quartier
    Nouveau Monde Inc.	 	Real
    estate company	 	Canada	 	2017	 
	Nouveau
    Monde Europe LTD	 	Trading
    company	 	England
    and Wales	 	2020	 

 

		4.2	FUNCTIONAL
                                         AND REPORTING CURRENCY

 

The
Group’s consolidated financial statements are presented in Canadian dollars, which is also the functional currency of the
parent company and its subsidiaries and the presentation currency.

 

Transactions
in foreign currencies are initially recorded at their respective functional currency spot rates at the date the transaction. Monetary
assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the
reporting date. All differences are taken to the statement of loss and comprehensive loss.

 

Non-monetary
items that are measured at historical cost in a foreign currency are translated using the exchange rates at the dates of the initial
transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date
when the fair value was determined.

 

		4.3	TAX
                                         CREDITS RECEIVABLE

 

The
Company is entitled to a refundable tax credit on qualified exploration expenditures incurred, refundable credit on duties for
losses under the Mining Tax Act (Quebec) and research and development tax credits. The tax credits are recognized as a
reduction of the costs incurred based on estimates made by management. The Company records these tax credits when there is reasonable
assurance that the credits will be received and that the Company will continue to comply with the conditions associated to them.

 

		4.4	GRANTS
                                         RECEIVABLE

 

The
Company receives periodically grants from different incentive programs. These grants are recognized initially when there is a
reasonable assurance that they will be received and when the Company has intentions to comply with the conditions associated with
the grant. The financial aid received for expenditures incurred is recognized against these expenditures on a systematic basis
and in the same accounting period in which the expenditures are incurred.

 

    6

     

    

 

		NOUVEAU
    MONDE GRAPHITE INC.
	 	Notes to consolidated
    financial statements
	 	(Amount expressed
    in thousands of Canadian dollars)

 

		4.5	RESEARCH
                                         AND DEVELOPMENT COST

 

Research
costs are expensed during the year in which the expenses are incurred. Development costs are capitalized when they meet the criteria
for capitalization in accordance with IAS 38 Intangible Assets.

The
costs incurred for activities associated with the development of the processes associated with the value-added products are considered
as research and development costs.

 

		4.6	PROPERTY
                                         AND EQUIPMENT

 

Property
and equipment are recognized at cost less accumulated depreciation and accumulated impairment losses. The assets are capitalized
and amortized on a straight-line basis in the consolidated statement of loss and comprehensive loss. Generally, the depreciation
rates are as follows:

 

	Buildings	25
    years
	Equipment	5-15
    years
	Furnitures	3-7
    years
	Computers	3
    years
	Rolling
    Stock	5
    years

 

The
residual value, depreciation method and the useful life of each asset are reviewed at least at each financial year-end. Gains
or losses arising on the disposal of property and equipment are determined as the difference between the disposal proceeds and
the carrying amount of the assets and are recognized in the statement of loss and comprehensive loss.

 

		4.7	INTANGIBLE
                                         ASSETS

 

The
intangible assets include software and licenses with a definite useful life. The assets are capitalized and amortized on a straight-line
basis in the consolidated statement of comprehensive loss. The intangible assets are assessed for impairment whenever there is
an indication that the intangible assets may be impaired.

Generally,
the depreciation rates are as follows:

 

	Software	2
    years
	Licences	2-10
    years

 

		4.8	EXPLORATION
                                         AND EVALUATION EXPENDITURES

 

Exploration
and evaluation expenditures are costs incurred during the initial search for mineral resources before the technical feasibility
and commercial viability of extracting a mineral resource are demonstrable.

 

All
expenditures relating to exploration and evaluation are expensed as incurred until the property reaches the development stage.
Costs related to exploration and evaluation include topographical, geological, geochemical and geophysical studies, exploration
drilling, trenching, sampling, research and development costs specific to a mining project and other costs related to the evaluation
of the technical feasibility and commercial viability of extracting a mineral resource. The various costs are expensed on a property-by-
property basis pending determination of the technical feasibility and commercial viability of extracting a mineral resource.

 

When
the technical feasibility and commercial viability of extracting a mineral resource are demonstrable, exploration and evaluation
expenses related to the mining property will be recorded to property and equipment in Mining assets under construction and or
to intangible assets depending on the nature of the expenditures.

 

    7

     

    

 

		NOUVEAU
    MONDE GRAPHITE INC.
	 	Notes to consolidated
    financial statements
	 	(Amount expressed
    in thousands of Canadian dollars)

 

		4.9	IMPAIRMENT
                                         OF NON-FINANCIAL ASSETS

 

For
the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows
(cash-generating units). As a result, some assets are tested individually for impairment and some are tested at a cash-generating
unit level.

 

Whenever
events or changes in circumstances indicate that the carrying amount may not be recoverable, an asset or cash-generating unit
is reviewed for impairment.

 

An
impairment loss is recognized in profit or loss for the amount by which the assets or cash-generating unit’s carrying amount
exceeds its recoverable amount. The recoverable amount of an asset or a cash- generating unit is the higher of its fair value
less cost to sell and its value in use.

 

An
impairment charge is reversed if the assets or cash-generating unit’s recoverable amount exceeds its carrying amount.

 

		4.10	INCOME
                                         TAXES

 

Income
tax is recognized in the statements of loss and comprehensive loss except to the extent that it relates to items recognized directly
in equity, in which case it is recognized in equity.

 

		–	Current
                                         taxes

 

Current
tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at
year-end, adjusted for amendments to income tax payable regarding previous years.

 

		–	Deferred
                                         taxes

 

Deferred
tax is provided using the liability method, providing for temporary differences between the tax bases of assets and liabilities
and their carrying amounts in the consolidated financial statements. The temporary difference is not provided for if it arises
from the initial recognition of goodwill or the initial recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither accounting nor taxable profit or loss. The amount of deferred
tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using
tax rates enacted or substantively enacted at the financial position reporting date and whose implementation is expected over
the period in which the deferred tax is realized or recovered. A deferred tax asset is recognized only to the extent that it is
probable that future taxable profits will be available against which the asset can be used.

 

Assets
and liabilities are offset where the entity has a legally enforceable right to offset current tax assets and liabilities or deferred
tax assets and liabilities, and the respective assets and liabilities relate to income taxes levied by the same taxation authority.

 

		4.11	EQUITY

 

		–	Share
capital

 

Share
capital represents the amount received on the issue of shares, less issuance costs, net of any underlying tax benefit from these
issuance costs. In addition, if shares were issued as consideration for the acquisition of a mineral property or some other form
of non-monetary assets, they are measured at their fair value according to the quoted price on the day of the conclusion of the
agreement.

 

		–	Unit
offerings

 

Proceeds
from unit offerings are allocated between shares and warrants using their relative fair value. Black-Scholes model is used to
determine the fair value of the warrants and the market price at the time of issuance is used for shares.

 

    8

     

    

 

		NOUVEAU
    MONDE GRAPHITE INC.
	 	Notes to consolidated
    financial statements
	 	(Amount expressed
    in thousands of Canadian dollars)

 

		–	Contributed
surplus and warrants

 

Contributed
surplus includes charges related to share options not exercised and amounts attributable to expired warrants.

 

Warrants
include amounts attributable to outstanding warrants.

 

		4.12	BASIC
                                         AND DILUTED LOSS PER SHARE

 

Basic
loss per share is calculated by dividing the loss attributable to common equity holders of the Company by the weighted average
number of common shares outstanding during the period. Diluted earnings per share is calculated by adjusting loss attributable
to common equity holders of the Company, and the weighted average number of common shares outstanding, for the effects of all
dilutive potential common shares which include convertible debt, options, broker’s options, and warrants. Dilutive potential
common shares arising from option type instruments shall be deemed to have been exercised at the beginning of the period or, if
later, at the date of issue of the potential common shares and the proceeds from their exercise used to repurchase common shares
at the average market price. The if-converted method is used for convertible debentures.

 

		4.13	PROVISION
                                         AND CONTINGENT LIABILITIES

 

Provisions
are recognized when present legal or constructive obligations as a result of a past event will probably lead to an outflow of
economic resources from the Company and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain.
Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence
available at the reporting date, including the risks and uncertainties associated with the present obligation. Provisions are
discounted when the time value of money is significant.

 

The
Company’s operations are governed by government environment protection legislation. Environmental consequences are difficult
to identify in terms of amounts, timetable and impact. As of the reporting date, management believes that the Company’s
operations are in compliance with current laws and regulations. An asset retirement provision is recognized when there is constructive
commitment that has resulted from past events, it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and the amount of the obligation can be measured with sufficient reliability.

 

In
those cases where the possible outflow of economic resources as a result of present obligations is considered improbable or remote,
no liability is recognized. Such situations are disclosed as contingent liabilities unless the outflow of resources is remote.

 

All
provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.

 

		4.14	SHARE-BASED
                                         PAYMENTS

 

The
Company operates an equity-settled share-based payment plan for its eligible directors, officers, employees and consultants. The
Company’s plan does not feature any option for a cash settlement.

 

All
goods and services received in exchange for the grant of any share-based payments are measured at their fair values unless that
fair value cannot be estimated reliably. If the Company cannot estimate reliably the fair value of the goods or services received,
the Company shall measure their value indirectly by reference to the fair value of the equity instruments granted. For the transactions
with employees and others providing similar services, the Company measured the fair value of the services rendered by reference
to the fair value of the equity instruments granted.

 

All
equity-settled share-based payments (except broker’s options) are ultimately recognized as an expense in profit or loss
with a corresponding credit to Contributed surplus, in equity. Equity-settled share-based payments to brokers, in respect of an
equity financing are recognized as issuance costs of the equity instruments with a corresponding credit to Contributed surplus,
in equity.

 

    9

     

    

 

		NOUVEAU
    MONDE GRAPHITE INC.
	 	Notes to consolidated
    financial statements
	 	(Amount expressed
    in thousands of Canadian dollars)

 

The
expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to
vest. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs
from previous estimates. Any cumulative adjustment prior to vesting is recognized in the current period. No adjustment is made
to any expense recognized in a prior period if some vested share options are not ultimately exercised.

 

		4.15	FINANCIAL
                                         INSTRUMENTS

 

Financial
assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument
and are measured initially at fair value adjusted for transaction costs, except for those carried at fair value through profit
or loss (“FVTPL”), which are measured initially at fair value. The subsequent measurement of financial assets and
financial liabilities is described below (and Note 18).

 

Financial
assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred and the Company
has transferred substantially all risks and rewards of ownership. A financial liability is derecognized when it is extinguished,
discharged, cancelled or expires.

 

Financial
assets and financial liabilities are offset, and the net amount is reported in the statements of financial position when there
is an unconditional and legally enforceable right to offset the recognized amounts and there is an intention to settle on a net
basis or realize the asset and settle the liability simultaneously.

 

		–	Financial
assets

 

Financial
assets are initially measured at fair value. If the financial asset is not subsequently accounted for at FVTPL, then the initial
measurement includes transaction costs that are directly attributable to the asset’s acquisition or origination. On initial
recognition, the Company classifies its financial assets in the following measurement categories:

		–	measured
subsequently at amortized cost; or

		–	measured
subsequently at fair value (either through other comprehensive loss, or through net loss).

 

		i)	Financial
                                         assets measured at amortized cost

 

A
financial asset is subsequently measured at amortized cost, using the effective interest method and net of any impairment loss,
if:

		–	the
                                         financial asset is held within a business model whose objective is to hold financial
                                         assets in order to collect contractual cash flows; and

		–	the
                                         contractual terms of the financial asset give rise on specified dates to cash flows that
                                         are solely payments of principal and interest on the principal amount outstanding.

 

		ii)	Financial
                                         assets measured at fair value

 

A
financial asset shall be measured at fair value through net loss unless it is measured at amortized cost or at fair value through
other comprehensive loss.

 

A
financial asset shall be measured at fair value through other comprehensive loss if both of the following conditions are met:

		–	the
                                         financial asset is held within a business model whose objective is achieved by both collecting
                                         contractual cash flows and selling financial assets; and

		–	the
                                         contractual terms of the financial asset give rise on specified dates to cash flows that
                                         are solely payments of principal and interest on the principal amount outstanding.

 

For
investments in debt instruments, this will thus depend on the business model in which the investment is held. For investments
in equity instruments that are not held for trading, this will depend on whether the Company has made an irrevocable election
at the time of initial recognition to account for the equity investment at fair value through other comprehensive loss, in which
case, gains and losses will never be reclassified to net loss, and no impairment may be recognized in net loss. Dividends earned
from such investments are recognized in net loss, unless the dividend clearly represents a repayment of part of the cost of the
investment.

 

    10

     

    

 

		NOUVEAU
    MONDE GRAPHITE INC.
	 	Notes to consolidated
    financial statements
	 	(Amount expressed
    in thousands of Canadian dollars)

 

		–	Financial
liabilities

 

Financial
liabilities are subsequently measured at amortized cost using the effective interest method, except for financial liabilities
at fair value through profit or loss. Such liabilities, including derivatives that are liabilities, shall be subsequently measured
at fair value.

 

Financial
instruments – Fair value

 

The
fair value of a financial instrument is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable,
willing parties in an arm’s-length transaction.

 

Fair
values of financial instruments traded in active markets are determined based on quoted market prices, where available. For financial
instruments not traded in an active market, fair values are determined based on appropriate valuation techniques. Such techniques
may include discounted cash flow analysis, using recent arm’s-length market transactions, reference to the current fair
value of another instrument that is substantially the same, and other valuation models. The Company applies a hierarchy to classify
valuation methods used to measure financial instruments carried at fair value. Levels 1 to 3 are defined based on the degree to
which fair value inputs are observable and have a significant effect on the recorded fair value, as follows:

		–	Level
1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;

		–	Level
2: Valuation techniques use significant observable inputs, directly or indirectly, or valuations are based on quoted prices for
similar instruments; and

		–	Level
3: Valuation techniques use significant inputs that are not based on observable market data (unobservable inputs).

 

		–	Compound
instruments

 

The
convertible bond issued by the Company is a compound financial instrument which the principal amount, together with all accrued
and unpaid or uncapitalized interest can be converted into a fixed number of common shares of the Company at the option of the
holder.

The
liability component of the compound instrument was established by discounting the contractual cash flow, the remaining balance,
net of the issuance cost, was allocated to the equity component of the financial instrument.

 

		–	Impairment
of financial assets

 

The
Company assesses on a forward-looking basis the expected credit loss associated with its debt instruments carried at amortised
cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

 

The
Company assumes that the credit risk on a financial instrument has not increased significantly since initial recognition if the
financial instrument is determined to have low credit risk at the reporting date. An external rating of investment grade is considered
to indicate that a financial instrument that may be considered as having low credit risk.

 

The
Company applies the simplified approach permitted by IFRS 9 for trade receivables and contract assets, which requires lifetime
expected credit losses to be recognized from initial recognition of the receivables.

 

The
Company’s financial instruments consist of the following:

 

	 	FINANCIAL
    ASSETS	CLASSIFICATION
	 	Cash	Amortized
    cost
	 	Amounts
    receivable	Amortized
    cost
	 	Grant
    and other receivables	Amortized
    cost
	 	Investment	Fair
    value through profit or loss

 

    11

     

    

 

		NOUVEAU
    MONDE GRAPHITE INC.
	 	Notes to consolidated
    financial statements
	 	(Amount expressed
    in thousands of Canadian dollars)

 

	 	FINANCIAL
    LIABILITIES	CLASSIFICATION
	 	Accounts
    payable and accrued liabilities	Amortized
    cost
	 	Long-term
        debt

        
	Amortized
        cost

        

	 	Convertible
    bond (liability component)	Amortized
    cost

 

		4.16	LEASES

 

Leases
are recognized as a right-of-use asset and a corresponding liability in lease liabilities at the date at which the leased asset
is available for use by the Company.

 

The
lease liability is initially measured at the present value of the future lease payment, including variable lease payment that
depends on an index or a rate. The lease liability is discounted using the interest rate implicit in the contract if this rate
can be easily determined, otherwise, the lessee must use his marginal borrowing rate.

 

The
monthly lease payments are segregated between the principal repayment and the finance cost. The present value of the lease liability
is increased to reflect the accretion of interest and decreased by the principal repayment. The accretion of interest is charged
to the profit and loss over the lease period.

 

If
a change to the lease were to happen, the lease liability would be remeasured to reflect those changes (e.g., changes in the lease
term or changes in the lease payment).

 

The
right-of-use assets are initially measured at cost, which includes the amount of the initial measurement of the lease liability
and any lease payments made at or before the commencement date. The right-of-use assets are amortized on a straight-line basis
over the duration of the lease.

 

		4.17	SEGMENT
                                         DISCLOSURE

 

The
Company currently operates in two segments: the acquisition, exploration, and evaluation of mining properties and the transformation
of value-added graphite products. The measure of profit or loss for each segment corresponds to the amounts reported for Exploration
and evaluation expenses and Value- added products expenses, respectively, in the consolidated statement of loss and comprehensive
loss. All the Company’s activities are conducted in Quebec, Canada.

 

    12

     

    

 

NOUVEAU
MONDE GRAPHITE INC. 

Notes
to consolidated financial statements

(Amount expressed in thousands of Canadian dollars)

 

		5.	ACCOUNTING
                                         STANDARDS ISSUED BUT NOT YET EFFECTIVE 

 

The
Company has not yet adopted certain standards, interpretations to existing standards and amendments which have been issued but
have an effective date of later than December 31, 2020. Many of these updates are not expected to have any significant impact
on the Company and are therefore not discussed herein.

 

Amendments
to IAS 16 Property, plant and equipment 

 

The
IASB has made amendments to IAS 16 Property, plant and equipment, which will be effective for financial years beginning
on or after January 1, 2022. Proceeds from selling items before the related item of Property, plant and equipment is available
for use should be recognized in profit or loss, together with the costs of producing those items. The Company will therefore need
to distinguish between the costs associated with producing and selling items before the item of Property, plant and equipment
(pre- production revenue) is available for use and the costs associated with making the item of Property, plant and equipment
available for its intended use. For the sale of items that are not part of a company’s ordinary activities, the amendments
will require the Company to disclose separately the sales proceeds and related production cost recognized in profit or loss and
specify the line items in which such proceeds and costs are included in the statement of comprehensive income (loss). These amendments
will have an impact on the Company’s consolidated financial statements.

 

		6.	ESTIMATES,
                                         JUDGEMENTS AND ASSUMPTIONS 

 

In
preparing its consolidated 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.

 

As at December 31, 2020, management determined that the technical
feasibility and commercial viability had not yet been established for the Matawinie Project and as such the project is still considered
to be at the exploration and evaluation stage.

 

Going
concern 

 

The
assessment of the Company’s ability to execute its strategy by funding future working capital requirements involves judgement.
Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the circumstances.

 

COVID-19
impact 

 

The
duration and full financial effect of the COVID-19 pandemic is unknown at this time, as are the measures taken by governments,
companies, and others to attempt to reduce the spread of COVID-19. Any estimate of the length and severity of these developments
is therefore subject to significant uncertainty, and accordingly estimates of the extent to which the COVID- 19 may materially
and adversely affect the Company’s operations, financial results and condition in future periods are also subject to significant
uncertainty. As at December 31, 2020, the demonstration plant in Saint-Michel-des-Saints was producing graphite flakes similarly
to pre-COVID-19 levels, activities related to the detail engineering of the mine and concentrator continues to advance, and the
construction of the demonstration plant for value added products in Bécancour continues to make significant progress. However,
in the current environment, the assumptions and judgements made by the Company are subject to greater variability than normal,
which could, in the future, significantly affect judgments, estimates and assumptions made by management as they relate to potential
impact of the COVID-19.

 

Provision
for asset retirement obligation 

 

The
Company’s exploration activities are subject to several environmental protection laws and regulations. The Company accounts for
management’s best estimate of asset retirement obligations in the period in which the obligations arise. Costs actually incurred
in future periods could be significantly different from these estimates. In addition, future changes in laws and regulations,
timing of estimated cash flows and discount rates may impact the carrying amount of this provision.

    13

     

    

 

 

NOUVEAU
MONDE GRAPHITE INC. 

Notes
to consolidated financial statements

(Amount expressed in thousands of Canadian dollars)

 

Tax
credits 

 

Tax
credits for the current and prior periods are measured at the amount that the Company expects to recover, based on its best estimate
and judgment at the reporting date. However, uncertainties as to the interpretation of the tax regulations, regarding refundable
mining rights credits for loss and refundable tax credits on eligible exploration expenses, as well as regarding amount and timing
of recovery of these tax credits.

 

To
determine whether the expenses it incurs are eligible for exploration tax credits, the Company must use judgment and resort to
complex techniques. As a result, there may be a significant difference between the amount recognized in respect of tax credits
and the actual amount of tax credits received because of the tax administrations’ review of matters that were subject to interpretation.
In the event of such a difference, an adjustment will be made to the tax credits for mineral prospecting expenses in future periods.

 

It
can take a long time for the tax administration to report its decisions on tax issues, thereby extending the tax credit recovery
period. Mineral exploration tax credits that the Company expects to recover in more than one year are classified as non-current
assets. The amounts recognized in the consolidated financial statements are based on the best estimates of the Company and in
its best possible judgment, as noted above. However, given the uncertainty inherent in obtaining the approval of the tax authority
concerned, the amount of tax credits that will be recovered and the timing of such recovery may differ materially from accounting
estimates and would affect the financial position and cash flow of the Company.

    14

     

    

NOUVEAU
MONDE GRAPHITE INC.

Notes
to consolidated financial statements

(Amount expressed in thousands of Canadian dollars)

 

		7.	PROPERTY
                                         AND EQUIPMENT

 

	 	 	Land
 $	 	 	Buildings
 $	 	 	Equipment
 $	 	 	Computers
 $	 	 	Furniture
 $	 	 	Rolling stock
 $	 	 	Assets under
 construction
 $	 	 	Total
 $	 
	COST	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance as at January 1, 2020	 	 	467	 	 	 	2,430	 	 	 	63	 	 	 	47	 	 	 	70	 	 	 	9	 	 	 	-	 	 	 	3,086	 
	Acquisition	 	 	40	 	 	 	212	 	 	 	-	 	 	 	9	 	 	 	-	 	 	 	15	 	 	 	1,206	 	 	 	1,482	 
	Write-Off/Disposals	 	 	-	 	 	 	-	 	 	 	(63	)	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(63	)
	Balance as at December 31, 2020	 	 	507	 	 	 	2,642	 	 	 	-	 	 	 	56	 	 	 	70	 	 	 	24	 	 	 	1,206	 	 	 	4,505	 
	ACCUMULATED DEPRECIATION	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance as at January 1, 2020	 	 	-	 	 	 	118	 	 	 	59	 	 	 	14	 	 	 	19	 	 	 	4	 	 	 	-	 	 	 	214	 
	Depreciation	 	 	-	 	 	 	101	 	 	 	2	 	 	 	25	 	 	 	13	 	 	 	4	 	 	 	-	 	 	 	145	 
	Write-Off/Disposals	 	 	-	 	 	 	-	 	 	 	(61	)	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	(61	)
	Balance 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	 

 

	 	 	Land
 $	 	 	Buildings
 $	 	 	Equipment
 $	 	 	Computers
 $	 	 	Furniture
 $	 	 	Rolling stock
 $	 	 	Total
 $	 
	COST	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance as at January 1, 2019	 	 	227	 	 	 	1,037	 	 	 	63	 	 	 	32	 	 	 	49	 	 	 	9	 	 	 	1,417	 
	Acquisition	 	 	240	 	 	 	1,393	 	 	 	-	 	 	 	15	 	 	 	21	 	 	 	-	 	 	 	1,669	 
	Balance as at December 31, 2019	 	 	467	 	 	 	2,430	 	 	 	63	 	 	 	47	 	 	 	70	 	 	 	9	 	 	 	3,086	 
	ACCUMULATED DEPRECIATION	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance as at January 1, 2019	 	 	-	 	 	 	47	 	 	 	58	 	 	 	6	 	 	 	15	 	 	 	2	 	 	 	128	 
	Depreciation	 	 	-	 	 	 	71	 	 	 	1	 	 	 	8	 	 	 	4	 	 	 	2	 	 	 	86	 
	Balance as at December 31, 2019	 	 	-	 	 	 	118	 	 	 	59	 	 	 	14	 	 	 	19	 	 	 	4	 	 	 	214	 
	Net book value as at December 31, 2019	 	 	467	 	 	 	2,312	 	 	 	4	 	 	 	33	 	 	 	51	 	 	 	5	 	 	 	2,872	 

 

The
construction in progress is comprised of deposits on equipment and is presented net of grants ($731 in 2020).

    15

     

    

 

NOUVEAU
MONDE GRAPHITE INC.

Notes
to consolidated financial statements

(Amount expressed in thousands of Canadian dollars)

 

 

		8.	INTANGIBLE
                                         ASSETS 

 

In
prior years, the Company and Hydro-Quebec (“HQ”) signed a licence agreement by which the Company is allowing us to
use HQ’s patented technologies for the micronization, spheronization, purification and natural graphite coating to serve
the lithium-ion battery market. The Company paid US $2 million ($2,562) for the use of the patents which have different expiry
dates between October 24, 2021, to June 7, 2028. The licence was capitalized as an intangible asset and will be amortized over
the life of the underlying patents.

 

	 	 	Software
 $	 	 	Licenses
 $	 	 	Total
 $	 
	COST	 	 	 	 	 	 	 	 	 	 	 	 
	Balance as at January 1, 2020	 	 	16	 	 	 	2,562	 	 	 	2,578	 
	Balance as at December 31, 2020	 	 	16	 	 	 	2,562	 	 	 	2,578	 
	ACCUMULATED DEPRECIATION	 	 	 	 	 	 	 	 	 	 	 	 
	Balance as at January 1, 2020	 	 	7	 	 	 	1,045	 	 	 	1,052	 
	Amortization	 	 	9	 	 	 	597	 	 	 	606	 
	Balance as at December 31, 2020	 	 	16	 	 	 	1,642	 	 	 	1,658	 
	Net book value as at December 31, 2020	 	 	-	 	 	 	920	 	 	 	920	 

 

	 	 	Software
 $	 	 	Licenses
 $	 	 	Total
 $	 
	COST	 	 	 	 	 	 	 	 	 	 	 	 
	Balance as at January 1, 2019	 	 	16	 	 	 	2,562	 	 	 	2,578	 
	Balance as at December 31, 2019	 	 	16	 	 	 	2,562	 	 	 	2,578	 
	ACCUMULATED DEPRECIATION	 	 	 	 	 	 	 	 	 	 	 	 
	Balance as at January 1, 2019	 	 	3	 	 	 	448	 	 	 	451	 
	Amortization	 	 	4	 	 	 	597	 	 	 	601	 
	Balance as at December 31, 2019	 	 	7	 	 	 	1,045	 	 	 	1,052	 
	Net book value as at December 31, 2019	 	 	9	 	 	 	1,517	 	 	 	1,526	 

 

		9.	RIGHT-OF-USE
                                         ASSETS 

 

The
Company has lease contracts for various items of mining equipment, motor vehicles and buildings used in its operations. Leases
of mining equipment and rolling stock generally have lease terms between two and three years, while buildings generally have lease
terms between two and five years.

 

Set
below are the carrying amount of Right-of-use assets and the movement during the period.

 

	 	 	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	 

    16

     

    

 

NOUVEAU
MONDE GRAPHITE INC.

Notes
to consolidated financial statements

(Amount expressed in thousands of Canadian dollars)

 

	 	 	Buildings
 $	 	 	Equipment
 $	 	 	Rolling stocks
 $	 	 	Total
 $	 
	COST	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	As at January 1, 2019	 	 	252	 	 	 	321	 	 	 	109	 	 	 	682	 
	New leases	 	 	205	 	 	 	18	 	 	 	49	 	 	 	272	 
	As at December 31, 2019	 	 	457	 	 	 	339	 	 	 	158	 	 	 	954	 
	ACCUMULATED DEPRECIATION	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	As at January 1, 2019	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 
	Depreciation	 	 	157	 	 	 	167	 	 	 	67	 	 	 	391	 
	As at December 31, 2019	 	 	157	 	 	 	167	 	 	 	67	 	 	 	391	 
	Net book value as at December 31, 2019	 	 	300	 	 	 	172	 	 	 	91	 	 	 	563	 

 

Included
in the depreciation of Right-of-use assets for the period is $321 ($355 in 2019) that have been included under the Evaluation
and exploration expenses and $27 (nil in 2019) under the Value-added products expenses line in the consolidated statements of
loss and comprehensive loss.

 

10.
ACCOUNTS PAYABLES AND ACCRUED LIABILITIES

 

	 	 	December 31, 2020
 $	 	 	December 31, 2019
 $	 
	Trade payables and accrued liabilities	 	 	4,285	 	 	 	4,335	 
	Wages and benefits liabilities	 	 	1,767	 	 	 	573	 
	Other payables	 	 	139	 	 	 	-	 
	Interest payable on convertible bond	 	 	797	 	 	 	-	 
	Accounts payables and accrued liabilities	 	 	6,988	 	 	 	4,908	 

 

11.
GRANTS

 

The
Company benefits from various government grants. The deferred grant is composed of the two following grants:

 

In
August 2019, the Company completed the closing of a federally funded grant with Sustainable Development Technology Canada (“SDTC”)
for a total of $4.25 million. This grant will help the Company build a value-added graphite purification processing facility in
Bécancour, Quebec. In February 2020, the Company received the first milestone payment of $2 million. SDTC also increased
its initial commitment of $4.25 million to the Company by 5%, representing an additional $213 in grant, because of the COVID-19
impact on Canadian companies. The additional $213 amount was received at the end of March 2020.

 

In
addition to the SDTC program, the Company finalized another grant agreement in April 2020 with Transition énergétique
Québec (“TEQ”), a Quebec government funded program, in relation to the same project of building a value-added
graphite purification processing facility. The additional grant of $3 million was secured via TEQ’s Technoclimat program.
During the year 2020, the Company received the payments totaling $1.5 million.

 

As
at December 31, 2020, $1.5 million of the grant proceeds received during the year remains to be applied against related expenditures
and therefore was recorded as a deferred grant at year-end.

 

The
grant receivables as at December 31, 2020 of $785 is composed of various smaller grants as there is reasonable assurance that
they will be received and when the Company has reasonable assurance that it will continue to comply with the conditions associated
with the grants.

    17

     

    

		NOUVEAU
    MONDE GRAPHITE INC.
	 	Notes to consolidated
    financial statements
	 	(Amount expressed
    in thousands of Canadian dollars)

 

		12.	LEASE LIABILITIES

 

	 	 	December
                                         31, 2020
 $
	 	 	December
                                         31, 2019
 $
	 
	Opening balance	 	 	609	 	 	 	682	 
	New liabilities and modifications of leases	 	 	955	 	 	 	272	 
	Principal repayment	 	 	(488	)	 	 	(345	)
	Ending balance	 	 	1,076	 	 	 	609	 
	Current portion	 	 	295	 	 	 	459	 
	Non-current portion	 	 	781	 	 	 	150	 

 

The Company also has certain
leases of assets with lease terms of 12 months or less. The Company applies the short-term lease assets recognition exemptions
for these leases. The expenses related to short term leases were $572 for the year ended December 31, 2020 (December 31, 2019:
$144).

 

		13.	BORROWINGS

 

	 	 	December 31, 2020
 $
	 	 	December 31, 2019
 $
	 
	Opening balance	 	 	4,502	 	 	 	3,308	 
	Proceeds	 	 	3,803	 	 	 	2,000	 
	Repayment	 	 	(2,419	)	 	 	(943	)
	Issue costs	 	 	(21	)	 	 	-	 
	Accretion of issue costs	 	 	25	 	 	 	40	 
	Interest capitalized	 	 	209	 	 	 	97	 
	Debts settled in exchange of Royalty	 	 	(4,306	)	 	 	-	 
	Ending balance	 	 	1,793	 	 	 	4,502	 
	Current portion	 	 	1,793	 	 	 	4,502	 
	Non-current portion	 	 	-	 	 	 	-	 

 

On December 21, 2018, the
Company closed a financing with Investissement Quebec for an aggregate amount of $4,665 through four loan offers of which only
$3,362 had been received as at December 31, 2019. The loans had an annual interest rate charge between 6.25% and 6.38% depending
on the offer.

 

During the year ended December
31, 2019, the Company repaid $943 of its debt. The remaining $2,419 has been repaid during the year ended December 31, 2020.

 

During the second quarter
ended June 30, 2019, the Company concluded a financing agreement with a significant shareholder, Pallinghurst Graphite Limited
(“Pallinghurst”), for a total of $2,000 and required a full reimbursement of the capital plus interest accrued at the
latest on December 31, 2020. The unsecured borrowing bore interest at 9% annually and all accrued interests had to be paid at the
end of the maturity date of the agreement.

 

On March 16, 2020, the
Company concluded a new financing agreement with Pallinghurst, for a total of $2,000. This agreement required the reimbursement
of the capital plus all accrued interests at the latest on December 31, 2020. The agreement bears interest at 9% annually.

 

On April 29, 2020, the Company
closed a financing agreement with Investissement Québec for an aggregate amount received of $1,802 through two loan
offers. The conditions also included a 1% issue cost fee calculated on the total aggregate amount. The interest rate on the
loan offer totalling $611 is the current prime rate of 2.45% plus 0.07%, while the interest rate on the loan offer totalling
$1,192 is the current prime rate of 2.45%. The capital shall be repaid by no later than June 30, 2021. To secure its
obligations set out in the loan offers, the Company granted two first-ranking mortgages for a total of the loan amount
received covering the universality of its present and future receivables, including the universality of its tax credits.

 

On August 28, 2020, the Company
closed a financing transaction with Pallinghurst where the Company issued a 3.0% royalty over the Matawinie graphite property
to Pallinghurst for an aggregate purchase price of $4,306. The purchase price for the royalty was satisfied by setting-off
all principal and accrued interest owed by the Company to Pallinghurst under the promissory note dated June 27, 2019 in the
principal amount of $2 million, the promissory note dated March 16, 2020 in the principal amount of $2 million, and the
accrued interests totaling $306. As the carrying amount of the underlying properties is nil, an amount corresponding to the purchase
price has been reported as net smelter royalty in the consolidated statement of loss and comprehensive loss.

 

    18

     

    

		NOUVEAU
    MONDE GRAPHITE INC.
	 	Notes to consolidated
    financial statements
	 	(Amount expressed
    in thousands of Canadian dollars)

 

During the year ended December
31, 2020, the Company paid out a total of $123 ($191 for the year ended December 31, 2019) of interest to its lenders.

 

		14.	CONVERTIBLE BOND

 

	 	 	December 31, 2020
 $
	 	 	December 31, 2019
 $
	 
	Opening balance	 	 	-	 	 	 	-	 
	Proceeds	 	 	15,000	 	 	 	-	 
	Equity component of convertible bond	 	 	(364	)	 	 	-	 
	Issue costs	 	 	(214	)	 	 	-	 
	Accretion expense	 	 	83	 	 	 	 	 
	Ending balance	 	 	14,505	 	 	 	-	 
	Current portion	 	 	-	 	 	 	-	 
	Non-current portion	 	 	14,505	 	 	 	-	 

 

During the third quarter
ended September 30, 2020, the Company closed a secured three-year convertible bond with Pallinghurst with a principal of $15 million.
The bond bears interest at 15% annually. Pallinghurst has the right to convert all or a portion of any accrued and unpaid or uncapitalized
interest under the bond into common shares of the Company at the market price of the common shares at the future time of conversion
subject to TSXV approval. The principal amount, together with all accrued and unpaid or uncapitalized interest under the bond,
will become payable on the date that is 36 months following the issuance of the bond. At any time, Pallinghurst has the right to
convert all or a portion of the bond into such number of common shares of the Company equal to the principal amount being converted,
divided by the conversion price of $0.20 per common share. Concurrently with the issuance of the bond, the Company issued to Pallinghurst
common share purchase warrants entitling Pallinghurst to purchase up to 75,000,000 common shares of the Company, at a price of
$0.22 per common share for a period of 36 months from the issuance date of the warrants.

 

When
initially recorded, the proceeds received amounted to $15 million for the convertible bond. Of this amount, the debt, the issue
costs, and the equity component represent respectively $14,422, $214, and $364. The debt component was evaluated first using an
effective rate of 17% corresponding to a rate that the Company would have obtained for a similar financing without the conversion
option. The residual value was attributed to the equity component and is presented in the shareholders’ equity. The net proceeds
allocated to the warrants have been evaluated at nil.

 

		15.	EQUITY

 

		15.1	SHARE CAPITAL

 

Authorized share capital

 

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

 

On April 25, 2019, the
Company completed a non-brokered private placement with Pallinghurst of 43,825,000 common shares in the capital of the Company
at a price of $0.235 per share for aggregate gross proceeds of $10,299 pursuant to a subscription agreement dated April 2, 2019.

 

On June 28, 2019, the Company
also completed a private placement of 42,345,213 common shares in the capital of the Company at a price of $0.235 per Share for
aggregate gross proceeds of $9,951. Pallinghurst also took part in this second private placement.

 

On September 1, 2020, the
Company issued an aggregate of 1,037,587 common shares of its share capital at a price of $0.20 per common share, for an aggregate
amount of $208 to 31 of its employees in settlement of an unpaid portion of wages resulting from a temporary measure in response
to the COVID-19 pandemic.

    19

     

    

		NOUVEAU
    MONDE GRAPHITE INC.
	 	Notes to consolidated
    financial statements
	 	(Amount expressed
    in thousands of Canadian dollars)

 

		15.2	LOSS PER SHARE

 

Basic loss per share is
calculated by dividing the net loss for the year by the weighted average number of ordinary shares outstanding during the year.

 

The numbers for the average
basic and diluted shares outstanding for all the periods presented in the consolidated statements of loss and comprehensive loss
have been adjusted to reflect the effect of the 1:10 share consolidation that took place on March 24, 2021.

 

The basic and diluted loss per
share is the same as there are no instruments that have a dilutive effect on earnings.

 

		15.3	WARRANTS

 

	 	 	 	 	 	December 31, 2020	 	 	 	 	 	December 31, 2019	 
	 	 	Number	 	 	Weighted average
 exercise price
 $
	 	 	Number	 	 	Weighted average
 exercise price
 $
	 
	Opening balance	 	 	26,766,142	 	 	 	0.38	 	 	 	52,049,727	 	 	 	0.39	 
	Issued	 	 	75,000,000	 	 	 	0.22	 	 	 	-	 	 	 	-	 
	Exercised	 	 	(8,722,914	)	 	 	0.35	 	 	 	-	 	 	 	-	 
	Expired	 	 	(14,508,837	)	 	 	0.40	 	 	 	(25,273,585	)	 	 	0.40	 
	Ending balance	 	 	78,534,391	 	 	 	0.23	 	 	 	26,766,142	 	 	 	0.38	 

 

The number of warrants outstanding
exercisable in exchange for an equivalent number of shares is as follows:

 

	 	 	 	 	 	December 31, 2020	 
	Expiration date	 	Number	 	 	Exercise price
 $
	 
	February 7, 2021	 	 	3,534,391	 	 	 	0.35	 
	August 28, 2023	 	 	75,000,000	 	 	 	0.22	 
	Ending balance	 	 	78,534,391	 	 	 	0.23	 

 

At the issuance date of the financial statement, all the outstanding warrants have either been exercised or have expired.

 

		15.4	BROKER’S WARRANTS

 

	 	 	 	 	 	December 31, 2020	 	 	 	 	 	December 31, 2019	 
	 	 	Number	 	 	Weighted average
 exercise price
 $
	 	 	Number	 	 	Weighted average
 exercise price
 $
	 
	Opening balance	 	 	331,994	 	 	 	0.34	 	 	 	1,474,525	 	 	 	0.31	 
	Expired	 	 	(331,994	)	 	 	0.34	 	 	 	(1,142,531	)	 	 	0.30	 
	Ending balance	 	 	-	 	 	 	-	 	 	 	331,994	 	 	 	0.34	 

 

		15.5	ADVISORY WARRANTS

 

	 	 	 	 	 	December 31, 2020	 	 	 	 	 	December 31, 2019	 
	 	 	Number	 	 	Weighted average
 exercise price
 $
	 	 	Number	 	 	Weighted average
 exercise price
 $
	 
	Opening balance	 	 	621,665	 	 	 	0.30	 	 	 	1,771,665	 	 	 	0.36	 
	Expired	 	 	(621,665	)	 	 	0.30	 	 	 	(1,150,000	)	 	 	0.39	 
	Ending balance	 	 	-	 	 	 	-	 	 	 	621,665	 	 	 	0.30	 

 

		15.6	SHARE-BASED PAYMENTS

 

The Board of Directors
determines the price per common share and the number of common shares which may be allocated to each director, officer, employee
and consultant and all other terms and conditions of the option, subject to the rules of the TSXV.

    20

     

    

 

		NOUVEAU
    MONDE GRAPHITE INC.
	 	Notes to consolidated
    financial statements
	 	(Amount expressed
    in thousands of Canadian dollars)

 

The plan has a policy that
caps the maximum of total 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.

 

The Company’s share options
are as follows for the year ended December 31, 2020 and 2019:

 

	 	 	 	 	 	December 31, 2020	 	 	 	 	 	December 31, 2019	 
	 	 	Number	 	 	Weighted average
 exercise price
 $
	 	 	Number	 	 	Weighted average
 exercise price
 $
	 
	Opening balance	 	 	15,825,000	 	 	 	0.28	 	 	 	11,450,000	 	 	 	0.29	 
	Granted	 	 	11,925,000	 	 	 	0.36	 	 	 	5,775,000	 	 	 	0.23	 
	Exercised	 	 	(1,450,000	)	 	 	0.30	 	 	 	(250,000	)	 	 	0.20	 
	Expired	 	 	(2,300,000	)	 	 	0.27	 	 	 	(1,018,750	)	 	 	0.30	 
	Forfeited	 	 	-	 	 	 	-	 	 	 	(131,250	)	 	 	0.31	 
	Ending balance	 	 	24,000,000	 	 	 	0.32	 	 	 	15,825,000	 	 	 	0.28	 
	Options that can be exercised	 	 	20,000,000	 	 	 	0.34	 	 	 	13,800,000	 	 	 	0.28	 

 

The weighted average price at
the time of exercise for 2020 is $0.62 ($0.24 in 2019).

 

For the year ended December
31, 2020, the Company granted 5,050,000 options to officers, 2,075,000 to directors, 2,850,000 to employees, and 1,950,000 to consultants.
Options granted have different vesting periods. Each option entitles the holder to subscribe to one common share of the Company,
at an average price of $0.36 per common share, for an average period of 4.8 years.

 

For the year ended December
31, 2019, the Company granted 1,375,000 options to officers, 1,250,000 to directors, 2,150,000 to employees, and 1,000,000 to consultants.
Options granted have different vesting periods. Each option entitles the holder to subscribe to one common share of the Company,
at an average price of $0.23 per common share, for an average period of 4.2 years.

 

The
weighted average fair value of the share options granted were estimated using the Black-Scholes option pricing model based on the
following average assumptions:

 

	 	 	2020	 	 	2019	 
	Share price at date of grant	 	$	0.36	 	 	$	0.24	 
	Expected life	 	 	4.75 years	 	 	 	4.2 years	 
	Risk-free interest rate	 	 	0.39	%	 	 	1.46	%
	Expected volatility	 	 	54.68	%	 	 	63.53	%
	Expected dividend	 	 	Nil	 	 	 	Nil	 
	Exercise price at date of grant	 	$	0.36	 	 	$	0.23	 

 

The expected annualized
volatility was based on historical data for the Company. The fair value of the share options is amortized over the vesting period,
considering expected forfeitures. Share options issued are exercisable at the closing market price of the common shares on the
day prior to their grant.

 

	 	 	 	 	 	 	 	 	December 31, 2020	 
	Expiration date	 	Total number	 	 	Total exercisable	 	 	Weighted average
 exercise price
 $
	 
	Year 2021	 	 	1,475,000	 	 	 	1,475,000	 	 	 	0,23	 
	Year 2022	 	 	3,775,000	 	 	 	3,775,000	 	 	 	0,31	 
	Year 2023	 	 	3,900,000	 	 	 	2,900,000	 	 	 	0,34	 
	Year 2024	 	 	4,425,000	 	 	 	4,425,000	 	 	 	0,23	 
	Year 2025	 	 	10,425,000	 	 	 	7,425,000	 	 	 	0,36	 
	Ending balance	 	 	24,000,000	 	 	 	20,000,000	 	 	 	0,32	 

    21

     

    

	 	NOUVEAU
                                            MONDE GRAPHITE INC.

        Notes
to consolidated financial statements

        (Amount
expressed in thousands of Canadian dollars)

 

		16.	EXPLORATION
                                         AND EVALUATION EXPENSES

 

	 	 	December 31, 2020
 $
	 	 	December 31, 2019 

(Adjusted note 27)$	 
	Wages and benefits	 	 	2,294	 	 	 	2,040	 
	Share-based compensation	 	 	594	 	 	 	192	 
	Engineering	 	 	3,964	 	 	 	721	 
	Professional fees	 	 	506	 	 	 	1,349	 
	Materials, consumables, and supplies	 	 	1,767	 	 	 	2,279	 
	Subcontracting	 	 	1,706	 	 	 	2,594	 
	Geology and drilling	 	 	389	 	 	 	2,298	 
	Utilities	 	 	388	 	 	 	218	 
	Other	 	 	265	 	 	 	673	 
	Grants	 	 	(164	)	 	 	(329	)
	Tax credits	 	 	(1,369	)	 	 	(2,203	)
	Exploration and evaluation expenses	 	 	10,340	 	 	 	9,832	 

 

The
exploration and evaluation expenses related to the Matawinie Property in Quebec. The wages and benefits are net of the grant received
as part of the Canada Emergency Wage Subsidy program of $892 in 2020 (nil in 2019).

 

		17.	VALUE
                                         ADDED PRODUCTS EXPENSES

 

	 	 	December
31, 2020
 $
	 	 	December
31, 2019
 (Adjusted
note 27)$
	 
	Wages and benefits	 	 	768	 	 	 	467	 
	Share-based compensation	 	 	112	 	 	 	-	 
	Engineering	 	 	2,399	 	 	 	710	 
	Professional fees	 	 	866	 	 	 	772	 
	Materials, consumables, and supplies	 	 	157	 	 	 	37	 
	Subcontracting	 	 	475	 	 	 	20	 
	Other	 	 	43	 	 	 	40	 
	Grants	 	 	(1,678	)	 	 	(441	)
	Tax credits	 	 	(231	)	 	 	-	 
	Value added products expenses	 	 	2,911	 	 	 	1,605	 

 

The
value-added products expenses relate to the costs incurred to develop an advanced materials plant in Bécancour, Québec.
The wages and benefits are net of the grant received as part of the Canada Emergency Wage Subsidy program of $189 in 2020 (nil
in 2019).

 

		18.	GENERAL
                                         AND ADMINISTRATIVE EXPENSES

 

	 	 	December
31, 2020
 $
	 	 	December
31, 2019
 (Adjusted,
note 27)$
	 
	Wages and benefits	 	 	2,920	 	 	 	2,080	 
	Share-based compensation	 	 	1,323	 	 	 	505	 
	Professional fees	 	 	1,168	 	 	 	949	 
	Consulting fees	 	 	220	 	 	 	415	 
	Travelling, representation and convention	 	 	397	 	 	 	493	 
	Office and administration	 	 	727	 	 	 	501	 
	Stock exchange, authorities, and communication	 	 	111	 	 	 	127	 
	Depreciation and amortization	 	 	854	 	 	 	723	 
	Loss/(gain) on asset disposal	 	 	2	 	 	 	-	 
	Other financial fees	 	 	48	 	 	 	11	 
	General and administrative expenses	 	 	7,770	 	 	 	5,804	 

    22

     

    
	 	NOUVEAU
                                            MONDE GRAPHITE INC.

        Notes
to consolidated financial statements

        (Amount
expressed in thousands of Canadian dollars)

 

		19.	NET
                                         FINANCIAL COSTS

 

	 	 	December
31, 2020
 $
	 	 	December
31, 2019
 $
	 
	Foreign exchange loss	 	 	15	 	 	 	15	 
	Interest income	 	 	(40	)	 	 	(126	)
	Interest expense on lease liabilities	 	 	28	 	 	 	39	 
	Accretion and interest on borrowings and bond	 	 	1,213	 	 	 	327	 
	Accretion of issue costs	 	 	25	 	 	 	-	 
	Loss /(gain) of fair value on investment	 	 	22	 	 	 	(3	)
	Net financial costs	 	 	1,263	 	 	 	252	 

 

		20.	INCOME
                                         TAXES

 

The
income tax expense attributable to earnings differs from the amounts computed by applying the combined federal and provincial
statutory income tax rate of 26.5% (26.6% in 2019) to loss before income taxes as a result of the following:

 

	 	 	December
31, 2020
 $
	 	 	December
31, 2019
 $
	 
	Loss before income taxes	 	 	(17,978	)	 	 	(17,492	)
	Tax recovery computed at applicable statutory tax rate	 	 	26.50	%	 	 	26.60	%
	Tax expense at combined statutory rate	 	 	(4,617	)	 	 	(4,653	)
	Increase (decrease) in income taxes resulting from:	 	 	 	 	 	 	 	 
	Temporary difference not recorded	 	 	4,268	 	 	 	4,209	 
	Share-based payments	 	 	538	 	 	 	165	 
	Tax effect of renounced flow-through expenditures	 	 	-	 	 	 	578	 
	Recovery of flow-through share liabilities	 	 	-	 	 	 	(448	)
	Effect of change in provincial tax rate	 	 	-	 	 	 	-	 
	Rate change	 	 	-	 	 	 	5	 
	Non-taxable mining duties	 	 	(217	)	 	 	(319	)
	Other	 	 	28	 	 	 	14	 
	 	 	 	-	 	 	 	(448	)
	Composition of deferred income taxes in the income statement:	 	 	 	 	 	 	 	 
	Recovery of a flow-through share liabilities	 	 	-	 	 	 	(448	)
	Deferred tax expense	 	 	-	 	 	 	(448	)

    23

     

    
	 	NOUVEAU
                                            MONDE GRAPHITE INC.

        Notes
to consolidated financial statements

        (Amount
expressed in thousands of Canadian dollars)

 

As
at December 31, 2020 and 2019, temporary differences and unused tax losses for which the Company has not recognized deferred tax
assets are as follows:

 

	 	 	December
31, 2020
 $
	 	 	December
31, 2019
 $
	 
	FEDERAL	 	 	 	 	 	 
	Exploration and evaluation expenses	 	 	24,034	 	 	 	26,200	 
	Property and equipment	 	 	3,898	 	 	 	1,234	 
	Equity investment	 	 	646	 	 	 	624	 
	Asset retirement obligation	 	 	621	 	 	 	621	 
	Share issue expenses	 	 	629	 	 	 	1,034	 
	Research and development expenses	 	 	12,946	 	 	 	8,971	 
	Non-capital losses	 	 	30,747	 	 	 	53	 
	Other	 	 	16	 	 	 	16,772	 
	 	 	 	73,537	 	 	 	55,509	 
	PROVINCIAL	 	 	 	 	 	 	 	 
	Exploration and evaluation expenses	 	 	22,296	 	 	 	25,237	 
	Property and equipment	 	 	3,881	 	 	 	1,233	 
	Equity investment	 	 	646	 	 	 	624	 
	Asset retirement obligation	 	 	621	 	 	 	621	 
	Share issue expenses	 	 	629	 	 	 	1,020	 
	Research and development expenses	 	 	14,427	 	 	 	9,823	 
	Non-capital losses	 	 	30,791	 	 	 	53	 
	Other	 	 	16	 	 	 	16,707	 
	 	 	 	73,308	 	 	 	55,320	 

 

The
ability to realize the tax benefits is dependent upon several factors, including the future profitability of operations. Deferred
tax assets are recognized only to the extent that it is probable that sufficient taxable profits will be available to allow the
asset to be recovered.

 

As
at December 31, 2020, the Company’s accumulated non-capital losses for tax purposes which can be used to reduce taxable
income in future years as follows:

 

	Year incurred	 	 	Expiration date	 	 	Federal	 	 	Provincial	 
	2020	 	 	 	2040	 	 	 	14,148	 	 	 	14,122	 
	2019	 	 	 	2039	 	 	 	5,381	 	 	 	5,457	 
	2018	 	 	 	2038	 	 	 	4,138	 	 	 	4,044	 
	2017	 	 	 	2037	 	 	 	2,526	 	 	 	2,764	 
	2016	 	 	 	2036	 	 	 	1,447	 	 	 	1,361	 
	2015	 	 	 	2035	 	 	 	873	 	 	 	844	 
	2014	 	 	 	2034	 	 	 	662	 	 	 	644	 
	2013	 	 	 	2033	 	 	 	747	 	 	 	738	 
	2012	 	 	 	2032	 	 	 	765	 	 	 	757	 
	2011	 	 	 	2031	 	 	 	61	 	 	 	59	 

 

The
Company has investment tax credit carryovers of $1,264 ($1,264 in 2019) that expire between 2036 and 2039, which are available
to reduce income taxes payables in future years.

    24

     

    
	 	NOUVEAU
                                            MONDE GRAPHITE INC.

        Notes
to consolidated financial statements

        (Amount
expressed in thousands of Canadian dollars)

 

		21.	ADDITIONAL
                                         CASH FLOW INFORMATION

 

	 	 	 	 	 	December
31, 2020 
 $
	 	 	December 31, 2019 

(Adjusted, note 27)$	 
	Grants receivable	 	 	9	 	 	 	(596	)	 	 	3	 
	Deferred grants	 	 	9	 	 	 	1,511	 	 	 	-	 
	Mining tax credits	 	 	 	 	 	 	(1,406	)	 	 	(2,203	)
	Sales taxes receivable	 	 	 	 	 	 	(68	)	 	 	311	 
	Prepaid expenses	 	 	 	 	 	 	85	 	 	 	(247	)
	Accounts payable and accrued liabilities	 	 	10	 	 	 	339	 	 	 	(878	)
	Total net change in working capital	 	 	 	 	 	 	(135	)	 	 	(3,014	)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Items not affecting cash	 	 	 	 	 	 	 	 	 	 	 	 
	Accounts payable and accrued liabilities included in property and equipment assets	 	 	 	 	 	 	944	 	 	 	-	 

 

		22.	RELATED
                                         PARTY TRANSACTIONS

 

	 	 	December
31, 2020
 $
	 	 	December
31, 2019
 $
	 
	Key management personnel of the Company	 	 	 	 	 	 	 	 
	Employee benefit expenses	 	 	1,238	 	 	 	990	 
	Share-based payments	 	 	398	 	 	 	184	 
	 	 	 	 	 	 	 	 	 
	Directors of the Company	 	 	 	 	 	 	 	 
	Board fees	 	 	91	 	 	 	95	 
	Share-based payments	 	 	305	 	 	 	159	 

 

In
addition to transactions with Pallinghurst disclosed elsewhere in the financial statements and in accordance with IAS 24 Related
Party Disclosures, key management personnel have authority and responsibility for planning, directing and controlling the
activities of the Company directly or indirectly, including any directors (executive and non-executive) of the Company.

 

For
the year ended December 31, 2020, the Company’s interest expense totalled $1,006 (December 31, 2019 - $97) in regards of
its debt and convertible bond agreements signed with Pallinghurst. As at December 31, 2020, Pallinghurst owns 19.18% of the Company’s
issued and outstanding common shares and has significant influence over the Company (2019 – 19.99%).

 

Severance

 

The
Company has commitments under certain management contracts with key executives. Minimum commitments under these contracts are
approximately $881. These contracts require additional minimum payments of approximately $2,003 to be made upon the occurrence
of certain events, such as a change of control. As a triggering event has not taken place, the contingent payments have not been
reflected in these consolidated financial statements.

 

		23.	INFORMATION
                                         DISCLOSURE ABOUT CAPITAL MANAGEMENT

 

The
Company monitors capital based on the carrying amount of equity and loans and totals $12,036 as at December 31, 2020 ($11,864
as at December 31, 2019).

 

The
objective of the Company’s capital management is to preserve its ability to continue its operations and its program of acquisition,
exploration, evaluation and development of mineral properties. It manages its capital structure and adjusts based on economic
conditions and risk characteristics of underlying assets.

 

The
Company is not subject to externally imposed capital requirements. Changes in capital are described in the consolidated statements
of changes in equity and notes 13 and 14.

 

The
properties in which the Company currently has an interest are in the exploration, evaluation, and development stage; as such,
the Company is dependent on external financing to fund its activities. To carry out the planned exploration, evaluation and development
and pay for administrative costs, the Company will spend its existing working capital and raise additional amounts as needed.

    25

     

    
	 	NOUVEAU
                                            MONDE GRAPHITE INC.

        Notes
to consolidated financial statements

        (Amount
expressed in thousands of Canadian dollars)

 

		24.	Financial
                                         instruments and risk management

 

CLASSIFICATION
AND CARRYING AMOUNT OF FINANCIAL INSTRUMENTS

 

The
Company’s financial instruments as at December 31, 2020 and 2019 consist of the following:

 

	 	 	As at December 31, 2020	 
	 	 	At
fair value through
 profit
or loss
 $
	 	 	

                                               Amortized cost
 $
	 	 	
 Total
 $
	 
	FINANCIAL ASSETS	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cash	 	 	 	 	 	 	-	 	 	 	4,520	 	 	 	4,520	 
	Grants and other receivables	 	 	11	 	 	 	-	 	 	 	829	 	 	 	829	 
	Total financial assets	 	 	 	 	 	 	-	 	 	 	5,349	 	 	 	5,349	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FINANCIAL LIABILITIES	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Account payables and accrued liabilities	 	 	10	 	 	 	-	 	 	 	6,988	 	 	 	6,988	 
	Borrowings	 	 	13	 	 	 	-	 	 	 	1,793	 	 	 	1,793	 
	Convertible bond	 	 	14	 	 	 	-	 	 	 	14,505	 	 	 	14,505	 
	Total financial liabilities	 	 	 	 	 	 	-	 	 	 	23,286	 	 	 	23,286	 

 

	 	 	As at December 31, 2019	 
	 	 	At
                                                                               fair value through
 profit
or loss
 $
	 	 	Amortized
cost
 $
	 	 	Total
 $
	 
	FINANCIAL ASSETS	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cash	 	 	 	 	 	 	-	 	 	 	4,077	 	 	 	4,077	 
	Grants and other receivables	 	 	11	 	 	 	-	 	 	 	233	 	 	 	233	 
	Investment	 	 	 	 	 	 	22	 	 	 	-	 	 	 	22	 
	Total financial assets	 	 	 	 	 	 	22	 	 	 	4,310	 	 	 	4,333	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FINANCIAL LIABILITIES	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Account payables and accrued liabilities	 	 	10	 	 	 	-	 	 	 	4,908	 	 	 	4,908	 
	Borrowings	 	 	13	 	 	 	-	 	 	 	4,502	 	 	 	4,502	 
	Total financial liabilities	 	 	 	 	 	 	-	 	 	 	9,410	 	 	 	9,410	 

 

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.

 

Investments
in shares measured at fair value in the statement of financial position as at December 31, 2019, were classified in Level 1. For
all other financial assets and liabilities, their net carrying amount is a reasonable approximation of fair value given their
relatively short maturities.

    26

     

    
	 	NOUVEAU
                                            MONDE GRAPHITE INC.

        Notes
to consolidated financial statements

        (Amount
expressed in thousands of Canadian dollars)

 

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.

 

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 December 31, 2020, all of the Company’s short-term liabilities totalled $10,587 ($9,869 as at December 31, 2019), 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 first quarter of 2021 (described in note 26), 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 December 31, 2020	 
	 	 	Carrying
 amount
	 	 	Contractual
 cash
flow
	 	 	0
to 12
 months
	 	 	12
to 24
 months
	 	 	more
than 24
 months
	 
	Account payables and accrued liabilities	 	 	6,988	 	 	 	6,988	 	 	 	6,988	 	 	 	-	 	 	 	-	 
	Lease liabilities	 	 	1,076	 	 	 	1,140	 	 	 	321	 	 	 	440	 	 	 	379	 
	Borrowings	 	 	1,793	 	 	 	1,824	 	 	 	1,824	 	 	 	-	 	 	 	-	 
	Convertible bond	 	 	14,505	 	 	 	21,408	 	 	 	2,427	 	 	 	2,427	 	 	 	16,554	 

 

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 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.

 

		25.	Commitments

 

Royalty

 

The
Company issued a 3% net smelter royalty over the Matawinie graphite property to Pallinghurst for an aggregate purchase price of
$4,306. For a period of three years following issuance thereof, the royalty is subject to a 1% buy back right in favour of the
Company for a buy-back price of $1,306 plus an amount equal to interest accrual at a rate of 9% per annum from and after the closing
of the royalty transaction up to the buyback date.

 

Matawinie
Property

 

A
large part of the property is subject to a 2% NSR. Each tranche of 1% can be purchased by the Company for $1,000.

    27

     

    
	 	NOUVEAU
                                            MONDE GRAPHITE INC.

        Notes
to consolidated financial statements

        (Amount
expressed in thousands of Canadian dollars)

 

Demonstration
plant in Bécancour

 

As
at December 31, 2020, the Company has commitments of $4,956 related to the construction of the graphite purification demonstration
plant in Bécancour.

 

Collaboration
and sharing of benefits.

 

On
January 23, 2020, the Company signed a benefit-sharing agreement with the municipality of Saint-Michel-des-Saints as part of the
Matawinie mining project. Through this new agreement and throughout the mine’s commercial operating life, the Company will
contribute up to 2% of its net future positive cash flow after taxes to the municipality.

 

		26.	Subsequent
                                         events

 

Subsequently
to year end and up to April 6, 2021, the total cash proceeds from issuance of shares sums to $41,5M:

		-	On
                                         January 20, 2021, the Company closed an equity financing in the amount of $17,3M where
                                         the Company issued a total of 11,896,750 common shares at a price of $1.45 per common
                                         share. Of this amount, Pallinghurst, purchased 2,379,316 common shares.

		-	On
                                         February 1, 2021, the Company secured $17,6M from the exercise of previously issued warrants.

		-	On
                                         February 12, 2021, the Company closed an equity financing in the amount of $5,8M where
                                         the Company issued a total of 3,965,516 common shares at a price of $1.45 per common
                                         share. Of this amount, Investissement Québec, acting as mandatory for the government
                                         of Québec, subscribed for 3,172,413 common shares, and Pallinghurst subscribed
                                         for the remainder of the common shares.

		-	2,720,000
                                         options have been exercised for proceeds totaling $759.

 

During
March 2021, the Company received $1.35M as part of a repayable contribution agreement with Canada Economic Development for Quebec
Regions. This contribution agreement bears no interest and will be repayable in 60 equal monthly installments starting September
2023.

 

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. Any quantity relating to these instruments for 2020 and up to March 24, 2021 or any per unit
price such as exercise prices disclosed throughout the consolidated financial statements have not been retrospectively adjusted
for the share consolidation except for the weighted average number of shares outstanding used in the calculation of basic and
diluted EPS which have been retroactively adjusted to give effect to the share consolidation as required by IAS 33.

 

		27.	CHANGE
                                         IN ACCOUNTING POLICY

 

The
Company has historically capitalized all expenses related to Exploration and Evaluation (E&E) activities under IFRS 6 Exploration
for and Evaluation of Mineral Resources.

 

During
the year ended December 31, 2020, the Company voluntarily changed its accounting policy regarding E&E expenses. The new accounting
policy indicates that all E&E expenses will be recorded on the statement of loss (income) and comprehensive loss (income).

 

This
change has been implemented for all E&E activities on the Matawinie property. The Company has determined that this voluntary
change in accounting policy will provide more relevant financial information and meaningful disclosure while bringing the Company
in line with its peers with a similar accounting approach.

 

Under
IAS 8 Accounting Policies, changes in Accounting Estimates and Errors, the change in accounting policy was made retroactively
and the comparative information was adjusted for all the periods presented, as if the policy had always been in place. See the
table below for impacts on the consolidated financial statements:

    28

     

    
	 	NOUVEAU
                                            MONDE GRAPHITE INC.

        Notes
to consolidated financial statements

        (Amount
expressed in thousands of Canadian dollars)

 

		A)	ADJUSTMENT
                                         OF CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

	 	 	As
previously reported
 $
	 	 	Impact
 $
	 	 	Adjusted
 $
	 
	 	 	As at January 1, 2019	 
	ASSETS	 	 	 	 	 	 	 	 	 
	Exploration and evaluation assets	 	 	24,252	 	 	 	(24,252	)	 	 	-	 
	Total assets	 	 	37,679	 	 	 	(24,252	)	 	 	13,427	 
	LIABILITIES	 	 	 	 	 	 	 	 	 	 	 	 
	Deferred tax liability	 	 	3,861	 	 	 	(3,861	)	 	 	-	 
	Total liabilities	 	 	14,024	 	 	 	(3,861	)	 	 	10,163	 
	EQUITY	 	 	 	 	 	 	 	 	 	 	 	 
	Deficit	 	 	(21,586	)	 	 	(20,391	)	 	 	(41,977	)
	Total equity (deficiency)	 	 	23,655	 	 	 	(20,391	)	 	 	3,264	 
	Total liabilities and equity (deficiency)	 	 	37,679	 	 	 	(24,252	)	 	 	13,427	 

 

	 	 	As at December 31, 2019	 
	ASSETS	 	 	 	 	 	 	 	 	 	 	 	 
	Exploration and evaluation assets	 	 	35,689	 	 	 	(35,689	)	 	 	-	 
	Total assets	 	 	53,083	 	 	 	(35,689	)	 	 	17,394	 
	LIABILITIES	 	 	-	 	 	 	-	 	 	 	-	 
	Deferred tax liability	 	 	5,084	 	 	 	(5,084	)	 	 	-	 
	Total liabilities	 	 	15,724	 	 	 	(5,084	)	 	 	10,640	 
	EQUITY	 	 	-	 	 	 	-	 	 	 	-	 
	Deficit	 	 	(28,417	)	 	 	(30,605	)	 	 	(59,022	)
	Total equity (deficiency)	 	 	37,359	 	 	 	(30,605	)	 	 	6,754	 
	Total liabilities and equity (deficiency)	 	 	53,083	 	 	 	(35,689	)	 	 	17,394	 

 

		B)	ADJUSTMENT
                                         OF CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

 

	 	 	As
previously reported
 $ 
	 	 	Impact
 $
	 	 	Adjusted
 $
	 
	 	 	For the year ended December 31, 2019	 
	EXPENSES	 	 	 	 	 	 	 	 	 
	Exploration and evaluation expenses	 	 	-	 	 	 	9,832	 	 	 	9,832	 
	Value added products expenditures	 	 	-	 	 	 	1,605	 	 	 	1,605	 
	Deferred tax expense	 	 	775	 	 	 	(1,223	)	 	 	(448	)
	Net loss and comprehensive loss	 	 	6,831	 	 	 	10,214	 	 	 	17,045	 
	Basic and diluted loss per share (note 15.2)	 	 	0.30	 	 	 	0.45	 	 	 	0.75	 

 

		C)	ADJUSTMENT
                                         OF CONSOLIDATED STATEMENTS OF CASH FLOWS

 

	 	 	As
previously reported
 $
	 	 	Impact
 $
	 	 	Adjusted
 $
	 
	 	 	For the year ended December 31, 2019	 
	Cash flows used in operating activities	 	 	(5,140	)	 	 	(13,513	)	 	 	(18,653	)
	Cash flows used in investing activities	 	 	(15,186	)	 	 	13,513	 	 	 	(1,673	)

    29

     

    
	 	NOUVEAU
                                            MONDE GRAPHITE INC.

        Notes
to consolidated financial statements

        (Amount
expressed in thousands of Canadian dollars)

 

		28.	CHANGE
                                         IN ACCOUNTING POLICIES - QUARTERLY ADJUSTMENTS (UNAUDITED- SUPPLEMENTARY INFORMATION)

 

		A)	ADJUSTMENT
                                         OF CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

	 	 	As
previously reported
 $
	 	 	Impact
 $
	 	 	Adjusted
 $
	 
	 	 	As at March 31, 2020	 
	ASSETS	 	 	 	 	 	 	 	 	 	 	 	 
	Exploration and evaluation assets	 	 	39,467	 	 	 	(39,467	)	 	 	-	 
	Property and equipment assets	 	 	2,859	 	 	 	130	 	 	 	2,989	 
	Total assets	 	 	55,591	 	 	 	(39,337	)	 	 	16,254	 
	LIABILITIES	 	 	 	 	 	 	 	 	 	 	 	 
	Deferred tax liability	 	 	5,518	 	 	 	(5,518	)	 	 	-	 
	Total liabilities	 	 	20,196	 	 	 	(5,518	)	 	 	14,678	 
	EQUITY	 	 	 	 	 	 	 	 	 	 	 	 
	Deficit	 	 	(30,442	)	 	 	(33,819	)	 	 	(64,261	)
	Total equity (deficiency)	 	 	35,395	 	 	 	(33,819	)	 	 	1,576	 
	Total liabilities and equity (deficiency)	 	 	55,591	 	 	 	(39,337	)	 	 	16,254	 

 

	 	 	As at June 30, 2020	 
	ASSETS	 	 	 	 	 	 	 	 	 	 	 	 
	Exploration and evaluation assets	 	 	42,312	 	 	 	(42,312	)	 	 	-	 
	Property and equipment assets	 	 	3,084	 	 	 	249	 	 	 	3,333	 
	Total assets	 	 	57,006	 	 	 	(42,063	)	 	 	14,933	 
	LIABILITIES	 	 	 	 	 	 	 	 	 	 	 	 
	Deferred tax liability	 	 	6,258	 	 	 	(6,258	)	 	 	-	 
	Total liabilities	 	 	23,540	 	 	 	(6,258	)	 	 	17,282	 
	EQUITY	 	 	 	 	 	 	 	 	 	 	 	 
	Deficit	 	 	(32,463	)	 	 	(35,805	)	 	 	(68,268	)
	Total equity (deficiency)	 	 	33,466	 	 	 	(35,805	)	 	 	(2,339	)
	Total liabilities and equity (deficiency)	 	 	57,006	 	 	 	(42,063	)	 	 	14,943	 

 

	 	 	As at September 30, 2020	 
	ASSETS	 	 	 	 	 	 	 	 	 	 	 	 
	Exploration and evaluation assets	 	 	40,841	 	 	 	(40,841	)	 	 	-	 
	Property and equipment assets	 	 	3,051	 	 	 	407	 	 	 	3,458	 
	Total assets	 	 	62,218	 	 	 	(40,434	)	 	 	21,784	 
	LIABILITIES	 	 	 	 	 	 	 	 	 	 	 	 
	Deferred tax liability	 	 	6,808	 	 	 	(6,808	)	 	 	-	 
	Total liabilities	 	 	30,560	 	 	 	(6,808	)	 	 	23,752	 
	EQUITY	 	 	 	 	 	 	 	 	 	 	 	 
	Deficit	 	 	(35,145	)	 	 	(33,626	)	 	 	(68,771	)
	Total equity (deficiency)	 	 	31,658	 	 	 	(33,626	)	 	 	(1,968	)
	Total liabilities and equity (deficiency)	 	 	62,218	 	 	 	(40,434	)	 	 	21,784	 

    30

     

    
	 	NOUVEAU
                                            MONDE GRAPHITE INC.

        Notes
to consolidated financial statements

        (Amount
expressed in thousands of Canadian dollars)

 

		B)	ADJUSTMENT
                                         OF CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

 

	 	 	As
previously reported
 $
	 	 	Impact
 $
	 	 	Adjusted
 $
	 
	 	 	For the three-month period ended March 31, 2020	 
	EXPENSES	 	 	 	 	 	 	 	 	 
	Exploration and evaluation expenses	 	 	-	 	 	 	3,097	 	 	 	3,097	 
	Value added products expenditures	 	 	-	 	 	 	552	 	 	 	552	 
	Deferred tax expense	 	 	433	 	 	 	(433	)	 	 	-	 
	Net loss and comprehensive loss	 	 	2,025	 	 	 	3,216	 	 	 	5,240	 
	Basic and diluted loss per share (note 15.2)	 	 	0.077	 	 	 	0.123	 	 	 	0.200	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	For the six-month period ended June 30, 2020	 
	EXPENSES	 	 	 	 	 	 	 	 	 	 	 	 
	Exploration and evaluation expenses	 	 	-	 	 	 	5,130	 	 	 	5,130	 
	Value added products expenditures	 	 	-	 	 	 	1,244	 	 	 	1,244	 
	Deferred tax expense	 	 	1,173	 	 	 	(1,173	)	 	 	-	 
	Net loss and comprehensive loss	 	 	4,047	 	 	 	5,201	 	 	 	9,248	 
	Basic and diluted loss per share (note 15.2)	 	 	0.155	 	 	 	0.199	 	 	 	0.354	 

 

	 	 	For the nine-month period ended September 30, 2020	 
	EXPENSES	 	 	 	 	 	 	 	 	 	 	 	 
	Exploration and evaluation expenses	 	 	-	 	 	 	2,689	 	 	 	2,689	 
	Value added products expenditures	 	 	-	 	 	 	2,056	 	 	 	2,056	 
	Deferred tax expense	 	 	1,723	 	 	 	(1,723	)	 	 	-	 
	Net loss and comprehensive loss	 	 	6,728	 	 	 	3,021	 	 	 	9,749	 
	Basic and diluted loss per share (note 15.2)	 	 	0.257	 	 	 	0.115	 	 	 	0.372	 

 

		C)	ADJUSTMENT
                                         OF CONSOLIDATED STATEMENTS OF CASH FLOWS

 

	 	 	As
previously reported
 $
	 	 	Impact
 $
	 	 	Adjusted
 $
	 
	 	 	For the three-month period ended March 31,
    2020	 
	Cash flows used in operating activities	 	 	(1,629	)	 	 	(1,265	)	 	 	(2,894	)
	Cash flows used in investing activities	 	 	(1,556	)	 	 	1,265	 	 	 	(291	)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	For the six-month period ended June 30, 2020	 
	Cash flows used in operating activities	 	 	(2,135	)	 	 	(3,610	)	 	 	(5,745	)
	Cash flows used in investing activities	 	 	(4,227	)	 	 	3,610	 	 	 	(617	)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	For the nine-month period ended September 30, 2020	 
	Cash flows used in operating activities	 	 	(4,065	)	 	 	(7,979	)	 	 	(12,044	)
	Cash flows used in investing activities	 	 	(8,759	)	 	 	7,979	 	 	 	(780	)

    31Exhibit 4.13

 

 

 

    

     

    

TABLE
OF CONTENTS

 

	ANNUAL
    INFORMATION FORM	1
	 	 
	PRELIMINARY
    COMMENTS	3
	 	 
	FORWARD-LOOKING
    STATEMENTS	3
	 	 
	CORPORATE
    STRUCTURE	4
	NAME,
    ADDRESS AND INCORPORATION	4
	INTERCORPORATE
    RELATIONSHIPS	5
	 	 
	GENERAL
    DEVELOPMENT OF THE BUSINESS	5
	INTRODUCTION
    AND GENERAL OUTLOOK	5
	LIB
    ANODE PLANT PROJECT	6
	MATAWINIE
    MINE PROJECT	13
	ACCOMPLISHMENTS
    AND RECENT DEVELOPMENTS	14
	OBJECTIVES	17
	THREE-YEAR
    HISTORY	18
	 	 
	DESCRIPTION
    OF THE INDUSTRY	34
	THE
    CORPORATION’S INDUSTRY FOCUS - BATTERY MATERIAL AND SPECIALTY GRAPHITE APPLICATIONS	34
	NATURAL
    GRAPHITE DEMAND	34
	GRAPHITE
    SUPPLY	42
	SUPPLY
    AND DEMAND BALANCE	44
	NATURAL
    GRAPHITE PRICING	45
	 	 
	DESCRIPTION
    OF THE BUSINESS	46
	GENERAL	46
	DESCRIPTION
    OF THE MINERAL PROPERTIES	47
	RISK
    FACTORS	75
	 	 
	DIVIDENDS	96
	 	 
	DESCRIPTION
    OF CAPITAL STRUCTURE	96
	COMMON
    SHARES	96
	WARRANTS	97
	COMPENSATION
    OPTIONS	97
	STOCK
    OPTIONS ISSUED UNDER THE STOCK OPTION PLAN	97
	 	 
	AGREEMENTS
    WITH PALLINGHURST GRAPHITE	100
	BOND	100
	AMENDED
    AND RESTATED INVESTMENT AGREEMENT	100
	ROYALTY	100
	ASSIGNMENT
    AND ASSUMPTION AGREEMENT	101

    

     

    

	MARKET
    FOR SECURITIES	102
	MARKET	102
	TRADING
    PRICE AND VOLUME	102
	 	 
	PRIOR
    SALES	103
	 	 
	ESCROWED
    SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER	104
	 	 
	DIRECTORS
    AND EXECUTIVE OFFICERS	104
	NAME,
    OCCUPATION AND SECURITIES HOLDING	104
	CEASE
    TRADE ORDERS, BANKRUPTCIES, PENALTIES OR SANCTIONS	106
	 	 
	CONFLICTS
    OF INTEREST	107
	 	 
	LEGAL
    PROCEEDINGS AND REGULATORY ACTIONS	107
	 	 
	INTEREST
    OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS	108
	 	 
	TRANSFER
    AGENT AND REGISTRAR	109
	 	 
	MATERIAL
    CONTRACTS	109
	 	 
	INTERESTS
    OF EXPERTS	110
	 	 
	ADDITIONAL
    INFORMATION	111

    ii

     

    

PRELIMINARY
COMMENTS

 

In
this annual information form (“Annual Information Form”), unless the context otherwise requires, Nouveau Monde
Graphite Inc. is referred to as the “Corporation” or “Nouveau Monde”. The information in this
Annual Information Form is dated as at December 31, 2020, unless indicated otherwise. Unless otherwise specified in this Annual
Information Form, numbers and price of the common shares of the Corporation (the “Common Shares”) and any other
information on securities convertible into Common Shares are stated prior to giving effect to the Consolidation (as defined herein).

 

Unless
otherwise indicated in this Annual Information Form, all references to “$”, “CAD$” or “dollars”
refer to Canadian dollars and all references to “US$” refer to United States dollars.

 

FORWARD-LOOKING
STATEMENTS

 

This
Annual Information Form contains forward-looking statements which relate to future events or future performance and reflect management’s
expectations and assumptions regarding the Corporation’s growth, results, performance and business prospects and opportunities.
Such forward-looking statements reflect management’s current beliefs and are based on information currently available to it. In
some cases, forward looking statements can be identified by words such as “may”, “would”, “could”,
 “will”, “should”, “expect”, “intend”, “aim”, “attempt”, “anticipate”,
 “believe”, “study”, “target”, “estimate”, “forecast”, “predict”, “outlook”,
 “mission”, “aspire”, “plan”, “schedule”, “potential”, “progress” or
the negative of these terms or other similar expressions concerning matters that are not historical facts. In particular, statements
regarding the Corporation’s future results, the intended construction and commissioning timeline of the Matawinie Mine (as defined
herein), the LiB Anode Plant (as defined herein), the Purification Demonstration Plant (as defined herein) and the Coating Demonstration
Plant (as defined herein), the intended operation and performance of the Shaping Demonstration Plant (as defined herein) and the
Flake Demonstration Plant (as defined herein), the economic performance and product development efforts, the potential additional
listing on the New York Stock Exchange (the “NYSE”), as well as the Corporation’s achievement of milestones,
including the ability to obtain sufficient financing for the Matawinie Mine project and the LiB Anode Plant project, are or involve
forward looking statements.

 

Forward-looking
information is based on reasonable assumptions that have been made by the Corporation as at the date of such information and is
subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance
or achievements of the Corporation to be materially different from those expressed or implied by such forward-looking information,
including but not limited to, the actual results of current development, engineering and planning activities, access to capital
and future prices of graphite and those factors discussed in the section entitled “Risk Factors” in this Annual Information
Form. Forward-looking information in this Annual Information Form contains, among other things, disclosure regarding: the Corporation’s
development activities and production plans, including the operation of the Shaping Demonstration Plant and the Flake Demonstration
Plant; the construction and commissioning, as applicable, of the Matawinie Mine project, the LiB Anode Plant project, the Purification
Demonstration Plant and the Coating Demonstration Plant; the impact of the COVID-19 pandemic (“COVID-19”) on
the Corporation’s operations; the future outlook, corporate development and strategy of the Corporation; the Corporation’s projected
capital and operating expenditures; the estimates of mineral resources and mineral reserves; the Corporation’s green and sustainable
lithium-ion active anode material (“Anode Material”) initiatives; the government regulation of mining operations,
environmental regulation and compliance; the realization of the expected economics of the construction and operation of the Matawinie
Mine project and the LiB Anode Plant project; the potential additional listing on the NYSE; the trading price of the Common Shares
meeting the listing requirements for the NYSE; the ability to obtain sufficient financing and the permitting required for the
development of the Matawinie Mine project and the LiB Anode Plant project; and business opportunities that become available to,
or are pursued by the Corporation.

    
	 	3	Annual Information Form

     

    

Forward-looking
statements are based on assumptions management believes to be reasonable, including but not limited to: general business and economic
conditions; there being no direct operational impacts resulting from infectious diseases or pandemics such as the ongoing COVID-19
pandemic; the supply and demand for, deliveries of, and the level and volatility of prices for graphite products; the speculative
nature of mineral exploration and development; changes in mineral production performance, exploitation and exploration successes;
the risk that exploration data may be incomplete and additional work may be required to complete further evaluation, including
but not limited to drilling, engineering, and socioeconomic studies and investment; the timing of the receipt of necessary regulatory
and governmental permits and approvals for the Matawinie Mine and LiB Anode Plant; the availability of financing for the Corporation’s
development of its properties and construction of its facilities and installations on reasonable terms; the ability to procure
equipment and operating supplies in sufficient quantities and on a timely basis; increased costs, delays, suspensions and technical
challenges associated with the development of the Matawinie Mine and the LiB Anode Plant; the ability to attract and retain skilled
staff; development and production timetables; competition and market risks; pricing pressures; the accuracy of the Corporation’s
mineral resource and mineral reserve estimates (including, with respect to size, grade and recoverability) as well as the geological,
operational and price assumptions on which they are based; the fact that certain business improvement initiatives are still in
the early stages of evaluation, and additional engineering and other analysis is required to fully assess their impact; the fact
that certain of the initiatives described in this Annual Information Form are still in the early stages and may not materialize;
business continuity and crisis management; and such other assumptions and factors as set out herein and in this Annual Information
Form.

 

Although
the Corporation has attempted to identify important factors that could cause actual results to differ materially from those contained
in forward-looking information, there may be other factors that may cause results not to be as anticipated, estimated or intended.
There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially
from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information.
The Corporation does not undertake to update or revise any forward looking information that is included or incorporated by
reference herein, whether as a result of new information, future events or otherwise, except in accordance with applicable securities
laws.

 

CORPORATE
STRUCTURE

 

Name,
Address and Incorporation

 

The
Corporation was formed on December 31, 2012 pursuant to the Canada Business Corporation Act (the “CBCA”) under
the name “Nouveau Monde Mining Enterprises Inc. / Entreprises minières du Nouveau Monde Inc.” as a result of
the amalgamation of “Tucson Acquisition Corporation”, a capital pool company, and “New World Mining Enterprises
Inc. / Entreprises minières du Nouveau-Monde Inc.”, a private company located in Gatineau, Québec. On February
6, 2017, the Corporation filed articles of amendment in order to change its name to “Nouveau Monde Graphite Inc.”. On
March 24, 2021, the Corporation filed articles of amendment in order to implement the Consolidation on the basis of the Consolidation
Ratio.

    
	 	4	Annual Information Form

     

    

The
Corporation’s head and registered office is located at 331 Brassard Street, Saint-Michel-des-Saints, Québec J0K 3B0. Global
operational headquarters are maintained in Montréal, Québec and supported by a sales and corporate office in London,
United Kingdom, for European developments.

 

Intercorporate
Relationships

 

As
of the date of this Annual Information Form, the Corporation beneficially owns 100% of the voting shares of Nouveau Monde District
Inc., incorporated under the CBCA and 100% of the voting shares of Nouveau Monde Europe Limited, incorporated under the Companies
Act 2006 (United Kingdom). Nouveau Monde District Inc. currently holds properties in Saint-Michel-des-Saints and is expected
to continue purchasing other properties in the near future. Nouveau Monde Europe Limited has been created on October 12, 2020.

 

The
following diagram illustrates the aforementioned intercorporate relationships between the Corporation and its material subsidiaries
as at the date of this Annual Information Form:

 

 

 

GENERAL
DEVELOPMENT OF THE BUSINESS

 

Introduction
and General Outlook

 

The
Corporation is a Québec-based company whose mission is to become a major producer of advanced graphite materials with a
carbon-neutral footprint. The Corporation is working towards developing a fully integrated source of green and sustainable battery
Anode Material in Québec, Canada. The Corporation is developing advanced carbon-neutral graphite-based solutions for the
growing lithium-ion battery (“LiB”) and fuel cell markets, and other value-added graphite products (“VAP”).
With low-cost operations and high environmental, social & governance (“ESG”) standards, the Corporation aspires
to become a strategic supplier to the world’s leading battery and auto manufacturers, ensuring robust and reliable advanced material,
while promoting supply chain traceability.

    
	 	5	Annual Information Form

     

    

The
Corporation’s activities are currently focused on the Matawinie Mine and the LiB Anode Plant, both of which are progressing concurrently
towards commercial operations.

 

	LiB Anode Plant Project	 
	Phase 2 – LiB Anode Plant	 
	 	 
	Phase 1 – LiB Anode Demonstration Plants	 
	 	 
	Shaping Demonstration Plant	Since February 2020, the Corporation has been
    operating two commercial scale shaping units.
	 	 
	Purification Demonstration Plant	The purification demonstration unit is currently
    being deployed at a 1,500 tonnes per annum (“tpa”) nameplate capacity and its commissioning is scheduled
    for mid-2021.
	 	 
	Coating Demonstration Plant	The Corporation is currently in the detailed
    engineering phase and has initiated the procurement to build the first module of the Phase 1 2,000 tpa capacity coating demonstration
    unit that is scheduled to be commissioned early in 2022.
	 	 
	Matawinie Mine Project	 
	Phase 2 – Matawinie Mine	Commissioning of commercial operations (Phase
    2) at the Matawinie Mine is scheduled for 2023.
	 	 
	Phase 1 – Matawinie Mine Demonstration
    Plant	 
	 	 
	Flake Demonstration Plant	Since September 2018, the Corporation has been
    operating a flake concentration demonstration plant.

 

LiB
Anode Plant Project

 

The
Corporation’s planned commercial VAP transformation plant (the “LiB Anode Plant”) deployment strategy is divided
in two phases: the Phase 1 is currently under construction in its existing facilities in Saint Michel-des-Saints and in Olin Corporation’s
(“Olin”) facility in the industrial park of Bécancour, Québec; and the LiB Anode Plant for the
Phase 2 is planned to be located on a 200,000-m2 parcel of land in the industrial park of Bécancour, Québec,
which the Corporation announced it had acquired on January 21, 2021. The Corporation’s Phase 2 site for the LiB Anode Plant in
Bécancour is strategically situated for large-scale Anode Material production, with proximity to potential customers, access
to key utilities (e.g., water, hydropower, gas), an adjacent chlor-alkali producer which provides access to key consumables, a
skilled workforce and an adjacent deep-water international port on the St. Lawrence River.

    
	 	6	Annual Information Form

     

    

The
LiB Anode Plant will be equipped to produce a wide range of graphite-based materials through onsite micronization, spheronization,
purification and coating transformation units. At this modular facility, the Corporation will initially target a Phase 1 of 2,000
tpa capacity with a planned expansion to 42,000 tpa production of Anode Material for the Phase 2, with an evaluation underway
to increase capacity as demand increases in battery and specialty markets. As announced on April 13, 2021, the Corporation aims
for the LiB Anode Plant to be carbon-neutral, bringing to market a sustainable product. For further details on the risk factors
associated with the LiB Anode Plant, see “Risk Factors” in this Annual Information Form.

 

Figure
 – Planned LiB Anode Plant

 

 

 

Phase
1 - Demonstration Plants

 

Shaping
Demonstration Plant

 

The
Corporation has been operating a demonstration plant since February 2020 (the “Shaping Demonstration Plant”).
The Shaping Demonstration Plant allows the Corporation to optimize the process parameters for two essential aspects of the future
Anode Material production, micronization and spheronization, to manufacture dense spherical graphite particles with the highest
possible yield and throughputs using the feedstock from the high purity flake concentrate from the Flake Demonstration Plant.

    
	 	7	Annual Information Form

     

    

Figure
 – Spheronization Equipment at the Shaping Demonstration Plant

 

 

 

The
micronization process typically uses jet or hammer mills to decrease graphite concentrate flakes to the desired size, before being
split into different size fractions using an air classifier. Spheronization modifies the micronized graphite further by rounding
the graphite shape in preparation for use as battery Anode Material. The Corporation’s Shaping Demonstration Plant uses flake
concentrate feedstock from its Flake Demonstration Plant and processes it through a micronization system to decrease the average
flake size to <45 micrometre (“μm”). The micronization unit has the capacity to produce from 120 to 180 kilograms
(“kg”) of micronized graphite per hour (“kg/hr”), which is fed through the spheronization system
at 125 kg/hr. The Corporation has tested the production of 7 μm to 35μm sized spheronized graphite and achieved yields
of >60%. Up to 16 tonnes of spheronized graphite has been produced thus far, thereby, de risking the shaping process and preparing
material for purification tests and commercial sales discussions.

 

Purification
Demonstration Plant

 

In
January 2021, the Corporation started the construction of a purification demonstration plant (the “Purification Demonstration
Plant”) within existing space at Olin’s facility in the industrial park of Bécancour, Québec. On October
26, 2020, the Corporation signed a five-year agreement with Olin, the largest chlor-alkali producer in the world, for the use
of commercial space and to supply chemical consumables and site services to support the commercialization of the Corporation’s
low-carbon, thermochemical purification process. The Purification Demonstration Plant is scheduled to be commissioned by mid-2021.

 

Traditional
graphite purification techniques, not employed by the Corporation, utilize a combination of harmful acids or energy intensive
thermal processes to reach battery-grade purity. In order to maintain a minimal environmental footprint with a focus on sustainable
operations, the Corporation employs a carbochlorination purification process, which lowers the temperatures required to reach
battery grades of 99.95% concentrate graphite (“Cg”) and can utilize Québec’s low-cost, renewable
hydropower to operate.

    
	 	8	Annual Information Form

     

    

Figure
 – Construction has started at the Purification Demonstration Plant

 

 

 

Coating
Demonstration Plant

 

The
final process step to produce Anode Material consists of the application of an amorphous carbon coating on the surface of the
99.95% Cg spheronized purified, from a carbon precursor to minimize the surface area and improve the stability of the solid-electrolyte-interface
to optimize the cycle life and long-term performance of the Anode Material. The Corporation is currently in the detailed engineering
phase and has initiated the procurement to build the first module of the 2,000 tpa coating demonstration plant (the “Coating
Demonstration Plant” and, collectively with the Shaping Demonstration Plant and the Purification Demonstration Plan,
the “LiB Anode Demonstration Plants”) that is scheduled to be commissioned early in 2022.

 

It
is expected that the flake graphite feedstock for the LiB Anode Demonstration Plants will be sourced primarily from the Flake
Demonstration Plant that has been in operation since 2018 in Saint-Michel-des-Saints. However, flake graphite concentrate purchased
from third parties may also be used to complement from time to time the required supply, to qualify other sources of graphite
and quantify the process parameters variability between various flake concentrate. It is estimated that a total of 2,667 tpa of
flake graphite concentrate will be processed to result in 2,000 tpa of Anode Material and purified jumbo flakes, 622 tpa of micronized
graphite and 45 tpa of chloride by-product.

    
	 	9	Annual Information Form

     

    

Table
 – Annual Operating Metrics for the LiB Anode Demonstration Plants

 

	Annual Operating Metrics	 	Phase 1: 2,000 tpa Facility
	Anode Material production	 	1,867 tpa
	Purified jumbo flakes production	 	133 tpa
	Micronized graphite by-product	 	662 tpa
	Chloride by-product	 	45 tpa

 

Figure
 – Site of the Corporation’s Phase 1 and Phase 2 Plants in Bécancour

 

 

 

LiB
Anode Demonstration Plants Capital Costs & Operating Costs

 

The
LiB Anode Demonstration Plants are currently under construction and it is estimated that the total capital cost estimate (“Capex”)
of the project is $37 million. As of April 1, 2021, it is estimated that $28 million remains to be spent on the project until
April 1, 2022 to complete the construction of the micronizing and spheronizing (combined, shaping), purification and coating units.
Accordingly, as of April 1, 2021, the financing required to complete the LiB Anode Demonstration Plants is approximately $20 million
and such funding is needed to be in place by October 1, 2021 in order to meet the current schedule.

    
	 	10	Annual Information Form

     

    

Table
 – Summary of Capital Cost Estimate of the LiB Anode Demonstration Plants

 

	Capex Financial Metrics	 	Phase 1: 2,000 tpa Facility(1)
    (2) 

(M $)
	Direct cost	 	28
	Indirect cost	 	4
	Contingency	 	5
	Total Capex	 	37

 

Notes:

 

(1)       Excludes
owner’s cost, provision for escalation and taxes and duties.

(2)       Based
on internal estimate made by the Corporation’s technical team.

 

Table
 – Summary of Operating Cost Estimate for the LiB Anode Demonstration Plants

 

	Opex Financial Metrics	 	Phase 1: 2,000 tpa Facility 

($/tonne)
	Anode Material	Conversion cost	 	4,610(1)
	Purified Jumbo flake	Conversion cost	 	1,936(1)

 

Note:

 

(1)       Based
on internal studies made by the Corporation’s technical team.

 

De-Risking
by Building a Significant LiB Anode Demonstration Plant and Strategic Research and Development (“R&D”)

 

The
production of coated spherical purified graphite (“CSPG”) used as Anode Material in LiB involves three major
process steps, namely shaping, purification and coating. Since 2016, the Corporation has committed approximately $25 million in
process development and de-risking, by running large-scale bench test and building demonstration units. Since early 2020, the
Corporation has been operating two commercial scale shaping units in which it has processed nearly 1,000 batches to confirm the
optimized process parameters and equipment performance profile to be implemented to consistently produce within customers’ specifications.
Significant equipment improvements and modifications were implemented on-site to achieve an optimum operating throughput and overall
yield while maintaining constant “in-spec” quality material. Ongoing internal R&D programs on the shaping process
are targeting manufacturing excellence by the enhancement of fundamental understanding of fluid dynamics and air flows by using
as-built scan, numerical modelling and adoption of advanced automation and artificial intelligence technologies.

 

For
the Purification Demonstration Plant, the Corporation developed its proprietary thermochemical process that is currently being
deployed at a 1,500 tpa nameplate capacity in Olin’s facility adjacent to the Corporation’s industrial site, with a commissioning
scheduled to start in the first half of 2021.

 

The
final process step to produce Anode Material consists of coating the purified spherical graphite with a carbon-based material
to minimize the surface area and enhance the stability of the solid electrolyte interface. The Corporation is currently in the
detailed engineering phase to build the 2,000 tpa capacity Coating Demonstration Plant that is scheduled to be commissioned in
Q1 2022. The Corporation is of the view that its strategy of de-risking the process by investing in a rapid deployment of a first
scalable-complete module will allow a faster product qualification with LiB cell makers and more efficient and reliable engineering
development.

    
	 	11	Annual Information Form

     

    

Project
Timeline

 

Given
the favourable economics revealed in the front-end loading engineering analysis (“FEL-1”) prepared by the Corporation
for the LiB Anode Plant, the Corporation has commenced a front-end loading pre-feasibility engineering analysis (the “FEL-2
and FEL-3”), based on the results from the demonstration modules, which is expected to be completed in the first half
of 2022. The FEL-1 evaluated various strategies to optimize the deployment of the project, including advancing directly to the
enhanced FEL-2 and FEL 3 program that includes detailed engineering of certain portions of the project and a modular construction
and commissioning sequence enabling an initial production capacity to be available earlier, while construction activities are
being completed. The project development pathway beyond detailed design and initiation of the construction phase will be determined
by financial partnerships and customer commitments.

 

Figure:
Timeline

 

 

    
	 	12	Annual Information Form

     

    

Table
 – Summary of the Estimated Costs and Description of Work

 

	Technical Engineering
    development: Process design & flow sheets, piping & instrumentation diagram, equipment design, plant layouts &
    infrastructure design, Capex & Opex AACE Class 3 estimate	 	$9.4 million
	Hydro-Quebec Power line front-end study:
    Hydro-Quebec 120kv connection and single line diagram, construction planning and cost estimate	 	$0.4 million
	Land geotechnical study: Core drilling,
    rock and soil analysis, civil design criteria	 	$0.1 million
	Environmental study: Phase 2 baseline
    study with wildlife inventory, surface and underground water	 	$0.1 million
	Contingency 15%	 	$1.5 million
	Total	 	$11.5 million

 

As
of April 1, 2021, it is estimated that the aggregate amount of $11.5 million remains to be spent on the project until June 30,
2022 to complete the FEL-2 and FEL-3. The FEL-2 and FEL-3 analysis is expected to require additional financing to complete this
milestone.

 

Matawinie
Mine Project

 

Matawinie
Graphite Property

 

The
Matawinie graphite property includes 378 mining claims forming 7 non-contiguous claim blocks totalling 21,028 hectares (the “Matawinie
Graphite Property”). The Matawinie Graphite Property is located approximately 120 km as the crow flies North of Montréal,
Québec using the existing public network. The Tony claims block is located in the Saint-Michel-des-Saints area. The Tony
claims block, including the West Zone, is easily accessible using existing forest roads and is close to high quality infrastructure,
including paved roads and high voltage power lines, which are needed for industrial activities. The community of Saint-Michel-des-Saints,
as well as surrounding communities, includes available skilled workforce following the end of many forestry activities.

 

All-Electric
Open-Pit Mine

 

The
Corporation intends to electrify its operations on the Matawinie Graphite Property, which would make it one of the first all-electric
open-pit operations in the world (the “Matawinie Mine”). On December 10, 2018, the Corporation filed a technical
report entitled NI 43-101 Technical Feasibility Study Report for the Matawinie Graphite Property with an effective date
as of July 10, 2018 and an issue date as of December 10, 2018 (the “Technical Report”), the results of which
were announced by the Corporation on October 24, 2018. See “Description of the Mineral Properties - The Matawinie Graphite
Property” in this Annual Information Form.

    
	 	13	Annual Information Form

     

    

Flake
Concentration Demonstration Plant

 

The
Corporation operates a graphite flake concentration demonstration plant (the “Flake Demonstration Plant”) since
September 2018. The Flake Demonstration Plant has a capacity to produce 1,000 tpa of high-purity natural graphite concentrate
using mineralization from the West Zone deposit, part of its Matawinie Graphite Property. In addition to demystifying the future
mining operations for the local community with an aim of achieving a high degree of social acceptability, the operation has allowed
the Corporation to:

 

		•	qualify
products with customers and establish sales;

 

		•	test
and improve processes for optimised production; and

 

		•	recruit
and train employees ahead of commercial operations.

 

Research
 & Development Ecosystem and Industry Leadership

 

The
Corporation has entered into agreements with Hydro-Québec to research and develop graphite Anode Materials used to make
LiBs. A world-renowned innovation hub, Hydro-Québec’s Center of Excellence in Transportation Electrification and
Energy Storage is developing some of the world’s most advanced battery material technologies for electric vehicles and other
energy storage applications. Through this partnership, Hydro-Québec’s broad intellectual property portfolio and leading-edge
facilities provide a springboard for the Corporation’s technological developments and commercialization activities. The
Corporation also holds a license to commercialize Hydro-Québec’s graphite Anode Material technologies and position
Québec in the LiB value chain. The Corporation is currently evaluating if it will use the Hydro-Québec technologies
within the LiB Anode Plant or its own developed processes. In addition, the Corporation also maintains a portfolio of research
and development projects to refine its line of specialty products based on market demands and innovations. To this end, the Corporation
is working with a number of industry leading technical institutions in Canada such as, among others, the National Research Council
Canada, the Institut national de la recherche scientifique (INRS), Corem, McGill University and University of Sherbrooke.

 

Accomplishments
and Recent Developments

 

During
the fiscal year ended December 31, 2020 and up the date of this Annual Information Form, the following milestones have been achieved
the Corporation and its management team:

 

		•	The
                                         receipt of a confirmation of the eligibility of the Environmental and Social Impact Assessment
                                         (the “ESIA”) for the Matawinie Mine by the Québec Government
                                         and the launch of an inquiry commission by the Bureau d’audiences publiques
                                         sur l’environnement (the “BAPE”) (see press releases dated
                                         December 17, 2019 and March 30, 2020);

 

		•	The
delivery and the commissioning of the first commercial spheronization and micronization equipment to the Flake Demonstration Plant
to test and optimize the process of transforming graphite concentrate into VAP, such as spheronized graphite, a key component
of LiB anodes (see press releases dated December 20, 2019 and February 26, 2020);

 

		•	The
                                         execution of a collaboration and benefit-sharing agreement (the “Saint-Michel-des-Saints
                                         Collaboration Agreement”) between the Corporation and the municipality of Saint-Michel-des-Saints
                                         for the Matawinie Mine, strengthening their social, economic and environmental development
                                         partnership (see press release dated January 24, 2020);

 

		•	The
                                         receipt of favourable results from a survey conducted by Marketing Léger Inc.
                                         (“Léger”) measuring the level of social acceptability, with 82%
                                         of respondents describing the Matawinie Mine as positive to very positive, a level of
                                         support equivalent to that obtained in a preceding survey conducted in 2018 (see press
                                         release dated January 28, 2020);

    
	 	14	Annual Information Form

     

    

		•	The
receipt of results from an updated pit-constrained mineral resource estimate for its West Zone deposit, located in the Tony claims
block, which is part of its Matawinie Graphite Property, demonstrating an increase of 25% in the combined measured and indicated
mineral resource categories (see press release dated March 19, 2020 and “Technical Information Update as of the Date of this
Annual Information Form”);

 

		•	The
grant by the Corporation of a mandate to Hydro-Québec to carry out the preliminary project encompassing the development,
installation and operation of a 120-kV electrical line that will supply its Matawinie Mine and help the Corporation meet its carbon-neutrality
targets (see press release dated April 15, 2020);

 

		•	The
                                         receipt by the Corporation of the report and recommendations (Rapport d’enquête
                                         et d’audience publique) of the BAPE regarding its Matawinie Mine project. The
                                         inquiry commission positively evaluated the economic, environmental and social parameters
                                         developed by the Corporation, and pointed out opportunities for enhancement (see press
                                         release dated June 26, 2020);

 

		•	The
grant by the Canada Economic Development for Québec Regions of $1,500,000 in repayable funding to assist the Corporation
to implement its secondary transformation processes to manufacture purified spherical graphite at the LiB Anode Plant (see press
release dated June 30, 2020);

 

		•	The
                                         execution of financing agreements with Pallinghurst Graphite Limited (“Pallinghurst
                                         Graphite”), for transactions totalling approximately $20 million to fund the
                                         next phase of the Corporation’s development (see press release dated July 15, 2020 and
                                         “Fiscal Year Ended December 31, 2020 and up to the date of this Annual Information
                                         Form - The Bond Transaction and the Royalty Transaction”);

 

		•	The
appointment of Mr. Arne H. Frandsen, co-founder of Pallinghurst Graphite, as Chairperson of the Board of Directors, and Mr. Daniel
Buron, Executive Vice-President and Chief Financial Officer of Domtar Corp., as Lead Independent Director and Chairperson of the
Audit Committee of the Corporation (see press release dated September 1, 2020);

 

		•	The
                                         execution of a collaboration agreement with Forge Nano Inc. (“Forge Nano”),
                                         a corporation based in Colorado, United States, for the use of Forge Nano’s proprietary
                                         Atomic Laser Disposition-coating technologies (see press release dated October 6, 2020);

 

		•	The
execution of a five-year agreement with Olin which covered the commercial space for operations, site services and the supply of
certain raw materials to implement the Corporation’s thermochemical purification operations (see press release dated October 27,
2020);

 

		•	The
opening of the first sales office outside of North America, located at 70 Pall Mall in St James’s London, UK, which will allow
the Corporation to readily respond to the growing enquiries from local customers and other stakeholders as commercial discussions
intensify with European automakers for the Corporation’s battery Anode Material (see press release dated November 5, 2020);

 

		•	The
receipt of results regarding the Corporation’s advanced graphite-based Anode Material, which outperformed (in terms of reversible
capacity, or energy density) leading Asian commercial producers (see press release dated November 12, 2020);

    
	 	15	Annual Information Form

     

    

		•	The
nomination to its Board of Directors of Ms. Nathalie Pilon and Mr. James Scarlett effective on December 1, 2020, following the
decision by Mr. Pierre Renaud and Mr. Marc Prud’homme to retire from the Board of Directors (see press release dated November
30, 2020);

 

		•	The
                                         execution of an assignment and assumption agreement (the “Assignment and Assumption
                                         Agreement”) with Pallinghurst Graphite pursuant to which, and subject to the
                                         terms of the Assignment and Assumption Agreement, the rights and obligations of Pallinghurst
                                         Graphite under the Pallinghurst Transactions (as defined herein) had been assigned to
                                         Pallinghurst Graphite International Limited (“Pallinghurst International”),
                                         an entity that has control over Pallinghurst Graphite (see press release dated December
                                         17, 2020);

 

		•	The
appointment of Mr. David Torralbo as Chief Legal Officer and Corporate Secretary of the Corporation (see press release dated January
6, 2021);

 

		•	The
                                         execution of an agreement with BMO Capital Markets (“BMO”), under which
                                         BMO had agreed to buy, on a bought deal basis, Common Shares, for gross proceeds of approximately
                                         $15 million (the “2021 Public Offering”). The Corporation also announced
                                         that it had concurrently launched a non-brokered private placement for total gross proceeds
                                         of approximately $5 million, on the same terms as the 2021 Public Offering, with institutional
                                         investors (the “2021 Private Placement”) (see press releases dated January
                                         13, 2021);

 

		•	The
successful closing of its 2021 Public Offering for aggregate gross proceeds of approximately $17 million, including over-allotments
(see press release dated January 20, 2021);

 

		•	The
successful closing of the 2021 Private Placement for aggregate gross proceeds of approximately $5.75 million (see press release
dated February 12, 2021);

 

		•	The
                                         receipt from the Ministère de l’Environnement et de la Lutte contre les
                                         changements climatiques (“MELCC”) of an authorization dated February
                                         17, 2021 for the thermochemical purification operations at the Purification Demonstration
                                         Plant;

 

		•	The
strategic acquisition of the 200,000-m2 land for the LiB Anode Plant (see press release dated January 21, 2021);

 

		•	The
advancement by the Corporation of its strategy to supply environmentally-friendly Anode Material, a critical material for LiB
in the electric vehicle and renewable energy storage industries (see press release dated January 26, 2021 and “Fiscal Year
Ended December 31, 2020 and up to the date of this Annual Information Form - Matawinie Graphite Property Mine Project Update”);

 

		•	The
securing of $16.5 million by the Corporation from the exercise of the Pallinghurst Warrants (as defined herein) by Pallinghurst’s
shareholders (see press release dated February 1, 2021);

 

		•	The
                                         receipt of the environmental decree (the “Decree”), issued by the Québec
                                         Government, authorizing the construction of the Matawinie Mine project (see press release
                                         dated February 10, 2021);

 

		•	The
                                         receipt of permits for deforestation works of the industrial pad and access road of the
                                         Matawinie Mine issued by the Québec Government, including an authorization from
                                         the Ministère des Forêts, de la Faune et des Parcs dated March 4,
                                         2021, a temporary territory occupancy permit from the Ministère de l’Énergie
                                         et des Ressources Naturelles dated February 24, 2021 and an authorization from the
                                         MELCC dated February 26, 2021, and an attestation of conformity from the municipality
                                         of Saint-Michel-des-Saints dated February 24, 2021;

    
	 	16	Annual Information Form

     

    

		•	The
evaluation of an additional listing on a major U.S. stock exchange and a special meeting of shareholders. The purpose of the special
meeting of shareholders was to seek authorization from the Corporation’s shareholders to enable the Board of Directors to consider
a consolidation of the Corporation’s issued and outstanding Common Shares at a ratio resulting in a post-consolidation price that
will meet the listing requirements for the selected U.S. stock exchange (see press release dated February 16, 2021 and “Fiscal
Year Ended December 31, 2020 and up to the date of this Annual Information Form - Additional Listing on a Major U.S. Stock Exchange”);

 

		•	The
announcement by the Corporation of Phase 2 of its plan to become North America’s largest fully integrated Anode Material production
facility (see press releases dated March 11 and March 13, 2021 and “Fiscal Year Ended December 31, 2020 and up to the date
of this Annual Information Form - Matawinie Graphite Property Mine Project Update”);

 

		•	The
                                         approval of the Corporation’s shareholders and the implementation of the consolidation
                                         of the Common Shares (the “Consolidation”) on the basis of one new Common
                                         Share for every ten outstanding Common Shares as of March 24, 2021 (the “Consolidation
                                         Ratio”) (see press release dated March 24, 2021);

 

		•	The
application to list the Common Shares on the NYSE and the filing of a preliminary base shelf prospectus with the securities regulatory
authorities in each of the provinces of Canada (excluding the territories) in order to allow the Corporation to offer Common Shares,
debt securities, convertible securities, subscription receipts and warrants or any combination thereof for up to a maximum of
$500,000,000 during a 25 month period (see press release dated March 29, 2021);

 

		•	The
appointment of Dr. Jürgen Köhler to its Board of Directors (see press release dated April 6, 2021); and

 

		•	The
                                         launch of the Corporation’s climate action plan (the “Climate Action Plant”)
                                         for a zero carbon footprint (see press release dated April 13, 2021).

 

Objectives

 

The
Corporation’s main commercial business objectives from the date of this Annual Information Form and up to the next 12 to 18 months,
subject to proper financing being secured in a timely manner, are, in no particular order, to:

 

		•	operate
the first purification module at the Purification Demonstration Plant, planned for the second half of the year 2021;

 

		•	produce
Anode Material, fully-integrated from the Matawinie Mine to the Purification Demonstration Plant, scheduled for Q1-2022;

 

		•	qualify
the Corporation’s Anode Material and potentially negotiate a long-term cornerstone supply agreement with a future customer;

 

		•	commence
construction of the Matawinie Mine;

    
	 	17	Annual Information Form

     

    

		•	deploy
employee training and business opportunity promotion programs targeting the Upper Matawinie and Atikamekw communities and continue
the integration of Upper Matawinie communities, namely Saint-Michel-des-Saints, Saint-Zénon and the Atikamekw First Nation,
in initiatives reconciling economic, social and environmental development;

 

		•	commence
construction activities of the LiB Anode Plant;

 

		•	complete
attractive financing endeavours for commercial operations;

 

		•	advance
the strategy to establish a European Anode Material facility, close to European customers; and

 

		•	advance
the blueprint for modular expansion to increase the Corporation’s capacity to meet electric vehicle market demand for LiB Anode
Material.

 

Three-Year
History

 

The
events described below have influenced the general development of the business of the Corporation during the last three fiscal
years of the Corporation ended December 31, 2018, 2019 and 2020 and up to the date of this Annual Information Form. Effective
as of March 24, 2021, the Corporation implemented the Consolidation on the basis of the Consolidation Ratio. The numbers and prices
of Common Shares and other information on securities convertible into Common Shares provided in this section are stated prior
to giving effect to the Consolidation.

 

Fiscal
Year Ended December 31, 2018

 

For
the period between January 1, 2018 and December 31, 2018, the Corporation’s continued primary focus was the completion of the
feasibility study on the West Zone of the Tony block of the Matawinie Graphite Property and the construction and commissioning
of the Flake Demonstration Plant.

 

Trading
on the OTCQX in the United States

 

On
January 12, 2018, the Corporation was approved to trade on the OTCQX® Best Market in the United States under the symbol “NMGRF”.

 

Research
Project at the Matawinie Graphite Property

 

On
February 21, 2018, the Corporation announced the results of its research project aiming to develop a new expandable graphite production
process. The 6-month research project was conducted in partnership with the Natural Science and Engineering Research Council of
Canada (“NSERC”) as well as a Québec research center. The results obtained were convincing, foretelling
expansions of some 342 mL/g. The graphite used to conduct this research was exclusively sourced from the West Zone of the Tony
claims block of its Matawinie Graphite Property.

 

Feasibility
Study at the Matawinie Graphite Property

 

On
April 10, 2018, the Corporation announced that it intended on completing, by the end of the year 2018, its feasibility study leading
to the implantation of one of the first all-electric open-pit mines, the Matawinie Mine. The results of this study served to confirm
the project’s economic viability and to determine how best to exploit the graphite deposit of the Matawinie Graphite Property
in a carbon-neutral way to meet the Corporation’s sustainable ambitions.

    
	 	18	Annual Information Form

     

    

On
June 27, 2018, the Corporation announced the results of an updated pit-constrained mineral resource estimate concerning its West
Zone deposit, located on the Tony claims block, part of its Matawinie Graphite Property. The announced results were included in
the updated technical report effective as of June 27, 2018, which laid the groundwork for a feasibility study targeting a production
of 100,000 tonnes of graphite concentrate per year from the West Zone deposit.

 

On
August 10, 2018, the Corporation filed on SEDAR an updated technical report entitled NI 43 101 Updated Technical Pre-Feasibility
Study Report for the Matawinie Graphite Project, effective as of June 27, 2018 and issued as of August 10, 2018. This updated
technical report was prepared by Mr. Bernard-Olivier Martel, P. Geo., B. Sc., Mr. Yann Camus, P. Eng., Mr. Oliver Peters, P. Eng.,
M. Sc., MBA, Ms. Martine Paradis, Eng., M. Sc., PMP, Mr. Nicolas Sciadas, P. Eng., M. Eng., Mr. Patrick Perez, P. Eng., M. Sc.,
Mr. Richard Bonici, P. Eng., Mr. Ewald Pengel, P. Eng., M. Sc. and Ms. Céline M. Charbonneau, P. Eng., M. Sc. and was filed
with the regulatory authorities.

 

On
October 24, 2018, the Corporation announced the results of a feasibility study covering the West Zone deposit of the Tony claims
block, part of the Matawinie Graphite Property. The feasibility study, detailing the mining operation of the Matawinie Mine, was
prepared by Met-Chem, a division of DRA Americas Inc. (“Met-Chem”).

 

On
December 10, 2018, the Corporation filed a technical report detailing the feasibility study entitled NI 43-101 Technical Feasibility
Study Report for the Matawinie Graphite Project with an effective date as of July 10, 2018 and an issue date as of December
10, 2018 (the “Technical Report”). This technical report was prepared by Mr. Bernard-Olivier Martel, P. Geo.,
B. Sc., Mr. Yann Camus, P. Eng., Mr. Oliver Peters, P. Eng., M. Sc., MBA, Ms. Martine Paradis, Eng., M. Sc., PMP, Mr. Patrick
Perez, P. Eng., M. Sc., Mr. Ewald Pengel, P. Eng., M. Sc., Mr. Jordan Zampini, P. Eng., Mr. Martin Saint-Amour, P. Eng. and Ms.
Céline M. Charbonneau, P. Eng., M. Sc. (the “Authors of the Technical Report”) and was filed with the
regulatory authorities. The results of such Technical Report were announced by the Corporation on October 24, 2018.

 

Mechanical
Commissioning of the Wet Circuit at the Flake Demonstration Plant

 

On
September 18, 2018, the Corporation announced the successful mechanical commissioning of the wet circuit of its 3.5 tonnes per
hour Flake Demonstration Plant. Mechanical commissioning of the flotation circuit up to the filter press was completed during
the week of September 3, 2018. Commissioning of the dry side of the Flake Demonstration Plant including dryer, classification
screen, and bagging system was successfully completed shortly thereafter.

 

License,
Research and Development Agreements with Hydro-Québec for the Flake Demonstration Plant

 

On
May 17, 2018, the Corporation announced the execution of a license and of research and development agreements with Hydro-Québec
to research and develop graphite Anode Materials used to make LiBs. The Corporation intends to enter into supply agreements with
other graphite suppliers. Some high-level samples testing was being conducted to determine the compatibility of graphite coming
from another supplier, with further sampling testing to be done. The Corporation is currently evaluating if it will use the Hydro-Québec
technologies within the LiB Anode Plant or its own developed processes. See “Matawinie Mine Project - Research & Development
Ecosystem and Industry Leadership”.

    
	 	19	Annual Information Form

     

    

Atikamekw
Nation

 

On
April 12, 2018, the Corporation announced the execution of a framework agreement with the Conseil des Atikamekw de Manawan and
the Conseil de la Nation Atikamekw establishing negotiation topics to be discussed and goals to be met in order to arrive at a
successful agreement in the best interests of all parties concerned. It also states subjects and guidelines to consider throughout
the discussion process to favour an environment propitiatory to a sound negotiation.

 

Issuances
for Cash Consideration

 

Brokered
Private Placement Closed on September 19 and October 20, 2017

 

On
February 26, 2018, the Corporation issued 1,150,000 broker warrants for general advisory services provided by the agents, acting
as advisors to a brokered private placement closed on September 19 and October 20, 2017. The issuance of the broker warrants was
in addition to the commissions paid to the agents for their services in connection with the offering. Each warrant entitled the
holder thereof to purchase up to 1,150,000 Common Shares, at a price of $0.39 per Common Share, up to February 26, 2020.

 

Non-Brokered
Private Placement Closed on May 17, 2018 and September 28, 2018

 

On
May 17, 2018, the Corporation announced the closing of the first tranche of a non-brokered private placement of 6,666,667 units
in the capital of the Corporation, at a price of $0.30 per unit, for aggregate gross proceed of $2,000,000. Each unit was comprised
of one Common Share and one half of one Common Share purchase warrant. Each full warrant entitled its holder to purchase one Common
Share at a price of $0.40 per Common Share, up to May 17, 2020.

 

On
September 28, 2018, the Corporation closed the second tranche of a non-brokered private placement of 11,585,168 units of the Corporation,
at a price of $0.30 per unit, for aggregate gross proceeds of $3,475,550. Each unit was comprised of one Common Share and one-half
of one Common Share purchase warrant. Each whole warrant entitled its holder to purchase one Common Share, at a price of $0.40
per Common Share, up to September 28, 2020.

 

Flow-Through
Shares Private Placement Closed on July 13, 2018, September 28, 2018 and October 2, 2018

 

On
July 13, 2018, the Corporation announced the closing a non-brokered private placement of an aggregate of 2,777,778 flow-through
shares, at a price of $0.36 per flow-through share, for aggregate gross proceeds of $1,000,000.

 

On
September 28, 2018, the Corporation announced that it had closed a second tranche of a non-brokered private placement of 2,506,489
flow-through shares, at a price of $0.36 per flow-through share, for aggregate gross proceeds of $902,336. In connection with
this private placement, agents or intermediates received cash commission of $45,968 and an aggregate of 127,689 broker warrants
entitling the holders thereof to purchase up to 127,689 Common Shares, at a price of $0.40 per Common Share, up to September 28,
2020.

    
	 	20	Annual Information Form

     

    

On
October 2, 2018, the Corporation announced that it has closed the final tranche of a non-brokered private placement of 1,111,110
flow through shares, at a price of $0.36 per flow-through share, for gross proceeds of $400,000.

 

Brokered
Private Placement Closed on July 13, 2018 and October 2, 2018

 

On
July 13, 2018, the Corporation closed a first tranche of a brokered private placement of 8,961,167 units of the Corporation, at
a price of $0.30 per unit, for aggregate gross proceeds of $2,688,350. Each unit was comprised of one Common Share and one-half
of one Common Share purchase warrant. Each whole warrant entitled its holder to purchase one Common Share, at a price of $0.40
per Common Share, up to July 13, 2020. In connection with this private placement, agents or intermediates received cash commission
of $37,701, advisory fees of $16,500 and an aggregate of 125,669 broker warrants and 55,000 advisory warrants to purchase collectively
up to 180,669 Common Shares, at a price of $0.30 per Common Share, until July 13, 2020.

 

On
October 2, 2018, the Corporation closed the final tranche of a brokered private placement of 1,310,666 units of the Corporation,
at a price of $0.30 per unit, for aggregate gross proceeds of $393,200. Each unit was comprised of one Common Share and one-half
of one Common Share purchase warrant. Each whole warrant entitled its holder to purchase one Common Share, at a price of $0.40
per Common Share, up to October 2, 2020. In connection with this private placement, agents or intermediates received cash commission
and advisory fees of $93,592 and an aggregate of 78,636 broker warrants and 566,665 advisory warrants entitling the holders thereof
to purchase up to 644,301 Common Shares, at a price of $0.30 per Common Share, up to October 2, 2020.

 

Private
Placement Closed on December 20, 2018 with Investissement Québec

 

On
December 20, 2018, the Corporation announced that it had closed a financing with Investissement Québec for an aggregate
amount of $4,665,000 through four loan offers for which the first tranche of an amount of $3,361,788 had been received on the
same day, with the second tranche being receivable in 2019 according to the Corporation’s cash flow needs but subject to the achievement
of conditions set forth in the loan offers.

 

Issuances
for Mineral Rights Acquisitions

 

On
December 14, 2018, the Corporation issued 1,000,000 Common Shares, at a deemed price of $1.00 per Common Share, pursuant to an
agreement entered into between the Corporation and 3457265 Canada Inc. on February 28, 2014, as amended on January 28, 2016 pursuant
to an amendment agreement entered into among Corporation and 3457265 Canada Inc. and to which intervened Mr. Éric Desaulniers.
Under the terms of this agreement, 3457265 Canada Inc. granted the Corporation an exclusive and irrevocable option to acquire
a 100% interest in mining claims under option, forming a large part of the Tony claims block. This agreement provided, among other,
that in the event that a positive feasibility study is carried out on the property under option, the Corporation undertook to
issue 1,000,000 Common Shares, or to pay $1,000,000, at the Corporation’s sole discretion. This milestone has been achieved through
the filling of the Technical Report. The claims covered under this agreement are now subject to a 2% net smelter return royalty
agreement which can be bought back by the Corporation from 3457265 Canada Inc. and Éric Desaulniers with a total of two
(2) lump sum payments of $1,000,000 (one payment for each tranche of 1 %). The portion of the claims block subject to the net
smelter return royalty agreement is located over the main mineralized zones, one of which, the West Zone, contains the Mineral
Reserves identified in the Technical Report.

    
	 	21	Annual Information Form

     

    

Other

 

During
the fiscal year ended December 31, 2018, 750,000 stock options were exercised by members of the Board of Directors and consultants
of the Corporation, at a weighted average exercise price of $0.20, in respect of which the Corporation received $152,500 and issued
750,000 Common Shares.

 

During
the fiscal year ended December 31, 2018, 3,871,003 warrants were exercised by shareholders, at a weighted average exercise price
of $0.20, in respect of which the Corporation received $774,201 and issued 3,871,003 Common Shares.

 

During
the fiscal year ended December 31, 2018, 90,000 broker warrants were exercised by agents or intermediates, at a weighted average
exercise price of $0.23 in respect of which the Corporation received $20,700 and issued 90,000 Common Shares.

 

During
the fiscal year ended December 31, 2018, commissions and advisory fees were paid to agents or intermediates for an aggregate amount
of $193,761.

 

Fiscal
Year Ended December 31, 2019

 

For
the period between January 1, 2019 and December 31, 2019, the Corporation’s continued primary focus was the filing of the ESIA
with the MELCC in respect of the Matawinie Mine, and the construction and commissioning of the Shaping Demonstration Plant and
the Purification Demonstration Plant.

 

Filing
of the ESIA for the Matawinie Mine with the MELCC

 

On
April 11, 2019, the Corporation announced that it has filed its ESIA for the Matawinie Mine with the MELCC. The filing of the
ESIA is an important step in the permitting of the Matawinie Mine by the ministerial authorities, which renders its decision by
decree.

 

On
December 17, 2019, the Corporation announced that it has obtained confirmation from the Québec Government of the eligibility
of its ESIA for the Matawinie Mine after it had been analyzed by 25 provincial ministries and bodies. The MELCC asked the BAPE
to form a commission of inquiry to consult the population about the Matawinie Mine. The MELCC set the start date of the BAPE’s
mandate to January 27, 2020.

 

Matawinie
Mine Project Update

 

On
November 5, 2019, the Corporation announced the completion of several milestones regarding the construction of its LiB Anode Plant,
including that it had awarded SNC-Lavalin, in partnership with Seneca and Boucher-Lachance Architects, the contract for detailed
engineering and procurement services for the construction of its concentrator as part of its Matawinie Mine project.

 

On
November 12, 2019, the Corporation provided an update on its strategy to produce spherical graphite destined to LiB market. The
Corporation announced the successful completion of test work and inspections of the micronization and spheronization equipment.
The Corporation was also developing a thermochemical purification process to complete its market offering, adding products with
a purity above 99.95%. To this end, the Corporation reserved an option to purchase 2 million square feet of land in the Bécancour
Industrial Park in Quebec, an area with excellent development potential for the electric battery sector due to the low cost of
energy, availability of labour, access to logistical infrastructure and proximity to the U.S. market. The Corporation announced
that it intended to build the LiB Anode Plant for the production of Anode Material for LiB at an initial capacity of 35,000 tonnes
per year for the first phase, and then up to 100,000 tonnes per year, with potential supply agreements with other graphite suppliers.

    
	 	22	Annual Information Form

     

    

On
December 3, 2019, the Corporation announced that it has completed its drilling program and pre-construction preparations at the
West Zone deposit of the Tony claims block, part of the Matawinie Graphite Property. From June 2019 to December 2019, 77 holes
had been drilled totalling 13,350 m. The operation generated 3,928 samples that provided greater resource detail.

 

On
December 20, 2019, the Corporation announced the receipt of the first commercial-scale spheronization and micronization equipment
at its Shaping Demonstration Plant as part of its strategy to supply the LiB market with a high-purity, sustainable and ethically
sourced product.

 

Sustainable
Development Technology Canada

 

On
August 20, 2019, the Corporation announced that it had secured a $4,250,000 technology commercialization grant from a federally-funded
Sustainable Development Technology Canada program. The grant will be used to build the Purification Demonstration Plant, a value-added
graphite purification processing facility. The Purification Demonstration Plant will be the first phase of the LiB Anode Plant,
which will produce spherical graphite products for the North American market.

 

Award
of Excellence in Sustainable Development at the Recognition Gala of the Quebec Mineral Association

 

On
October 25, 2019, the Corporation announced that it had won the Award of Excellence in Sustainable Development at the Recognition
Gala of the Quebec Mineral Association (“QMEA”) on October 23, 2019. Honoring the dynamism and entrepreneurship of businesses
and individuals involved in the development of mineral exploration, the QMEA highlighted the high standards of sustainable development
implemented by the Corporation as part of its Matawinie Mine project.

 

Offtake
and Joint Marketing Agreement with the Traxys Group

 

On
February 14, 2019, the Corporation announced it had entered into an offtake and joint marketing Agreement (the “Offtake
and Joint Marketing Agreement”) with the Traxys Group (“Traxys”) for flake graphite concentrate to be
produced at the Flake Demonstration Plant. Traxys is a global commodity trading and logistics company with operations in North
and South America, Europe, Africa, the Far East and greater China and India. For each of the first two years, Traxys shall market,
for customer product prequalification purposes, 200 tonnes of flake graphite concentrate (400 tonnes in total) from the Flake
Demonstration Plant. Thereafter, 25,000 tonnes of flake graphite product shall be sold through Traxys by the Corporation for each
of the first 5 years of the Corporation’s commercial production (the full-scale term), at a price per tonne to be determined between
the parties. Traxys shall have the exclusive right to market, distribute and resell the flake graphite products to Traxys’ customer
base. Traxys shall be entitled to receive from the Corporation a marketing fee for its services, established at market conditions.

    
	 	23	Annual Information Form

     

    

Atikamekw
Nation

 

On
April 23, 2019, the Corporation entered into a pre-development agreement (the “PDA”) with the Conseil des Atikamekw
de Manawan and the Conseil de la Nation Atikamekw for the Matawinie Mine project. The PDA outlines the respective rights and interests
of all parties with respect to pre-development activities and provides a guideline for negotiating an impact and benefit agreement
(the “IBA”) relating to the Matawinie Mine project. According to the PDA, the parties support the development
of the Flake Demonstration Plant in a manner that respects the environment, sustainability principles, culture and lifestyle of
the Atikamekw Nation. As part of the PDA, the Corporation shall provide training, employment and business opportunities to members
of the Atikamekw Nation, as well as establish a joint training fund with the Conseil des Atikamekw de Manawan and the Conseil
de la Nation Atikamekw.

 

Board
of Directors and Management Appointment

 

On
May 28, 2019, the Corporation announced the appointment of two new members to its Board of Directors: Mr. Arne H. Frandsen, Co-Managing
Partner of Pallinghurst, and Mr. Christopher Shepherd, Managing Director and Head of Corporate Finance of Pallinghurst. The Corporation
also announced the appointment of two new members to the Matawinie Mine project team: Ms. Martine Paradis was appointed Vice-President,
Chief Engineer Infrastructure and Environment, and Mr. Alain Dorval was appointed Vice President – Chief Engineer Metallurgy and
Process.

 

On
June 28, 2019, the Corporation announced that the following eight candidates were all elected as members to its Board of Directors
during its annual general and special meeting of shareholders held on June 21, 2019: Mr. Yannick Beaulieu, Mr. Patrice Boulanger,
Mr. Éric Desaulniers, Mr. Nathalie Jodoin, Mr. Marc Prud’homme, Mr. Christopher Shepherd, Mr. Arne H. Frandsen and Mr.
Pierre Renaud. Mr. Guy Bourassa withdrew his candidacy as director.

 

On
September 16, 2019, the Corporation announced the appointment of a new member to its Board of Directors: Mr. Daniel Buron, Executive
Vice-President and Chief Financial Officer of Domtar Corp. The Corporation also announced the appointment of two new members to
its team: Mr. Sylvain Descombes was appointed Vice-President Project, Mine and Concentrator, and Mr. Éric Deslauriers was
appointed Procurement Manager. Mr. Patrice Boulanger relinquished his seat on the Board of Directors to join the management team
as Vice-President, Marketing, Business Development and R&D.

 

On
October 31, 2019, the Corporation announced the appointment of three new members to its management team: Mr. Philippe Legault
was appointed Vice-President, Human Resources, Ms. Christina Lalli was appointed Director, Investor Relations (IR) and Ms. Julie
Paquet was appointed Director, Communications.

 

On
November 12, 2019, the Corporation announced the appointment Mr. René Boisvert as VAP Project Manager to its technical
team.

 

On
December 20, 2019, the Corporation announced the appointment of Mr. Pierre-Luc St-Hilaire as Operations Director for the Flake
Demonstration Plant. In parallel, Mr. Karl Trudeau stepped down as Chief Operating Officer.

    
	 	24	Annual Information Form

     

    

Issuances
for Cash Consideration

 

Short
Form Base Shelf Prospectus dated January 10, 2019

 

On
January 10, 2019, the Corporation filed a short form base shelf prospectus with the securities regulatory authorities in each
of the provinces of Canada (except the territories), allowing the Corporation to offer Common Shares, debt securities, convertible
securities, subscription receipts and warrants or any combination thereof for up to a maximum of $300,000,000 during a 25 month
period.

 

Pallinghurst
Private Placement and Institutional Private Placement

 

On
April 3, 2019, the Corporation announced that it entered into a subscription agreement in connection with a non-brokered private
placement with Pallinghurst Graphite, for an amount of $10,298,875 and pursuant to which Pallinghurst Graphite agreed to subscribe
for 43,825,000 Common Shares, at a price of $0.235 per Common Share (the “Pallinghurst Private Placement”). The
Corporation also announced its intention to complete a second private placement with selected existing institutional shareholders
and other investors (the “Institutional Private Placement”).

 

On
April 25, 2019, the Corporation announced the closing of the Pallinghurst Private Placement of 43,825,000 Common Shares, at a
price of $0.235 per Common Share, for aggregate gross proceeds of $10,298,875. In the context of the Pallinghurst Private Placement,
Pallinghurst agreed not to sell its Common Shares for up to two years following the closing date of the Pallinghurst Private Placement,
subject to conditions.

 

On
June 28, 2019, the Corporation announced the closing of the Institutional Private Placement of 42,345,213 Common Shares, at a
price of $0.235 per Common Share, for aggregate gross proceeds of $9,951,125. The Common Shares issued under the Institutional
Private Placement were subject to a four month plus one day statutory hold period ended on October 28, 2019.

 

2019
Unsecured Financing

 

On
June 28, 2019, the Corporation announced that it has closed an unsecured financing with Pallinghurst Graphite for an aggregate
amount of $2,000,000, minimizing shareholder dilution and bearing interest at a rate of 9 % per year (the “2019 Unsecured
Financing”). The capital and the accrued interest were to be repaid at the latest on June 27, 2020.

 

Other

 

During
the fiscal year ended December 31, 2019, 250,000 stock options were exercised by members of the Board of Directors, employees
and consultants of the Corporation, at a weighted average exercise price of $0.20, in respect of which the Corporation received
$50,000 and issued 250,000 Common Shares.

 

During
the fiscal year ended December 31, 2019, no warrants were exercised by shareholders.

 

During
the fiscal year ended December 31, 2019, no broker warrants were exercised by agents or intermediates.

 

During
the fiscal year ended December 31, 2019, no commissions were paid to agents or intermediates.

    
	 	25	Annual Information Form

     

    

Fiscal
Year Ended December 31, 2020 and up to the date of this Annual Information Form

 

For
the period between January 1, 2020 and December 31, 2020, the Corporation’s continued primary focus was to obtain the Decree for
its Matawinie Mine project, start construction of its LiB Anode Plant, and launch demonstration operations for its VAP.

 

For
the period between January 1, 2021 and up to the date of this Annual Information Form, the Corporation’s continued primary focus
was to obtain the Decree for its Matawinie Mine project, enabling the construction of its commercial mining facilities, and to
complete the construction and commissioning of its Purification Demonstration Plant.

 

Updated
Pit-Constrained Mineral Resource Estimate

 

On
March 19, 2020, the Corporation announced an updated pit-constrained mineral resource estimate for its West Zone deposit, located
in the Tony claim block, which is part of its Matawinie Graphite Property. See “Technical Information Update as of the Date
of this Annual Information Form”.

 

Municipality
of Saint-Michel-des-Saints Collaboration Agreement

 

On
January 24, 2020, the Corporation announced the signing of the Saint-Michel-des-Saints Collaboration Agreement for the Matawinie
Mine. The Saint-Michel-des-Saints Collaboration Agreement was based on requests expressed by local stakeholders, on sustainable
development principles, and on an agreement in principle reached in August 2018. According to the Saint-Michel-des-Saints Collaboration
Agreement, which shall cover the Matawinie Mine’s entire commercial operating life, the Corporation shall contribute up
to 2% of its net cash flow after taxes to the municipality of Saint-Michel-des-Saints to boost community spinoffs and reinvestment.
An annual advance payment of $400,000 will help the municipality of Saint-Michel-des-Saints prepare and upgrade, if necessary,
its infrastructure prior to the start of the mine’s operating period. Through a liaison committee, which is complementary
to the monitoring committee that will be established as per the Mining Act (Québec), the municipality will also
have the chance to actively participate in shaping, implementing and monitoring the Matawinie Mine project. The Corporation will
also contribute 1% of its net cash flow after taxes to a community fund for the future to help stimulate developmental projects
in Upper Matawinie that have a social, economic and environmental impact. The community fund will be administered by a trust organization
and will promote things such as economic sustainability and community vitality beyond the mine’s operating period.

 

Matawinie
Mine Project Update

 

On
January 28, 2020, the Corporation announced the renewed support for the Matawinie Mine and provided an update on its social acceptability
efforts. The Corporation announced that it has launched many initiatives since the discovery of the Matawinie Mine in 2015 to
align its project with the context, concerns and values of the local community. The most recent survey conducted by Léger
confirmed favourable reception of the Matawinie Mine project, with 82% of respondents calling the project positive or very positive.
The results have remained consistent, with an equivalent rate of support (83% in 2018 and 82% in 2019) and viewpoints that remain
positive regarding economic benefits (89%) and community integration with respect to quality of life (76%) and the environment
(70%). In addition to refining the project, open dialogue with the community has helped identify avenues for integration and revealed
a strong interest in training, employment and business opportunities.

    
	 	26	Annual Information Form

     

    

On
February 26, 2020 the Corporation announced the successful commissioning of its demonstration micronization and spheronization
line. The first samples of spherical graphite attested the performance of the secondary transformation process developed by the
Corporation. The successful commissioning of the commercial-scale equipment received at the Flake Demonstration Plant on December
20, 2019 will allow the Corporation to move forward with its strategy to supply the LiB market with a product that is ethically
and sustainably extracted and processed.

 

On
March 30, 2020, the Corporation provided an update on the progress of its Matawinie Mine project and announced that it remained
focused on its business objectives to launch commercial production in 2022 despite the social and economic disruptions brought
by the COVID-19 pandemic. As of March 30, 2020, the development of the mine and concentrator for the Matawinie Graphite Property
continued to advance; detailed engineering of the site for the concentrator and the process continued in teleworking format with
team members and consultants; the class 2 estimate was expected to be completed at the end of Q3-2020 as well as the commissioning
of long-lead equipment; and work required for the Matawinie Mine project permitting was also progressing. Civil servants were
continuing the environmental assessment analysis and, according to the information obtained as of March 30, 2020, the BAPE report
was still on track for submission in Q2-2020. On the same day, the Corporation announced that, in parallel to the promising preliminary
results obtained at its micronization and spheronization units at its Flake Demonstration Plant, planning for the construction
of the Purification Demonstration Plant continued for the purification of spherical graphite. Commercial discussions, the qualification
of finished products, engineering work, the authorization process and budgeting were progressing as planned with involved partners.
Moreover, until economic activity resumed, the Corporation applied the government directive suspending non-essential economic
activities until April 13, 2020, tightening the pace of spending and focusing its efforts on critical activities in order to achieve
the key development milestones of the Corporation’s projects. Exceptional measures were temporarily deployed to get through this
period of economic instability, including the suspension of operations at the Flake Demonstration Plant and the temporary layoff
of some hourly, administrative and maintenance personnel.

 

On
April 15, 2020, the Corporation announced that it mandated Hydro-Québec to carry out the preliminary project encompassing
the development, installation and operation of a 120-kV electrical line that will supply its Matawinie Mine and help the Corporation
meet its carbon-neutrality targets. The goal is to connect the Matawinie Mine and its concentrator to the power network via a
dedicated line. The 120-kV line is expected to be powered up for the start of the Matawinie Mine’s operations.

 

On
October 27, 2020, the Corporation announced a five-year agreement with Olin which covered the commercial space for operations,
site services and the supply of certain raw materials to implement the Corporation’s thermochemical purification operations. The
Corporation intends to construct two pilot commercial-scale purification furnaces within Olin’s existing facility in the industrial
park of Bécancour, Québec.

 

On
November 12, 2020, the Corporation announced that its advanced graphite-based Anode Material outperformed leading Asian commercial
producers. The Corporation’s reversible capacity (or energy density) performed at 365 milliamp hours per gram (“mAh/g”),
above the 360 mAh/g of Asian peers, with similar charging efficiency, and above the minimum customer specifications requirement
of 350 mAh/g. The Corporation also announced that this carbon coating technology would be incorporated into the Coating Demonstration
Plant.

    
	 	27	Annual Information Form

     

    

On
January 21, 2021, the Corporation announced it had made significant progress on the advancement of its Phase 1 purification operation
at Olin’s facility in the industrial park of Bécancour, Québec. Olin’s move-in ready space had proven advantageous
in accelerating preparation and construction times for the Corporation. Expected commissioning and first production of the Corporation’s
high-purity spheronized and flake graphite for use in lithium-ion batteries is scheduled to commence mid-2021. The Corporation
also announced the successful completion of the strategic acquisition of the 200,000-m2 land for the Phase 2 expansion (commercial
stage) in the Bécancour industrial park. This important milestone further cemented the Corporation’s vertical integration
model, allowing the Corporation to benefit from full exposure to the entire “mine-to-market” battery materials value
chain. Besides LiB, the Corporation’s high-purity graphite products will target high-growth markets such as fuel cells, and 5G
heat dissipation foils.

 

On
January 26, 2021, the Corporation announced it was advancing with the deployment of its environmentally friendly coated spherical
graphite Anode Material - which is a critical material for lithium-ion batteries. The production of coated spherical graphite
is part of the Corporation’s broader supply of Anode Material to the electrical vehicle and renewable energy storage industries.
The Corporation had successfully completed the detailed engineering study and procurement of equipment has commenced for its Phase-1
production line - with first production currently planned for Q1-2022. The initial capacity of the facility is targeted at 2,000
tpa with scope for significant expansion in a Phase 2. The Corporation also announced an exclusive collaboration with Professor
Philippe Ouzilleau, a specialist in materials engineering from McGill University, to optimize performance and sustainability of
the Corporation’s Anode Material for LiB. In a show of support for this project, the Québec Government had provided the
Corporation with a grant to partly fund the development of the Corporation’s spherical graphite coating initiative.

 

On
March 11, 2021 (updated on March 13, 2021), the Corporation announced details with regard to Phase 2 of its plan to become North
America’s largest fully integrated Anode Material production facility. The Corporation announced the completion of the FEL-1 for
the LiB Anode Plant and that the front-end loading pre-feasibility engineering analysis (FEL-2) is underway, with the goal of
having it completed within 12 months. See “General Development of the Business - LiB Anode Plant Project” in this Annual
Information Form.

 

On
April 13, 2021, the Corporation announced the launch of the Climate Action Plan for a zero-carbon footprint, which is a stakeholder
commitment tool for both internal and external use by organizations whose business strategy is linked to potential climate impacts.
The Climate Action Plan will allow the disclosure of reduction efforts, objectives and results of various initiatives, in addition
to serving as a reference and guide for decision-making regarding the carbon footprint of the Corporation and its products.

 

Assignment
and Assumption Agreement with Pallinghurst Graphite

 

On
December 17, 2020, the Corporation and Pallinghurst Graphite entered into an assignment and assumption agreement (the “Assignment
and Assumption Agreement”) pursuant to which, and subject to the terms of the Assignment and Assumption Agreement, the
rights and obligations of Pallinghurst Graphite under the Pallinghurst Transactions had been assigned to Pallinghurst Graphite
International Limited (“Pallinghurst International”), an entity that has control over Pallinghurst Graphite.

    
	 	28	Annual Information Form

     

    

Board
of Directors and Management Appointment

 

On
September 1, 2020, the Corporation announced role changes at its Board of Directors to guide its corporate development strategy.
Arne H. Frandsen, co-founder of Pallinghurst Graphite, now serves as Chairperson of the Board of Directors, and Daniel Buron,
Executive Vice-President and Chief Financial Officer of Domtar Corp., now serves as Lead Independent Director and Chairperson
of the Audit Committee. The Corporation also announced the issuance of an aggregate of 1,037,587 Common Shares at a price of $0.20
per Common Share, for an aggregate amount of $207,517, to 31 of its employees in settlement of an unpaid portion of wages owing
that corresponded to a temporary proactive capital management measures put in place in response to COVID-19. The Board of Directors
also granted a total of 6,325,000 stock options to officers and directors. These stock options were granted pursuant to the terms
and conditions of the Corporation’s stock option plan.

 

On
November 30, 2020, the Corporation announced the nomination to its Board of Directors of Ms. Nathalie Pilon and Mr. James Scarlett
effective on December 1, 2020, following the decisions by Mr. Pierre Renaud and Mr. Marc Prud’homme to retire from the Board of
Directors.

 

On
January 6, 2021, the Corporation announced the appointment of Mr. David Torralbo to the position of Chief Legal Officer and Corporate
Secretary of the Corporation.

 

On
April 6, 2021, the Corporation announced the appointment of Dr. Jürgen Köhler to its Board of Directors effective on
April 1, 2021.

 

Collaboration
Agreement with Forge Nano

 

On
October 6, 2020, the Corporation announced that it had entered into a collaboration agreement with Forge Nano, a corporation based
in Colorado, United States, for the use of Forge Nano’s proprietary atomic laser disposition-coating technologies. The collaboration
agreement sets out a multi-phase partnership, which will allow the Corporation the opportunity to commence production in the near-term,
while preparing for commercial production by 2023.

 

Opening
of the Corporation’s Office in London, United Kingdom

 

On
November 5, 2020, the Corporation announced the opening of its first sales office outside of North America, located at 70 Pall
Mall in St James’s London, UK, which will allow the Corporation to readily respond to the growing enquiries from local customers
and other stakeholders as commercial discussions intensify with EU automakers for the Corporation’s battery Anode Material.

 

Environmental
Decree issued by the Québec Government with respect to the Matawinie Graphite Property

 

On
June 26, 2020, the Corporation announced that it had received the report and recommendations of the BAPE regarding its Matawinie
Mine project. The inquiry commission positively evaluated the economic, environmental and social parameters developed by the Corporation,
and pointed out opportunities for enhancement.

 

On
February 10, 2021, the Corporation announced the Québec Government had issued the Decree authorizing the Matawinie Mine
project on the territory of the municipality of Saint-Michel des-Saints. The Corporation’s development plan embraces sustainable
development measures, including water management system, tailings co-disposal, progressive land reclamation and biodiversity protection,
acclaimed by the government’s environmental experts. The Corporation is also advancing environmental engineering efforts in order
to ensure optimal design of the site’s infrastructure and progressive reclamation with vegetation that bolsters biodiversity and
captures carbon. The community welcomed the project as a positive contributor for socio-economic development, including direct
and indirect employment. An experienced team was assembled to finalize robust project schedule, costs, authorization and execution;
with deforestation of the industrial pad and access road of the Matawinie Mine started in Q1-2021 and early work anticipated to
start in Q2-2021. The Decree covered a production level of 100,000 tpa of high-quality graphite material.

    
	 	29	Annual Information Form

     

    

Additional
Listing on a Major U.S. Stock Exchange

 

On
February 16, 2021, the Corporation announced the evaluation of an additional listing on a major U.S. stock exchange and the calling
of a special meeting of shareholders for the purpose of seeking authorization from the Corporation’s shareholders to enable the
Board of Directors to consider a consolidation of the Common Shares at a ratio that will result in a post-Consolidation price
that meets the listing requirements for the selected U.S. stock exchange.

 

On
March 26, 2021, the Corporation announced that it had filed an application to list the Common Shares on the NYSE.

 

Consolidation

 

On
March 24, 2021, the Corporation announced that following the approval of its shareholders, the Corporation implemented the Consolidation
on the basis of the Consolidation Ratio. The Consolidation Ratio was determined by the Corporation’s Board of Directors in accordance
with the parameters authorized by the Corporation’s shareholders at the Corporation’s special meeting of shareholders held on
March 23, 2021. The consolidation took effect on March 24, 2021, and the Common Shares commenced trading on the TSXV on a post-Consolidation
basis at the open of markets on March 31, 2021. Unless otherwise specified in this Annual Information Form, numbers and prices
of Common Shares and any other information on securities convertible into Common Shares are stated prior to giving effect to the
Consolidation.

 

Issuances
for Cash Consideration

 

On
March 19, 2020, the Corporation announced that the repayment of the 2019 Unsecured Financing of an aggregate amount of $2 million
was extended to December 31, 2020. As of March 19, 2020, the other terms of the 2019 Unsecured Financing remained unchanged. The
Corporation also announced the closing of a new unsecured financing with Pallinghurst Graphite for an aggregate amount of $2 million
upon the same terms as the 2019 Unsecured Financing (the “2020 Unsecured Financing”), bearing an interest rate
of 9% per year with the repayment of the capital and the accrued interest fixed at the latest on December 31, 2020.

 

On
April 29, 2020, the Corporation announced the receipt of non-dilutive financing totalling approximately $5,206,905 comprising
(i) non-refundable financial assistance of a maximum of $3,000,000 from the Québec Government Crown corporation Transition
 énergétique Québec through the “Technoclimat” program; (ii) $1,994,405 in funding closed with Investissement
Québec through two loan offers (the “Loan Offers”) that were ready to be disbursed as per the Corporation’s
cash flow needs, subject to the Loan Offer conditions; and (iii) a 5% increase to Sustainable Development Technology Canada’s
$4,250,000 initial 2019 grant, representing an additional $212,500. The Loan Offers comprised a $641,090 loan at an interest rate
equal to the prime rate plus 0.07% and a $1,353,315 loan at an interest rate equal to the prime rate. The interest is to be paid
monthly throughout the term, whereas the capital is to be repaid by no later than the term’s expiry on June 30, 2021. To secure
its obligations set out in the Loan Offers, the Corporation granted two first-ranking mortgages for a total of $1,994,405 covering
the universality of its present and future receivables, including the universality of its tax credits.

    
	 	30	Annual Information Form

     

    

On
June 30, 2020, the Corporation announced that Canada Economic Development for Québec Regions had agreed to grant $1,500,000
in repayable funding to the Corporation to implement its secondary transformation processes to manufacture purified spherical
graphite at the LiB Anode Plant.

 

On
July 15, 2020, the Corporation announced that it had reached an agreement with Pallinghurst Graphite for financing transactions
totalling approximately $20 million to fund the next phase of the Corporation’s development. The Corporation entered into
a convertible bond subscription agreement (the “Pallinghurst Subscription Agreement”) with Pallinghurst Graphite
pursuant to which the Corporation issued to Pallinghurst Graphite a secured convertible bond (the “Bond”) in
the principal amount of $15 million (the “Bond Transaction”). Concurrently, the Corporation also entered into
a royalty purchase agreement with Pallinghurst Graphite pursuant to which Pallinghurst Graphite agreed to exchange the principal
amount and accrued interest under its existing debt facility of approximately $5 million, including accrued interest, into a net
smelter return royalty (the “Royalty”) on the Matawinie Graphite Property, with a partial buy-back option for
the Corporation (the “Royalty Transaction” and together with the Bond Transaction, the “Pallinghurst
Transactions”). See “Recent Developments - The Bond Transaction and the Royalty Transaction”.

 

On
December 31, 2020, the Corporation announced the issuance of an aggregate of 766,351 Common Shares at a price of $1.04 per Common
Share to Pallinghurst International in settlement of interest owed on the Bond.

 

On
January 13, 2021, the Corporation announced that it had entered into an agreement with BMO, under which BMO had agreed to buy,
on a bought deal basis, Common Shares, for gross proceeds of approximately $15 million. The Corporation also announced that it
had concurrently launched the 2021 Private Placement for total gross proceeds of approximately $5 million, on the same terms as
the Public Offering, with institutional investors. On January 20, 2021, the Corporation announced the closing of the 2021 Public
Offering pursuant to which the Corporation issued an aggregate of 11,896,750 Common Shares at a price of $1.45 per Common Share
for gross proceeds to the Corporation of $17,250,288, which included the exercise, in full, by BMO of the over-allotment option
granted by the Corporation to purchase an additional 1,551,750 Common Shares at a price of $1.45 per Common Share. Pallinghurst
International and Charles-Armand Turpin, insiders of the Corporation, purchased, respectively, 2,379,316 and 690,000 Common Shares
pursuant to the 2021 Public Offering. On February 12, 2021, the Corporation announced the closing of the 2021 Private Placement
for gross proceeds of $5.75 million pursuant to which the Corporation issued an aggregate of 3,965,516 Common Shares at a price
of $1.45 per Common Share. Investissement Québec, acting as mandatary for the Québec Government, subscribed for
3,172,413 Common Shares, and Pallinghurst International, an insider of the Corporation, subscribed for the remainder of the Common
Shares.

    
	 	31	Annual Information Form

     

    

On
February 1, 2021, the Corporation announced it had secured $16.5 million from the exercise of the Pallinghurst Warrants (as defined
herein). Pallinghurst International transferred those warrants to its shareholders on January 29, 2021, with the objective of
offering the direct opportunity to invest further in the Corporation through the exercise of those warrants.

 

On
March 26, 2021, the Corporation filed a preliminary base shelf prospectus with the securities regulatory authorities in each of
the provinces of Canada (excluding the territories) in order to enable the Corporation to offer Common Shares, debt securities,
convertible securities, subscription receipts and warrants or any combination thereof for up to a maximum of $500,000,000 during
a 25 month period.

 

The
Bond Transaction and the Royalty Transaction

 

The
Bond issued in connection with the Bond Transaction is a three-year instrument in the principal amount of $15 million, which bears
interest at a rate of 15% per annum, payable annually commencing on December 31, 2020. Accrued interest under the Bond is capitalized
quarterly and added to the principal amount thereunder unless the Corporation elects to settle any accrued interest with Pallinghurst
Graphite at the end of a given calendar quarter; otherwise, the annual payment of any interest shall be made in cash or shares
at the Corporation’s discretion. The principal amount, together with all accrued and unpaid or uncapitalized interest thereunder,
will become payable on July 14, 2023. The Corporation’s obligations under the Bond are secured by a hypothec in favour of Pallinghurst
Graphite over substantially all of the Corporation’s movable and immovable assets, subject to certain existing permitted encumbrances.
At any time, Pallinghurst Graphite has the right to convert all or a portion of the Bond into such number of Common Shares equal
to the principal amount being converted, divided by the conversion price of $0.20 per Common Share. Pallinghurst Graphite also
has the right to convert all or a portion of any accrued and unpaid or uncapitalized interest under the Bond into Common Shares
at the market price of the Common Shares (within the meaning provided in the Bond) at the future time of conversion subject to
the TSXV’s approval at such time.

 

Upon
closing of the Bond Transaction, an amended and restated investment agreement was entered into to amend the existing investment
agreement entered into on April 2, 2019 (the “Amended and Restated Investment Agreement”). The Amended and Restated
Investment Agreement provides that Pallinghurst Graphite is entitled to nominate three nominees to the Board of Directors so long
as it holds (on an as-converted basis assuming the conversion of the Bond) more than 20% of the issued and outstanding Common
Shares. In the event Pallinghurst Graphite holds less than 20% of the issued and outstanding Common Shares but greater than 10%
of the issued and outstanding Common Shares (in each case on an as-converted basis assuming the conversion of the Bond), Pallinghurst
Graphite shall be entitled to nominate two nominees to the Board of Directors. Pallinghurst Graphite shall no longer be entitled
to nominate any nominee once its as-converted ownership falls below 10% of the issued and outstanding Common Shares. Under the
Amended and Restated Investment Agreement, Pallinghurst Graphite has agreed to a lock-up restriction pursuant to which it shall
not sell or otherwise dispose of its Common Shares until August 28, 2021. Pallinghurst Graphite was also granted anti-dilution
rights over subsequent equity offerings by the Corporation in order to maintain its relative ownership in shares of the Corporation
on an as-converted basis. Such anti-dilution rights are in force until August 28, 2021. If Pallinghurst Graphite’s as-converted
ownership falls below 10%, the Corporation and Pallinghurst Graphite shall cease to have any rights and obligations with respect
to the anti-dilution rights granted under the Amended and Restated Investment Agreement.

    
	 	32	Annual Information Form

     

    

Concurrently
with the issuance of the Bond, the Corporation issued to Pallinghurst Graphite Common Share purchase warrants entitling Pallinghurst
Graphite to purchase up to 75,000,000 Common Shares, subject to customary anti-dilution clauses, at a price of $0.22 per Common
Share for a period of 36 months from the issuance date of the warrants (the “Pallinghurst Warrants”). The proceeds
of the Bond Transaction were to be used for the development of the Matawinie Mine and general working capital purposes of the
Corporation.

 

Concurrently
with the entering into of the Bond Transaction, the Corporation entered into the Royalty Transaction whereby the Corporation issued
and sold a 3% royalty to Pallinghurst Graphite for an aggregate purchase price of approximately $5 million, including accrued
interest. Until July 14, 2023, the Royalty is subject to a 1% buy back right in favour of the Corporation. The consideration to
be paid by the Corporation upon exercise of its buy back right will be equal to approximately $1.3 million, plus an amount equal
to interest accrual at a rate of 9% per annum from and after the closing of the Pallinghurst Transactions up to the buyback date.
Pursuant to the Royalty, Pallinghurst Graphite will have the right, until July 14, 2023, to request that the Royalty be converted
into a graphite stream agreement or other similar forward purchase agreement, provided that the Corporation will not be required
to complete any such conversion if such conversion could have a negative impact on the Corporation. The purchase price for the
Royalty was satisfied by setting-off all principal and accrued interest amounts owing by the Corporation to Pallinghurst Graphite
under the promissory note dated June 27, 2019 in the principal amount of $2 million and the promissory note dated March 16, 2020
in the principal amount of $2 million, each of which was cancelled.

 

The
approval of disinterested shareholders of the Corporation for the Pallinghurst Transactions was obtained at the annual general
and special meeting of shareholders of the Corporation held on August 27, 2020. Closing of the Pallinghurst Transactions took
place on August 28, 2020.

 

Pursuant
to the Assignment and Assumption Agreement, the rights and obligations of Pallinghurst Graphite under the Pallinghurst Transactions
had been assigned to Pallinghurst International. Pallinghurst International currently owns 5,628,877 Common Shares (post-Consolidation)
representing 15.18% of the issued and outstanding Common Shares. Assuming the conversion in whole of the Bond, Pallinghurst International
would beneficially own 13,128,877 Common Shares (post-Consolidation) representing 29.45% of the issued and outstanding Common
Shares.

 

Other

 

During
the fiscal year ended December 31, 2020 and up to the date of this Annual Information Form, 4,427,500 stock options were exercised
by members of the Board of Directors, employees and consultants of the Corporation, at a weighted average exercise price of $0.29,
in respect of which the Corporation received $1,274,413 and issued 4,427,500 Common Shares.

 

During
the fiscal year ended December 31, 2020 and up to the date of this Annual Information Form, 86,939,914 warrants were exercised
by shareholders, at a weighted average exercise price of $0.24, in respect of which the Corporation received $20,678,970 and issued
86,939,914 Common Shares.

 

During
the fiscal year ended December 31, 2020 and up to the date of this Annual Information Form, no broker warrants were exercised
by agents or intermediates.

 

During
the fiscal year ended December 31, 2020 and up to the date of this Annual Information Form, no commissions were paid to agents
or intermediates.

    
	 	33	Annual Information Form

     

    

DESCRIPTION
OF THE INDUSTRY

 

The
Corporation’s Industry Focus - Battery Material and Specialty Graphite Applications

 

The
Corporation is focused on supplying the rapidly growing electric vehicle (“EV”) market as well as established
but evolving specialty graphite applications. Graphite has unique chemical properties that, once micronized, spheronized, purified
and coated, makes a key input into LiB production where graphite generally forms up to 95% of the anode. Graphite is sourced from
two primary production routes, natural flake graphite, which is extracted and processed, and synthetic graphite, which is primarily
produced through graphitizing needle coke, a by-product of the petroleum industry, at high temperatures. Metallic properties such
as thermal and electrical conductivity, when combined with non-metallic properties such as high thermal resistance, inertness
and lubricity, make graphite ideally suited to a variety of other commercial applications, including high-temperature lubricants,
refractory products and, in the case of synthetic graphite, electrodes for steel making.

 

Natural
Graphite Demand

 

Demand
for natural flake graphite is driven by both growth in anode demand for LiB and growth in traditional and specialty graphite markets.
Demand for graphite has historically been driven by traditional and specialty industrial applications, including refractories,
lubricants, foundry crucibles, pencils and other metallurgy applications. In recent years, demand growth has been driven by increased
production of LiB for use in electronics, EVs and grid storage applications. Benchmark Mineral Intelligence (“Benchmark”)
in its latest quarterly update (Q1 2021) expects increased adoption of EVs will drive increasing LiB sales and, as a result, significant
growth in required volumes of batteries and consequentially the raw materials that make them.

 

Benchmark
expects EV sales to represent 28% of total vehicles by 2030, equating to approximately 31 million cars and requiring 1,928 GWh
of LiB capacity, representing a 10-year compound annual growth rate (“CAGR”) of 29.2%. According to Benchmark,
10-year compound annual demand growth from portable electronics is expected to be 4.5%, in line with expected growth in mobile
phones, power tools and other portables.

 

Residential
and commercial stationary storage applications are expected by Benchmark to drive the fastest growth in LiB demand, albeit from
a lower 2020 level than other applications. Cost and quality improvements in battery chemistry are expected to drive high penetration
levels and a 41% CAGR from 2020 to 2030, overtaking demand from portable electronics by 2024.

 

Natural
flake demand for batteries is a function of the following key factors:

 

		•	Growth
in aggregate GWh of demand for use in LiB (EVs, portables and stationary applications);

		•	Anode
market share by graphite type (natural flake, synthetic and non-graphite, e.g., silicon, among others); and

		•	Ratio
of natural graphite to Anode Material (volume required to produce one unit).

    
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Natural
Graphite Demand Buildup

 

	 	 	2020	 	 	2025	 	 	2030	 	 	2040	 	 	2020 - 2025

 Growth CAGR	 	 	2020 - 2030

 Growth CAGR	 	 	2020 - 2040

 Growth CAGR	 
	Li-ion Battery Demand Growth	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Electric Vehicles (GWh)	 	149	 	 	751	 	 	1,928	 	 	5,827	 	 	 	 	 	 	 	 	 	 
	Stationary (GWh)	 	12	 	 	113	 	 	358	 	 	1,344	 	 	 	 	 	 	 	 	 	 
	Portable (GWh)	 	60	 	 	77	 	 	94	 	 	138	 	 	 	 	 	 	 	 	 	 
	Total (GWh)	 	221	 	 	941	 	 	2,380	 	 	7,310	 	 	33.6	%	 	26.8	%	 	19.1	%
	Natural Flake Graphite Demand for Li-ion Batteries	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Natural Graphite Market Share	 	38.5	%	 	48.7	%	 	49.0	%	 	45.0	%	 	 	 	 	 	 	 	 	 
	Implied Energy Demand From Natural Graphite (GWh)	 	85	 	 	458	 	 	1,166	 	 	3,289	 	 	 	 	 	 	 	 	 	 
	Graphite Intensity (kg / KWh)	 	1.2	 	 	1.2	 	 	1.2	 	 	1.2	 	 	 	 	 	 	 	 	 	 
	Natural Graphite Anode Material (kt)	 	102	 	 	550	 	 	1,399	 	 	3,947	 	 	 	 	 	 	 	 	 	 
	Natural Flake Graphite per tonne of Anode Material	 	2.2	 	 	2.2	 	 	2.2	 	 	2.2	 	 	 	 	 	 	 	 	 	 
	Natural Flake Graphite Demand for Li-ion Batteries (kt)	 	225	 	 	1,210	 	 	3,079	 	 	8,684	 	 	40.1	%	 	29.9	%	 	20.1	%
	Total Natural Flake Graphite Demand	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Battery Demand (kt)	 	225	 	 	1,210	 	 	3,079	 	 	8,684	 	 	 	 	 	 	 	 	 	 
	Non-battery Demand (kt)	 	546	 	 	738	 	 	854	 	 	1,122	 	 	 	 	 	 	 	 	 	 
	Total Natural Flake Graphite Demand (kt)	 	771	 	 	1,948	 	 	3,932	 	 	9,806	 	 	20.4	%	 	17.7	%	 	13.6	%
	Memo:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Synthetic Graphite Market Share	 	58.0	%	 	45.0	%	 	41.0	%	 	34.0	%	 	 	 	 	 	 	 	 	 
	Implied Energy Demand From Synthetic Graphite (GWh)	 	128	 	 	423	 	 	976	 	 	2,485	 	 	 	 	 	 	 	 	 	 
	Graphite Intensity (kg / KWh)	 	1.2	 	 	1.2	 	 	1.2	 	 	1.2	 	 	 	 	 	 	 	 	 	 
	Synthetic Graphite Anode Material (kt)	 	154	 	 	508	 	 	1,171	 	 	2,982	 	 	27.0	%	 	22.5	%	 	16.0	%

Source:
Benchmark Mineral Intelligence Q1 2021

 

Electric
Vehicle Adoption, Vehicle Sales and Growth in Battery Production Capacity

 

LiB
demand is a function of growth in battery demand for electric vehicles, largely driven by increasing penetration rates (EV sales
as a percentage of total vehicle sales), battery demand for portable electronics and battery demand for residential and commercial
stationary applications.

 

	EV Adoption and Vehicle Sales	LiB Demand in GWh
	 	 
	 	 

 

Source:
Benchmark Mineral Intelligence Q1 2021

    
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Major
automotive manufacturers have announced expanded offerings of EVs, aggressive sales targets and the phase out of traditional internal
combustion engines. Timelines vary by manufacturers, but are generally focused on hitting key milestones by 2025, 2030 and/or
2035.

 

Automotive
Manufacturers Making a Committed Effort Towards Electrification

 

	Manufacturers	Highlights
	Tesla	•	Tesla aspires to produce
    20 million vehicles each year before 2030;
	 	•	Delivered approximately 500 thousand vehicles
    in 2020; and
	 	•	In 2020, deployed approximately 3 GWh of energy
    storage products.
	 	•	Announced its plans to have six 40 GWh battery
    cell production plants in operation in Europe by 2030;
	Volkswagen	•	Stated 2026 will be its final product start
    on an internal combustion engine (“ICE”) platform; and
	 	•	Will have at least one electric variant of every
    car model leading to 80 new EV models.
	General Motors	•	Plans to completely phase out all vehicles using
    ICEs by 2035; and
	 	•	Aims go to completely carbon neutral at all
    facilities by 2035.
	PSA Group	•	By 2025, it will offer an electric variant for
    each of its new models; and
	 	•	All brands now offering either electric plug-in
    hybrid or full EV models.
	Kia	•	By 2030, Kia plans to have 40% of all its sales
    be EVs, hybrids or plug-in hybrids,
	 	•	with a total target sales of 1.6 million vehicles
    sold;
	 	•	Of that 1.6 million, the company anticipates
    55% or 880 thousand, will be EVs; and
	 	•	Kia’s first electric purpose built vehicle will
    be unveiled in 2022.
	Renault-Nissan-Mitsubishi	•	By 2022, plans to have a range of eight EVs
    and 12 electrified models, as part of the company’s strategic “Drive The Future” plan.
	Daimler AG	•	Plans to release ten different EVs by 2022.
	BMW	•	Targeting annual production of 7 million EVs
    by 2030;
	 	•	Aims to have 25% of vehicles sold in Europe
    be electrified by 2021, 33% by 2025 and 50% by 2030; and
	 	•	Signed a $335 million multi-year contract with
    Livent that will supply lithium directly to BMW’s battery cell manufacturers from 2022 onwards.
	Ford	•	Will invest $1 billion in a German factory as
    part of a plan to phase out ICEs in Europe by 2030; and
	 	•	By 2030, expects EVs to account for 100% of
    its passenger-car sales in Europe,along with 66% of its commercial vans and trucks.
	Toyota	•	By 2025, Toyota’s goal is to have 40%
    of new vehicle sales be electrified models,and by 2030 expects that to increase to nearly 70%.
	Honda	•	Plans to electrify 66% of its global automotive
    sales by 2030; and
	 	•	Has announced it will sell two electric SUVs
    in the United States in 2024.

Source:
Company websites, press releases and news articles

    
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Governments
around the world have enacted a series of incentives to facilitate consumer adoption of electric vehicles and provided capital
to support the required infrastructure to support this shift in consumer behaviour. The following table summarizes some of the
key initiatives outlined in the United States recently announced $2 trillion infrastructure plan and targets that select governments
have announced for EV penetration over time.

 

Worldwide
focus on EVs

 

	Country	Highlights
	United States	•	The United States’
    $2 trillion infrastructure plan allocates $174 billion specifically for EV investments;
	 	•	The American Jobs plan calls for replacing 50
    thousand diesel-powered transit vehicles as well as electrifying 20% of the U.S. school bus fleet through a new Clean Buses
    for Kids Program and electrifying the government automotive fleet including the U.S. Postal Service;
	 	•	The American Jobs plan also calls for “Point
    of sale” rebates for American made EVs and other incentives;
	 	•	By 2035 all newly sold vehicles in California
    will be required to be electric; and
	 	•	10 states have set targets for 100% zero-emissions
    vehicles by 2050.
	Canada	•	Target of 30% penetration of EV sales by 2030;
    and
	 	•	Quebec targeting 100% zero-emissions by 2050.
	Mexico	•	Target of 30% penetration of EV sales by 2030.
	Brazil	•	Target of 30% penetration of EV sales by 2030.
	United Kingdom	•	Proposal to end ICE sales by 2040.
	France	•	Proposal to end ICE sales by 2040; and
	 	•	Launched €8bn automotive stimulus package
    targeting electrification.
	Norway	•	Proposal to end ICE sales by 2035.
	Netherlands	•	Proposal to end ICE sales by 2035.
	Germany	•	Targeting 2030 and double EV subsidies in post-COVID-19
    stimulus efforts.
	Italy	•	Target of 30% penetration of EV sales by 2030.
	Israel	•	Proposal to end ICE sales by 2030.
	India	•	Proposal to end ICE sales by 2030.
	Japan	•	Target of 30% penetration of EV sales by 2030.
	South Korea	•	Target of 30% penetration of EV sales by 2030.
	China	•	Target of 5% penetration of EV sales by 2020,
    20% by 2025.

Source:
Benchmark Mineral Intelligence Q1 2021

 

The
Role of Graphite in Battery Chemistry

 

Graphite
is a critical battery material and is fundamental across all key LiB chemistries. Graphite has a critical role in the anode element
of LiB due to attractive structural characteristics that facilitate the movement of lithium-ion during charging and discharging,
while also showing minimal expansion and contraction. Graphite is currently estimated to make up as much as 95% of the anode.
While it is often supplemented with limited amounts of silicon, which increases energy density, graphite exhibits greater expansion
and contraction properties than silicon which improves battery stability.

    
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Battery
Raw Material Composition by Key LiB Cathode Chemistry

 

Graphite
is present as the primary anode material across a range of LiB types typically described with reference to the chemical make-up
of the battery’s cathode. For example, the LFP battery cathode is comprised of lithium, iron and phosphate, while the NMC811 battery
cathode is comprised of lithium plus a mix of nickel, manganese and cobalt in an 80%, 10%, 10% ratio. The NCA battery cathode
is comprised of a mix of lithium, nickel, cobalt and aluminum.

 

 

 

Flake
Graphite Demand from Growth in LiBs

 

Benchmark
expects total graphite Anode Material demand for use in LiB to grow from approximately 256 kt in 2020 to approximately 1,058 kt
in 2025 and approximately 2,570 kt in 2030, a 314% and 905% growth, respectively. Benchmark expects further growth to approximately
6,930 kt through 2040 as graphite remains the dominant Anode Material.

 

2030
graphite Anode Material for LiB of approximately 2,570 kt is expected to be sourced from 46% synthetic material (1,171 kt) and
54% natural material (1,399 kt). After accounting for Benchmark’s estimated flake to battery conversion ratio of 2.2 this equates
to natural flake graphite demand of approximately 3,079 kt, a 30% annual growth rate from 2020 demand of approximately 225 kt.

 

In
aggregate, including non-LiB demand, Benchmark expects demand for natural flake graphite to grow from approximately 771 kt in
2020 to approximately 1,948 kt in 2025 and approximately 3,932 kt in 2030, a 153% and 410% growth, respectively. This 410% growth
through 2030 is the strongest growth of the key battery raw materials (graphite, lithium, nickel, cobalt and manganese) as estimated
by Benchmark.

    
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Battery
Metals Raw Material Demand Growth

 

 

 

Source:
Benchmark Mineral Intelligence Q1 2021

 

The
World Bank has provided estimates of the mineral intensity of the critical minerals required to deliver the clean energy transition.
Under the International Energy Agency’s 2 degree scenario (“2DS”) for reduction in carbon emissions they estimate the
share of mineral demand from energy storage, highlighting the important role graphite will play. The Mineral Intensity of the
Clean Energy Transition Report published in May 2020 estimates that over 3 billion tonnes of minerals and metals will be needed
to deploy wind, solar and geothermal power, as well as energy storage, required for achieving a below 2°C future.

 

Share
of Mineral Demand from Energy Storage under IEA 2DS through 2050

 

 

 

Source:
The World Bank, Minerals for Climate Action: The Mineral Intensity of the Clean Energy Transition Report (May 2020)

    
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Demand
for Natural Flake Graphite vs. Synthetic Graphite in Battery Applications

 

Natural
flake graphite and synthetic graphite can be both utilized as Anode Material, however they have a few key differences. Historically,
natural flake graphite was not able to match the performance characteristics of synthetic graphite. However, recent technological
breakthroughs have improved cycle life, energy density and product consistency of natural graphite while maintaining the significant
relative cost advantage and improved environmental footprint. Battery manufacturers have to date sought to blend synthetic and
natural materials, a trend Benchmark expects to continue.

 

Types
of Natural Graphite

 

	Type	Anode profile	Intensity	Pros	Cons
	Natural Anode	•	The preferred input material
    for producers outside China	•	1.2 kg/kWh	•	Capacity	•	Consistency issues can impact
    life cycle
	 	•	Increasingly natural blends being used in EVs	 	 	•	Cost	 	 
	Synthetic Anode	•	The dominant anode technology in China today	•	1.2 kg/kWh	•	Life cycle	•	High cost
	 	•	Typically blended with other carbon	 	 	•	Particle size	•	Supply chain uncertainty
	 	 	 	 	 	 	 	•	Capital intensive

 

Source:
Benchmark Mineral Intelligence Q1 2021

 

Benchmark
expects higher demand growth for natural flake graphite over its forecast period. This higher demand for natural flake graphite
is expected to grow market share from approximately 40% in 2020 to 49% in 2030.

 

Battery
Anode Material Evolution through 2030

 

 

 

	Natural Graphite 

Demand for 

Lithium-ion 

(tonnes)	224,538	1,209,953	3,078,757

 

Source:
Benchmark Mineral Intelligence Q1 2021

    
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Growth
in Other Natural Flake Graphite Applications

 

The
strong growth in natural flake graphite from battery applications is expected to be supplemented by a doubling of demand from
specialty applications through 2040, a 576 kt increase or 3.7% annual growth.

 

Change
in Natural Flake Graphite Demand by Non-Battery Application

 

 

 

Source:
Benchmark Mineral Intelligence Q1 2021

 

Notwithstanding
the steady growth from non-battery applications, the approximately 2,854 kt of natural flake graphite (approximately 1,297 kt
after accounting for yield loss) growth in natural flake graphite demand for battery anode applications through 2030 is expected
to result in battery applications making up to 78% of total natural flake graphite demand.

    
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Change
in Flake Graphite Demand – Battery vs. Non-Battery Applications

 

 

 

Source:
Benchmark Mineral Intelligence Q1 2021

 

Graphite
Supply

 

Graphite
supply, both natural and synthetic, has been concentrated in China due to the current location of processing capacity. China accounts
for an estimated 61% of synthetic graphite and 100% of chemical processing capacity, respectively. As it relates to graphite usage
in LiB, China currently accounts for approximately 100% of spherical graphite production (both synthetic and natural), the key
graphite precursor for battery anode production.

 

	Natural Graphite extraction	Chemical Processing	Synthetic Graphite Production
	 	 	 
			

 

Source:
Benchmark Mineral Intelligence Q1 2021

    
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Natural
graphite occurs in three primary forms that impact the characteristics of the graphite as well as target end market. Key characteristics
are the graphite’s purity (measured as percentage carbon), crystalline structure and in the case of flake graphite the size of
the flake product (fines, medium, large, jumbo).

 

Types
of Natural Graphite

 

	Type	Characteristics	Applications
	Amorphous	•	Most common naturally occurring graphite; and	•	Industrial (e.g., steel, moulding,
    paint, coating, pencil).
	 	•	Lowest purity 70 –
    80%.	 	 
	High Crystalline	•	Very rare; and	•	Limited specialty applications (e.g.,
    carbon brushes, brake lining, lubricants, pebble beds of nuclear reactors).
	 	•	High purity 90 – 99%.	 
	Flake	•	Most common form of extracted graphite; and	•	Industrial, specialty and battery
    anode
	 	•	Purity once beneficiated 92 – 97%.	 	applications.

 

Source:
Page 5, Battery Materials Review, April 2020

 

Natural
Graphite Value Added-Process for Use in LiB

 

In
order to be suitable for use in battery anodes, natural flake graphite is required to undergo a value-added conversion process
to create CSPG. The key steps in the value-added conversion process include:

 

		•	Micronization,
which reduces the size of the graphite;

		•	Spheronization,
which shapes the flakes into spheres to increase surface area density;

		•	Purification,
which removes the impurities needed for battery grade material; and

		•	Coating,
which improves the performance of the Anode Material.

 

This
value-added conversion process typically results in a yield loss of natural flake graphite. Benchmark estimates that across the
industry, each tonne of CSPG requires 2.2 tonnes of flake graphite feed. The Corporation’s conversion process is expected to require
only 1.4 tonnes of flake graphite feed for each 1 tonne of CSPG produced, a significant reduction in yield loss compared to Benchmark’s
estimate for the industry at large.

 

Natural
Graphite Benefits from an Improved Carbon Footprint vs. Synthetic Alternatives

 

Natural
graphite provides an improved carbon footprint due to a lower energy conversion process and lower emission raw material. Synthetic
graphite Anode Material relies on petroleum needle coke and coal tar pitch as a feedstock and an energy intensive (2,700 - 3,000°C)
twenty-day graphitizing process. Natural graphite extraction and processing can be undertaken with renewable powered electricity
resulting in a materially lower carbon footprint and in a small number of cases, such as the Corporation, carbon-neutral production.

    
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Synthetic
Graphite Raw Material Considerations

 

Synthetic
graphite utilizes petroleum needle coke as its primary raw material feedstock. The primary alternative use for petroleum needle
coke is as a feedstock for graphite electrodes used for steel making utilizing the electric arc process. As a result, availability
of petroleum needle coke faces pressure from expected declines in petroleum production and expected growth in electric arc steel
production.

 

Government
Policy Driving a Localization of the Supply Chain

 

The
United States and Canada are highly focused on securing the supply chains for critical minerals, of which graphite is specifically
included. On February 24, 2021, U.S. President Joseph R. Biden signed a new executive order (the “EO”) aimed
at strengthening critical U.S. supply chains through a 100-day supply chain vulnerability review. The EO specifically calls for
a report identifying risks in the supply chain for critical minerals and other identified strategic materials as well as policy
recommendations to address those identified risks. In Executive Order 13953 (September 30, 2020), referenced in the EO, graphite
was one of the four minerals and metals singled out as essential to the U.S.’s “national security, foreign policy and economy.”
The EO also mentioned that the U.S. was 100% reliant on imports for graphite. Similarly, Natural Resources Canada notes that critical
minerals, of which graphite is specifically included, are essential to Canada’s economic security and required for Canada’s transition
to a low-carbon economy. Canada noted that its critical elements list, of which graphite was included, is part of its whole-of-government
approach to strengthen domestic critical mineral value chains. Specifically, the government will work to identify ways to help
bolster Canadian critical minerals projects and supply chain development and target policy development to secure Canada’s position
in global value chains. Additionally, the Québec Government has released a Quebec plan on critical minerals which calls
for support for companies and local communities in the development of critical and strategic mineral industries with ethical and
responsible practices which would attract investment. This support includes sharing the financial risk of exploration and assistance
in relations with local communities and First Nations. On January 9, 2021, Canada and the United States announced the finalization
of the Canada-U.S. Joint Action Plan on Critical Minerals Collaboration. The plan aims to facilitate development of secure supply
chains for critical minerals that are key to strategic industries such as defense, aerospace and communications.

 

Supply
and Demand Balance

 

The
flake graphite market has maintained relative balance in recent years moving from approximately 226 kt oversupply in 2018 to approximately
60 kt deficit in 2021. Demand growth from specialty, industrial and LiB applications is expected to be met with a combination
of expanded natural and synthetic graphite supply. Benchmark expects a supply deficit to emerge as demand from LiB manufacturers
ramps-up in the coming years. Graphite demand is expected to exceed global supply by approximately 430 kt by 2026 increasing to
approximately 1,888kt by 2030. The supply side response is constrained on the natural flake graphite side from the development
timeline for new extraction and processing capacity and on the synthetic graphite side from the availability of petroleum needle
coke capacity, given the competing demand from graphite electrode requirements for the production of steel using the electric
arc furnace process.

    
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Flake
Graphite Supply Shortages Expected as LiB Demand Increases

 

 

 

Source:
Benchmark Mineral Intelligence Q1 2021

 

Natural
Graphite Pricing

 

Graphite
pricing varies greatly based on market application, the degree of downstream processing, the product purity and in the case of
flake graphite the size of the saleable product. As a general principle greater processing leads to a greater market price (e.g.,
CSPG vs. uncoated spherical purified graphite), larger flake size is generally sold at a premium to smaller flake sizes, and higher
purity products (e.g., above 94%) are sold at a premium to lower purity products.

 

Transactions
in the market are generally based on private direct negotiation between buyers and sellers, as a result there is no spot or forward
market. Companies such as Benchmark and Roskill estimates current and historical pricing based on their market research and publish
forward estimates for select grades and product types.

 

Pricing
benchmarks for CSPG and uncoated spherical purified graphite have historically been based on trade between Asian producers and
consumers given the location of coating operations (uncoated spherical purified graphite exported from China and CSPG imported
into China). According to Roskill, Global Trade Tracker the average price of CSPG imported into China in 2019 and 2020 were US$7,157/tonne
and US$7,307/tonne, respectively.

 

Pricing
for flake concentrate products are published on a regional basis reflective of the key-producing regions generally on a mid-sized
basis, with additional quotes for larger and smaller flake products, generally at a purity of 94% carbon. Flake sizes are measured
based on the size of mesh screens that the products pass through measured in microns (one thousandth of a millimetre) versus a
product of average size. The most common flake sizes are +50 mesh (jumbo), +80 mesh (large), +100 mesh (medium) and -100 mesh
(small). The United States is currently 100% reliant on imported natural flake graphite. The USGS estimates the average price
of imported flake graphite was approximately US$1,516/tonne from 2016 to 2020.

    
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The
Corporation commissioned Benchmark to prepare estimated sale prices by product size for the Matawinie Mine project used in the
Technical Report. These estimates were based on a base price of US$1,429/tonne, being the 5-year average of Benchmark’s Flake
Graphite Price Index from January 2012 to December 2016.

 

The
Corporation estimates its flake concentrate production will benefit from above specification sizing and purity resulting in premium
pricing versus benchmarks for commodity grade flake. The selling price was calculated using price forecasts provided by Benchmark
as of July 2018 for the Matawinie Mine project’s flakes size basket composition.

 

	Type	Size (microns)	Purity	Illustrative price
	Jumbo	•	+50	•	94 – 97%	•	US$2,548/tonne
	Large	•	+80	•	94 – 97%	•	US$1,643/tonne
	Medium	•	+140	•	94 – 97%	•	US$1,263/tonne
	Fines	•	-140	•	94 – 97%	•	US$1,065/tonne

Source:
Benchmark Mineral Intelligence 2018 market study for the Matawinie Mine project

 

DESCRIPTION
OF THE BUSINESS

 

General

 

The
Corporation

 

The
Corporation is a Québec-based company whose mission is to become a major producer of advanced graphite materials with a
carbon-neutral footprint. The Corporation is working towards developing a fully-integrated source of green and sustainable battery
Anode Material in Québec, Canada. The Corporation is developing advanced carbon-neutral graphite-based solutions for the
growing LiB and fuel cell markets, and other VAP. With low-cost operations and high environmental, social & governance standards,
the Corporation aspires to become a strategic supplier to the world’s leading battery and auto manufacturers, ensuring robust
and reliable advanced material, while promoting supply chain traceability.

 

In
addition, the Corporation owns 100% interest in the mining titles forming the Yates Property, but there is no exploration program
on this property. The Corporation also owns 100% interest in the mining titles forming the Mac’s Lead Property and the Rivière-au-Castor
Property. During fiscal year ended December 31, 2017, the Corporation decided to put on hold its exploration program on these
properties, as management has chosen to focus its efforts on the Matawinie Graphite Property. All the projects and assets of the
Corporation are located in Québec, Canada. The Corporation has no income other than interest income on funds on deposit
and other interest, as the case may be. The Corporation has no mine in operation currently. As of the date of this Annual Information
Form, the Corporation had 72 employees.

    
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Description
of the Mineral Properties

 

The
Matawinie Graphite Property

 

Except
for the section entitled “Technical Information Update as of the Date of this Annual Information Form”, the following
description of the Matawinie Graphite Property project was summarized from the Technical Report that was prepared by the Authors
of the Technical Report, each of whom is a “qualified person” and “independent” of the Corporation, as at
the issuance date of the Technical Report, within the meaning of National Instrument 43-101 for the Standards of Disclosure for
Mineral Projects (“NI 43-101”) and is qualified in its entirety with reference to the full text of the Technical
Report. The summary is subject to all the assumptions, conditions and qualifications set forth in the Technical Report. The Technical
Report was prepared in accordance with NI 43 101 and for additional technical details, please see the complete text of the Technical
Report which was filed with the applicable regulatory authorities and was posted on SEDAR at www.sedar.com on December
10, 2018. Defined terms and abbreviations used in this section and not otherwise defined in this Annual Information Form have
the meanings attributed to them in the Technical Report.

 

Readers
are cautioned that the information provided in this section is provided as of the effective date of the Technical Report, being
July 10, 2018. For additional information on the Matawinie Graphite Property since the filing of the Technical Report, see “The
Matawinie Graphite Property - Technical Information Update as of the Date of this Annual Information Form” of this Annual
Information Form.

 

Introduction

 

The
Matawinie Graphite Property consists of 210 map-designated claims forming eight (8) main claim blocks.

 

The
Technical Report focuses on the Tony claims block consisting of 145 contiguous map-designated claims. The Tony claims block center
is located approximately six (6) km South West of the community of Saint-Michel-des-Saints, 120 km as the crow flies North of
Montréal.

 

Following
completion of a pre-feasibility study and an updated pre-feasibility study NI 43-101 technical report on the Matawinie Graphite
Property prepared by Met-Chem and published in 2017 and in 2018 respectively, the Corporation has mandated Met-Chem to provide
the Technical Report, a feasibility study following NI 43-101 rules and guidelines, regarding the Tony claims block in order to
increase the definition of the project and to support the Corporation through the next phases.

 

The
Technical Report incorporates the following changes from the pre-feasibility study:

 

		•	New
results from core and hydrogeology drilling programs performed in late 2017 and early 2018;

 

		•	Increase
in the production rate from 52,000 tonnes to 100,000 tonnes of graphite concentrate per year;

 

		•	Replacement
of a permanent crushing system by a semi-mobile in-pit crushing system;

    
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		•	Relocation
                                         of the de-sulphurization plant and related temporary storage facilities for non-acid
                                         generating (“NAG”) and potentially acid generating (“PAG”)
                                         tailings from the south of the pit to the concentrator plant area;

 

		•	Replacement
of the NAG and PAG tailings stockpiles and the waste rocks stockpile by co disposition tailings storage whereby the NAG and PAG
tailings are co-disposed with waste rock underlain with impervious geomembrane liners;

 

		•	Change
in the mining operation from diesel to an all-electric operation;

 

		•	The
increase in plant throughput and the addition of the all-electric mining fleet coupled with the limited power available at 34.5
kV, requires that the incoming power line from Hydro-Québec to be at 120 kV;

 

		•	A
mining contractor would be responsible for providing the all-electric mine and service equipment and provide the quality and quantity
of ore to the concentrator on a cost per tonne basis over the life of the mine.

 

To
finalize the Technical Report to the requisite standard, Met-Chem worked with renowned engineering firms and suppliers who provided
design and cost information to support the capital and operating cost estimates, project schedule, and economic analysis. Met-Chem
was supported by SGS Geostat, Metpro and SNC Lavalin as well as ABB and MEDATECH.

 

Property
Description, Location and Ownership

 

The
Matawinie Graphite Property consists of 210 map-designated claims forming eight (8) main claim blocks totalling 11,360 hectares.
The Matawinie Graphite Property is fully owned by the Corporation and is spread over an area of approximately 75 km by 45 km.
Since the main focus of the Technical Report is to present an assessment on the Tony claims block, only that claims block will
be described. The Tony claims block currently consists of 145 contiguous map-designated claims totalling 7,543.86 hectares.

 

The
centre of the Tony claims block is located approximately six (6) km to the South-West of the community of Saint-Michel-des-Saints
in the National Topographic System map sheets 31J/09 and 31I/12. Most of the Tony claims block lies within the municipality of
Saint-Michel-des-Saints, Lanaudière Administrative Region, Province of Québec, Canada. The centre of the Tony claims
block is positioned approximately 120 km as the crow flies north of Montréal, more or less at latitude 46.63° and longitude
73.96°.

 

A
large part of the Tony claims block is subject to a 2% net smelter royalty agreement which can be bought back by the Corporation
from 3457265 Canada Inc. and Éric Desaulniers with a total of two (2) lump sum payments of $1,000,000 (one payment for
each tranche of 1 %). The portion of the claims block subject to the net smelter agreement is located over the main mineralized
zones, one of which, the West Zone, contains the Mineral Reserves identified in the Technical Report.

    
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Geological
Setting and Mineralization

 

The
Matawinie Graphite Property, including the Tony claims block, lies in the southwestern portion of the Grenville geological province,
and more specifically in the Morin Terrane. The area is host to a variety of rock types, mainly composed of deformed metamorphosed
sediments, including paragneiss and calc silicates. Granitic and pegmatitic intrusions are also present and are observed locally
on the Matawinie Graphite Property. The graphite mineralization identified in the Tony claims block is hosted in paragneiss horizons
and appears as disseminated graphite flakes.

 

Exploration
 & History

 

Exploration
work on the Tony claims block was initiated in late 2013, when a detailed airborne geophysical survey was performed in the area.
The 2013 survey was executed following positive results from a regional survey by 3457265 Canada Inc., pursuant to the instructions
provided by the Corporation’s technical staff, covering over 2,100 km2 (confidential internal documents).

 

The
Corporation’s field exploration programs on the Tony claims block focused on graphite exploration consisting of:

 

		•	Airborne
TDEM surveys (2013 and 2015);

 

		•	Ground
prospecting of conductive targets identified by the airborne surveys (2014-2015);

 

		•	Ground
geophysical surveying using a portable TDEM system (2014-2017);

 

		•	Trenching
and channel sampling of the main conductors (2014-2016);

 

		•	Drilling
of the main mineralized zones (2015-2016 and 2018);

 

		•	Metallurgical
testing of surface and drill core samples.

 

From
2014 to 2017, ground PhiSpy TDEM surveys totalling 110 line-kilometres using 100 m line spacing in the targeted areas and 25 m
line spacing over the more promising South-East, South-West and West Zones, was performed. The PhiSpy survey results provided
a detailed outline of the conductive areas and thus possible mineralized zones, which were used as a basis for planning the trenching
and drilling programs.

 

Trenching
on the Tony claims block from 2014 to 2016 confirmed the extent of the graphite mineralization on the Matawinie Graphite Property.
The trenching work targeted wide conductors on each of the main conductive zones outlined by the 2015-2016 ground PhiSpy surveys.
A total of 511 channel samples were collected from the Tony claims block. The results from trenches TO-14/16-TR-03, TO 16 TR 10
and TO 16 TR-11 were used in the Mineral Resource Estimate for the West Zone (West Zone Deposit).

    
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Drilling

 

Exploration
drilling on the Tony claims block targeted wide conductors on each of the main conductive areas outlined by the 2014 to 2017 ground
PhiSpy surveys. A total of 123 exploration drill holes, numbered TO-15-05 to TO-15-74, TO-16-75 to TO-16-116 and TO-18-127 to
TO-18-137, were drilled in the Tony claims block totalling 19,780.60 m. Drilling in the West Zone consisted of 80 holes totalling
13,848.04 m. The exploration drill holes mentioned above do not include ten (10) holes drilled for the pit slope geotechnical
study and 14 vertical holes for overburden thickness survey in the West Zone.

 

Mineralization
was intercepted 270 times by drilling in the West Zone resulting in the interpretation of a mineralized envelope of about 100
m to 150 m thick from which 19 graphitic horizons, or volumes, were interpreted. These horizons can be followed, sometimes sporadically,
from sections W 0400 to W+2200 (a distance of 2,600 m). An additional feature of the West Zone is that some of the horizons separate
and coalesce to form wider mineralized volumes. The longest intersection along drill core returned a graphite content of 4.76%
C(g) over 133.7 m although this intersection is considered as being down-dip. Mineralization is open to the North, to the south
and at depths greater than 200 m from surface.

 

The
drilling in the South-East Zone of the South deposit consisted of nine (9) holes for a total of 1,551.99 m drilled. Mineralization
was intercepted 13 times by drilling resulting in the interpretation that the South-East Zone is composed of two (2) main mineralized
horizons (S1 and S2). The highlight of the South-East Zone is the large width of the mineralized horizons. From section S2600
to section S2900 (300 m length), the mineralized horizon ranges from 117 to 160 m true width, with grades varying from 3.19% to
3.62% C(g).

 

The
drilling in the South-West Zone of the South deposit consisted of 22 holes for a total of 2,616.6 m drilled. Mineralization was
intercepted 57 times by drilling resulting in the interpretation that the South West Zone is composed of two (2) main mineralized
horizons (S1 and S2). The highlight of South West Zone is a first graphitic horizon (S1) about 30 m thick, followed by a mostly
barren interval between 25 and 63 m thick, and finally, a second graphitic horizon (S2) around 40 to 50 m thick, with both graphitic
horizons varying from 2.79% to 5.29% C(g).

 

A
total of 12 other exploration holes totalling 1,763.97 m was drilled in other mineralized zones on the Matawinie Graphite Property.
Although most of these holes intercepted graphite mineralization, the potential for the presence of an economic deposit was lower
than that for the West, South-East and South-West Zones, due to thinner mineralized intercepts and/or lower graphite grades.

 

Quality
control samples, including blanks, duplicates and graphite standards, were included in the drill core sample stream. Out of the
7,252 drill core samples from the Tony claims block sent for graphic carbon (“C(g)”) analysis in 2015, 2016 and 2018,
771 were sent as quality control samples. Quality control sample results retuned within acceptable limits. No bias was introduced
in the sampling procedures.

 

Mineral
Processing and Metallurgical Testing

 

The
process component is based on the results of eight (8) metallurgical programs that were carried out on numerous composites from
the Matawinie Graphite Property. All test work was completed by SGS Minerals in Lakefield, Ontario. The test work included laboratory
scale testing and two (2) bulk sample processing campaigns on a pilot scale.

    
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The
process development and optimization programs that were carried out in preparation for the pre feasibility study culminated in
the flotation flow sheet that is depicted in the figure below. One locked cycle test (“LCT”) was carried out during
the feasibility stage using this flow sheet and a master composite that represented the first several years of mining operations.

 

Figure
 –LCT Flow Sheet

 

 

 

The
LCT mass balance and results of the size fraction analysis on the final concentrate is presented in the tables below. The graphite
recovery into the final concentrate was 94.3% at a combined concentrate grade of 97.0% C(t). These results are in very good agreement
with 97.0% C(t) at 94% carbon recovery, which were selected for the pre-feasibility and feasibility studies to generate the process
design criteria and circuit mass balance.

    
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Table
-LCT Results

 

	Sample ID	 	Weight 

(%)	 	Assays

(%) C(t)	 	Distr. 

(%) C(t)
	Combined Concentrate	 	4.30	 	97.0	 	94.3
	+80 mesh 1st Clnr Concentrate	 	2.20	 	96.6	 	48.1
	+80 mesh 1st Clnr Tailings	 	0.01	 	50.0	 	0.1
	-80 mesh 3rd Clnr Concentrate	 	2.10	 	97.4	 	46.2
	-80 mesh 1st Clnr Tailings	 	0.13	 	28.3	 	0.8
	1st Clnr Tailings	 	3.59	 	1.95	 	1.6
	Scavenger Tailings	 	92.1	 	0.15	 	3.2
	Combined Tailings	 	95.8	 	0.26	 	5.7
	Head (calc)	 	100.1	 	4.42	 	100.0

 

Table
- LCT Graphite Concentrate Size Fraction Analysis

 

	Size Fraction	 	Weight 

(%)	 	Assays 

(%) C(t)	 	Distribution 

(%) C(t)
	+32 mesh	 	1.0	 	97.2	 	1.0
	+48 mesh	 	12.5	 	97.6	 	12.5
	+65 mesh	 	18.1	 	96.8	 	18.0
	+80 mesh	 	11.4	 	96.6	 	11.3
	+100 mesh	 	13.5	 	96.9	 	13.4
	+150 mesh	 	13.5	 	98.4	 	13.7
	+200 mesh	 	9.8	 	98.3	 	9.9
	+325 mesh	 	9.1	 	97.8	 	9.1
	+400 mesh	 	2.8	 	97.3	 	2.8
	-400 mesh	 	8.2	 	97.2	 	8.2
	Final Concentrate (SA)	 	100.0	 	97.4	 	100.0

 

Mineral
Resources Estimates

 

The
block model, used to generate the Current Resource of the West Zone for the Technical Report has an effective date of July 10,
2018. This Resource is based on a total of 104 core drill holes which produced 4,491 samples as well as 207 samples collected
from channelling work in three (3) trenches. This does not include the quality control samples which are comprised of 198 duplicates,
198 blanks and 96 standard samples, all of which returned within acceptable limits. In all, 19 mineralized horizons encased in
paragneiss units were interpreted and modelled from this data.

    
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The
Current Resource block model for the West Zone was prepared by Yann Camus, P. Eng., of SGS Canada Inc. Geostat office in Blainville,
Québec, Canada, using the Genesis© mining software. Interpolation was performed using inverse square distance as well
as different search ellipses which were adapted to geology of the deposit. The block model was then processed by GEOVIA’s Whittle
software to provide an optimized pit. The optimized pit containing the Current Resource was limited to the Tony claims block property
boundary to the South of the West Zone Deposit at the effective date of the Resource Estimate (July 10, 2018). The Mineral Resources
of the West Zone are presented in the Table below.

 

Table
- Pit-Constrained Mineral Resource Estimate for the West Zone(1)

 

	 	 	Current Resource (July 10, 2018)(7)
	Mineral Resource 

Category(2)	 	Tonnage 

(Mt)(5)(6)	 	Grade 

[% C(g)](3)	 	C(g) 

(Mt)
	Indicated	 	95.8	 	4.28	 	4.10
	Inferred(4)	 	14.0	 	4.19	 	0.59

 

Notes:

 

		(1)	The
Mineral Resources provided in this table were estimated using current CIM standards on Mineral Resources and Reserves, definitions
and guidelines.

		(2)	Mineral
resources that are not mineral reserves have not demonstrated economic viability. Additional trenching and/or drilling will be
required to convert Inferred and Indicated Mineral Resources to Measured Mineral Resources. There is no certainty that any part
of a mineral resource will ever be converted into reserves.

		(3)	All
analyses used for the Resource Estimates were performed by ALS Minerals Laboratories and delivered as % C(g), internal analytical
code C-IR18.

		(4)	Inferred
Mineral Resources represent material that is considered too speculative to be included in economic evaluations. Additional trenching
and/or drilling will be required to convert Inferred Mineral Resources to Indicated or Measured Mineral Resources. It cannot be
assumed that all or any part of the inferred resources will ever be upgraded to a higher resource category.

		(5)	Current
Resource effective July 10, 2018.

		(6)	Mineral
Resources are stated at a cut-off grade of 1.78% C(g).

		(7)	Standards
used for this resource update are the same standards produced over the course of the pre-feasibility study (results published
October 25, 2017). The difference comes from a newly acquired land package (see July 5, 2017 press release), the south-west extension
drilled in 2018, the new hydrogeological and geotechnical data as well as the future market outlook.

 

Mineral
Reserve Estimates

 

The
Mineral Reserves for the West Zone Deposit were prepared by Met-Chem using best practices in accordance with CIM guidelines and
following NI 43-101 rules and guidelines. The Mineral Reserves are the Measured and Indicated Mineral Resources that have been
identified as being economically extractable and which incorporate mining losses and the addition of waste dilution.

 

The
first step in the Mineral Reserve estimate was to carry out a pit optimization analysis. The pit optimization analysis used economic
criteria to determine the cut-off grade and to limit the extent at which the deposit can be mined profitably. The pit optimization
analysis was done using the MS-Economic Planner module of MineSight®. The optimizer uses the 3D Lerchs-Grossmann algorithm
to determine the economic pit limits based on input of mining and processing costs and revenue per block.

    
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The
pit optimization analysis shows that the open pit design should be based on PIT33 (Revenue Factor 0.7). This pit shell contains
63.9 Mt of Indicated Mineral Resources at a strip ratio of 0.8 to 1 (waste to ore). Mining additional resources with an open pit
beyond the limits of this pit shell increases the stripping ratio. Although a slight increase in NPV is observed for PIT38, it
was decided to remain at a lower stripping ratio.

 

The
pit designed for the Tony claims block consists of five (5) phases of varying size and grade. The ultimate pit (all phases combined)
is approximately 2,600 m long and 380 m wide at surface with a maximum pit depth from surface of 235 m. The total surface area
of the pit is roughly 680,000 m2. The overburden thickness varies along the strike of the mineralization increasing in thickness
towards the North. For Phases 1, 2, and 3 of the project, overburden thickness is on average five (5) m ranging between 0 to 15
m in thickness. In Phases 4 and 5, overburden thickness increases and varies between 10 and 38 m.

 

The
open pit design includes 59.8 Mt of Probable Mineral Reserves at a diluted grade of 4.35% Cg. In order to access these reserves,
13.2 Mt of overburden and 50.0 Mt of waste rock will need to be removed. This results in a stripping ratio of 1.06 to 1 (waste/ore).

 

The
effective date of the Mineral Reserve estimate is July 10, 2018.

 

Table
- Open Pit Mineral Reserves

 

	 	 	Tonnage	 	Cg Grade
	Category	 	(Mt)	 	(%)
	Proven	 	0	 	0
	Probable	 	59.8	 	4.35
	Proven & Probable	 	59.8	 	4.35

 

Mining
Methods

 

The
mining method selected for the project will consist of an open pit, truck and shovel operation considering an all-electric fleet.
In addition, an in-pit crushing and conveying system will supply crushed ore to the concentrator. Vegetation, topsoil and overburden
will be stripped and stockpiled for future reclamation use. The ore and waste rock will be mined with five (5) m high benches,
drilled, blasted and loaded into rigid frame haul trucks with hydraulic excavators.

 

The
use of electric equipment for drilling, loading and hauling operations will minimize carbon emissions over the duration of the
mine life. This incentive aligns directly with the Corporation’s low environmental impact initiative. The design and implementation
of an all-electric mining project is an opportunity to reduce the environmental impact on the community of Saint-Michel-des-Saints.

 

A
mine plan was developed which supplies the required amount of ore to produce 100,000 tonnes of graphite concentrate per year.
The ultimate pit design consists of five (5) phases of production to assure a consistent feed grade for the entire 26-year mine
life of the project.

    
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The
initial starter pit (Phase 1) was designed at the south most extension closest to the Corporation’s property boundaries. The majority
of the run-of-mine (“ROM”) ore for the first four (4) years of the operation will be supplied from the initial
starter pit and will be mined to completion to allow in-pit backfilling of waste and tailings (PAG and NAG). Mining will commence
in Phase 1 and progress toward the north reaching Phase 5.

 

This
mining sequence will help minimize the project’s environmental footprint as the disposal of waste, PAG and NAG tailings can commence
backfilling in-pit as early as Year 5 of production. The driving factor for the mining sequence is the progressive reclamation
of the site while minimizing the environmental footprint and assuring a consistent feed grade (Cg%) to the mill. This involves
maximizing the backfilling of waste and tailings in-pit and minimizing the footprint of any external co-disposal stockpile.

 

Due
to the configuration of the pit, starting in the south extension will also minimize overburden removal as the majority of overburden
is located in the Phases 4 and 5 areas. Phase 2 consists of an extension of Phase 1 to the north and will be predominately mined
between Years 2 and 8 of operation. Phase 3 consists of a high-grade zone which will be blended with Phase 4 material (located
north of Phase 3) to facilitate a consistent blend to the mill.

 

The
mining operations will be carried out by a mining contractor who will operate the mine, five (5) days per week and 16-hour per
day. The mining contractor will also operate the in-pit crushers five (5) days per week and 12-hour per day. Since the concentrator
is designed to operate continuously 24-hour per day year-round, an ore stockpile was designed in order to maintain the ROM ore
feed to the plant during nights, weekends and when mining operations are idle.

 

Recovery
Methods

 

The
concentrator is located near the open pit mine and is designed to produce a nominal 100,000 tonnes of high-grade graphite concentrate
per year.

 

The
ROM mineralized material will be crushed by the in-pit crushers prior to being transported from the pit to the covered stockpile
by conveyor. The crushed material is reclaimed from the stockpile and ground in a SAG mill. The SAG mill discharge is screened
and the screen oversize is returned back to the SAG mill. The SAG screen undersize is pumped to the ball mill circuit. The ball
mill is in closed circuit with rougher flotation and the cyclones. This allows for the removal of larger graphite flakes as soon
as they are liberated from the ore and helps maintain graphite flake integrity. The cyclone overflow flows to scavenger flotation.
The scavenger tailings are pumped to the final tailings treatment plant via the concentrator tailings thickener.

 

The
combined rougher and scavenger concentrates are dewatered to obtain the proper pulp density and polished in a polishing mill using
ceramic media. The polishing mill scrubs the surface of the graphite flakes and thus removes the gangue minerals that are attached
to the flakes. The polished concentrate is refloated in the primary column. The primary cleaner concentrate is screened to separate
fine and coarse flakes. The screen oversize is the final product and is transported to the graphite concentrate thickener. The
screen undersize undergoes the same process with slightly harsher polishing and column flotation. The fine cleaner concentrate
combines with the coarser concentrate and both are pumped to the graphite concentrate thickener. Both cleaner tailings go to the
tailings thickener.

 

The
final graphite concentrate is thickened, filtered and dried. After drying the product is dry screened into four (4) products and
bagged in super sacks for transport.

    
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The
graphite flotation reagents are fuel oil and methyl isobutyl carbinol. Almost all of the flotation reagents will be adsorbed by
the graphite.

 

The
concentrator tailings are initially thickened for process water recovery and then pumped to the de sulphurization plant. The concentrator
tailings are de-sulphurized by sulphide flotation and magnetic separation to produce clean (“NAG”) tailings.
The NAG tailings and the sulphide concentrate (“PAG” tailings) are filtered and stockpiled before being trucked
to the co disposition site.

 

Project
Infrastructure

 

The
project infrastructure includes the 120 kV electrical power line, the main access road and site roads, general site works, site
electrical distribution and communication, site fire protection, fresh water, potable water and sewage treatment, auxiliary buildings,
water treatment and tailings and water management facilities.

 

Water
Management Plan

 

The
mine water management plan addresses the surface runoff, underground water from the pit, and the process water that are to be
collected from the industrial areas including the overburden/topsoil stockpiles and co disposal storage facilities (“CSF”)
of the Matawinie Graphite Property mine site. The water management infrastructure (i.e. basins, ditches and pumping requirements)
is sized based on the required volume of surface runoff to manage, which varies based on the catchment area of the CSF and the
open pit. Hence, the water management plan is divided into three (3) distinct phases (A, B1 and B2) as the drainage area increases
with the mine development. Treated water from the Water Treatment Plant will be discharged into a polishing basin to be partly
reused in the mineral processing plant while the remaining water will be discharged in the ruisseau à l’eau morte following
monitoring of flow and water quality in full compliance with applicable laws, regulations and standards.

 

Tailings
and Waste Rock Storage Facility

 

Co-disposal
methodology will be used to manage tailings and waste rock generated by mining activities. Tailings produced at the Corporation’s
concentrator are PAG and will be subjected to a de-sulphurization process. De-sulphurized tailings (NAG) and sulphide concentrate
(PAG) will then be filtered and placed with the waste rocks in co-disposition cells to form a co-disposal stockpile. From Year
5, co-disposition will also be carried out in the mine pit. A total of 56.49 Mm3 (60%) of waste rocks and tailings will be managed
out of which 22.6 Mm3 (40%) will be placed in-pit. The progressive restoration of the co-disposal stockpile will also be carried
out starting at Year 4 of mine operation.

 

Market
Studies and Contracts

 

Graphite
is a material with unique chemical, electrical, mechanical and thermal properties, which allows it to find demand from a very
wide array of applications, from pencil lids and refractory bricks, to battery active anode. Natural graphite is one of the commercial
types of this material, and is available in an array of commercial grades with different purity, particle size and morphology.
Among the traditional applications, the refractory industry is the most relevant, and looking into future trends, Anode Material
for LiBs is the most promising. China is the largest producer, followed by Brazil and Mozambique.

    
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The
graphite concentrate sales price used for the Technical Report was established at $2,261 (1,730 USD) per tonne. The selling price
was calculated using price forecasts provided by Benchmark Mineral Intelligence (“Benchmark”). Benchmark is an
independent credible source who compiles international graphite prices for various commercial size fractions and concentrate purities.
The Tony claims block’s West Zone graphite concentrate value was calculated based on the weighted average of each size fraction
and purity obtained during the metallurgical testing. No contracts relevant to the Technical Report have been established by the
Corporation. The Corporation has not hedged, nor committed any of its production pursuant to an offtake agreement.

 

Environmental
Studies, Permitting and Social or Community Impact

 

Several
environmental baseline studies have been completed since 2015 to set environmental reference values and to identify any major
environmental issues raised by the project. In parallel, several stakeholder and public engagement activities were set forth since
2015 to obtain an overview of potential socioeconomic issues, to obtain public perceptions, and to propose adequate measures to
foster the social acceptability of the project and its harmonious insertion at the local level.

 

Field-work
to describe the receiving environment started in June 2016 and continued through October 2018, and focused on the following components:
soil characterization; sediment characterization; geochemistry, hydrogeology; surface water quality; groundwater quality; noise
environment; vegetation, wetlands and special status plant species; aquatic fauna and fish fauna; small mammals; amphibians and
reptiles; bats; and birds. Some results on soil characterization, geochemistry, hydrogeology, and groundwater quality are still
to come as these studies are in progress.

 

Modelling
studies are under preparation to better understand some of the potential project’s impacts and propose relevant mitigation measures
to minimize residual impact (noise, air emission, hydrogeology, etc.). Baseline studies on other environmental components were
completed using existing data (hydrology, climate, etc.). According to the results of the current baseline studies, no major environmental
issues likely to have an impact on resource extraction were identified in the study area considering that specific mitigation
measures have been integrated into the Technical Report as progressive reclamation of the co-disposal waste and tailings storage
facility. In addition, stakeholders and the public have raised issues that relate to noise, air quality, transportation and safety,
loss of property value and physical and psychosocial health, among others. A stakeholder committee has been formed to follow up
on the project’s advancement and to collaboratively design adequate mitigation measures. The Atikamekw First Nation of Manawan
and the Council of the Atikamekw First Nation is also involved in this process and in discussions aiming to lead to a predevelopment
agreement.

 

The
Corporation prepared an ESIA report based on the directive issued in February 2018 by the MELCC in order to get a decree. If and
once the certificate of authorization is issued, the Corporation will be required to obtain all other environmental permits requested
by the law to fully develop and operate its mining project. At the same time, the project will need to undertake the environmental
monitoring activities as described in the ESIA report and/or requested by the government authorities.

    
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Capital
and Operating Costs

 

Capital
Cost Estimate

 

The
project scope covered in the Technical Report is based on the construction of a green field mining and processing facility with
an average mill feed capacity of 2.37 million tonnes per year of ore and producing 100,000 tonnes per year of graphite concentrate.
The capital and operating cost estimates related to the mine, the concentrator, and all required facilities and infrastructure
have been developed by Met-Chem or consolidated from external sources.

 

The
capital cost estimate (“Capex”) consists of direct and indirect capital costs as well as a contingency. Provision
for sustaining capital is also included, mainly for the development of the co-disposition area, and capital requirements as the
mine development moves from the south to the north. Amounts for closure and rehabilitation of the site have been estimated as
well.

 

The
Capex includes the material, equipment, labour and freight required for the mine predevelopment, processing facilities, tailings
storage and management, as well as all infrastructure and services necessary to support the operation.

 

The
Capex is based on a Class 3 type estimate as per the American Association of Cost Engineers Recommended Practice 47R-11 with a
target accuracy of ± 15%.

    
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Table – Summary of Capital Cost Estimate(1)

 

	Summary of Capital Cost Estimate ($000 CAD)	 
	Description	 	Initial Costs	 	 	Sustaining Costs	 	 	LoM Costs	 
	Direct Costs	 	 	 	 	 	 	 	 	 	 	 	 
	Mining	 	 	16,833	 	 	 	4,155	 	 	 	20,988	 
	Processing Plant	 	 	105,017	 	 	 	-	 	 	 	105,017	 
	Infrastructure	 	 	11,420	 	 	 	-	 	 	 	11,420	 
	Tailings and Water Management	 	 	48,177	 	 	 	38,760	 	 	 	86,937	 
	Electrical Distribution	 	 	23,486	 	 	 	8,085	 	 	 	31,571	 
	Sub-Total Direct Costs	 	 	204,933	 	 	 	51,000	 	 	 	255,933	 
	Indirect and Owner’s Costs	 	 	 	 	 	 	 	 	 	 	 	 
	Project Development Costs	 	 	2,327	 	 	 	-	 	 	 	2,327	 
	EPCM Costs	 	 	21,703	 	 	 	957	 	 	 	22,660	 
	Owner’s Costs	 	 	14,732	 	 	 	-	 	 	 	14,732	 
	Sub-Total Indirect Costs	 	 	38,762	 	 	 	957	 	 	 	39,719	 
	Contingency	 	 	31,476	 	 	 	8,731	 	 	 	40,207	 
	Closure Costs	 	 	6,250	 	 	 	6,250	 	 	 	12,501	 
	NSR Buyout	 	 	2,000	 	 	 	-	 	 	 	2,000	 
	Total Costs	 	 	283,421	 	 	 	66,938	 	 	 	350,360	 

 

Note:

 

		(1)	The totals may not add up due to rounding.

 

Operating Costs Estimate

 

The estimated operating costs of the project cover
the mining, processing, general administration and site services.

 

The sources of information used to develop the
operating costs include in-house databases and outside sources, particularly for materials, services and consumables.

    
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Table – Operating Costs Summary

 

	Description	 	Cost per Year
 ($)	 	 	Cost /tonne of concentrate
 ($/t concentrate)	 	 	Total Costs
 (%)	 
	Mining (Average over life)	 	 	17,776,100	 	 	 	177.76	 	 	 	35.6	 
	Tailings (Average over life)	 	 	5,872,892	 	 	 	58.73	 	 	 	11.8	 
	Ore Processing	 	 	23,270,908	 	 	 	232.70	 	 	 	46.6	 
	Site Services	 	 	886,080	 	 	 	8.86	 	 	 	1.8	 
	General and Administration	 	 	2,123,010	 	 	 	21.23	 	 	 	4.3	 
	Total Opex	 	 	49,928,990	 	 	 	499.29	 	 	 	100.0	 
	*Totals may not add up due to rounding

 

Economic Analysis

 

An economic analysis based on the production and
cost parameters of the project was prepared and the results are shown in the table below. In the analysis, an average EXW-mine
graphite concentrate selling price of 1,730 USD per tonne and a USD/CAD exchange rate of 0.7651 (1.307 CAD/USD) were assumed.

 

Table – Summary of Life of Project Production,
Revenues and Costs

 

	Description	 	Units	 	Value	 
	Production - Mineralization	 	M tonnes	 	 	59.9	 
	Production – Concentrate@ 97.0% Cg	 	k tonnes	 	 	2,520.4	 
	Revenue	 	M CAD	 	 	5,703.0	 
	Operating Costs	 	M CAD	 	 	1,261.2	 
	Initial Capital Costs (excludes Working Capital)	 	M CAD	 	 	276.2	 
	Sustaining Capital Costs	 	M CAD	 	 	59.8	 
	Closure Costs	 	M CAD	 	 	14.4	 
	Total Pre-Tax Cash Flow	 	M CAD	 	 	4,091.4	 
	Total After-Tax Cash Flow	 	M CAD	 	 	2,449.5	 

 

The financial indicators associated with the economic
analysis are summarized in the table below.

    
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Table – Summary of Financial Indicators

 

	Description	 	Units	 	Value	 
	Pre-Tax	 	 	 	 	 
	Payback Period	 	Years	 	 	2.2	 
	NPV @ 6%	 	M CAD	 	 	1,673.8	 
	NPV @ 8%	 	M CAD	 	 	1,286.8	 
	NPV @ 10%	 	M CAD	 	 	1,002.7	 
	Internal Rate of Return(“IRR”)	 	%	 	 	40.6	 
	After-Tax	 	 	 	 	 	 
	Payback Period	 	Years	 	 	2.6	 
	NPV @ 6%	 	M CAD	 	 	986.7	 
	NPV @ 8%	 	M CAD	 	 	750.8	 
	NPV @ 10%	 	M CAD	 	 	577.2	 
	Internal Rate of Return	 	%	 	 	32.2	 

 

Figures below show the sensitivity of the after-tax
NPV and IRR, respectively, to variations in Capex, operational capital cost estimate (Opex), selling prices and the USD/CAD exchange
rate. The vertical dashed lines represent the typical margin-of-error interval associated with the feasibility level cost estimates.

 

The Technical Report was compiled according to
widely accepted industry standards. However, there is no certainty that the conclusions reached in the Technical Report will be
realized. 

    
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Table– Cash Flow Statement – Base
Case 

 

 

 

 

    
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Figure – Sensitivity of Project NPV @ 8%
(After-Tax)

 

 

Figure – Sensitivity of Project IRR (After-Tax)

 

    
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Interpretation and Conclusions

 

Exploration Activities

 

Exploration work on the project targeted graphite
mineralization and consists to date of airborne geophysics (Mag and TDEM), prospecting, ground TDEM surveying, trenching/channel
sampling and core drilling. Surface and core samples were also collected for metallurgical tests including representative master
composites of the West Zone. Exploration work by the Corporation was initiated on the Tony claims block in summer of 2014 which
resulted in the discovery of seven (7) mineralized zones. These zones are named the Far West, West, North, North-East, East,
South-East and South-West Zones. No other known mineral occurrences were identified on the project area prior to the exploration
work performed by the Corporation.

 

Exploration activities by the Corporation have
culminated in the identification of a Probable Mineral Reserve for the West Zone as well as a Mineral Resource Estimate combining
the South-East and South-West mineralization present on the Corporation’s Tony claims block. The Probable Mineral Reserve
of the West Zone is based on 4,491 assay intervals collected from core drilling and three (3) surface trenches providing 207 channel
samples. Proper quality control measures were used throughout the exploration programs leading to the Probable Mineral Reserves
detailed in the Technical Report.

 

Mineral Processing and Testing

 

The metallurgical test program that was carried
out to support the Technical Report confirmed the robustness of the flow sheet that was developed during the pre-feasibility.

 

The additional testing that was completed to address
risks and opportunities that have been identified led to the following conclusions:

 

		•	Master composite representing the first few years of planned mining operation and mine plan variability
composites confirmed the metallurgical results that were obtained in the flow sheet development and optimization programs. This
consistent metallurgical response further reduces the process risk of the project.

 

		•	Process water re-circulation can result in undesirable activation of sulphides in the rougher/scavenger
stage and increased sulphide grades in the final graphite concentrate. Further work will be required to develop a better understanding
of the impact of process water circulation time and ageing on the activation of sulphides.

 

		•	Laboratory simulations of the Outotec SkimAir® technology has not resulted in a superior concentrate
product. However, this evaluation is based on two (2) tests only. Longer term and larger scale testing would be required to
determine the attractiveness of the technology.

 

		•	Optimized conditions have been developed for the de-sulphurization stage, but a full characterization
of representative low-sulphur and high-sulphur tailings have not been completed.

 

All test programs completed to-date generated conclusive
results and further laboratory scale development testing is deemed unnecessary at this point, especially when considering the new
3.5 t/h Flake Demonstration Plant commissioned to process the West Zone material.

    
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The Flake Demonstration Plant, which has been designed
with a capacity of 3.5 t/h, will process approximately 40,000 tonnes of ore over a period of two (2) years. The
operation of the Flake Demonstration Plant will facilitate the optimization of all unit operations and a systematic investigation
of the grinding conditions for the polishing and stirred media mill applications. It will also allow to test process options such
as the SkimAir® technology or spirals in the secondary cleaning circuit. The operation of the Flake Demonstration Plant will
provide critical process data to finalize the flow sheet necessary for the detailed engineering phase.

 

Recovery Methods

 

The processing plant is designed to process 6,449 t/d
of run of mine to produce 100,000 tonnes per year of graphite concentrate grading at about 97% C(t) based on a concentrate
recovery of 94%. A suitable process flow sheet has been developed which includes crushing, grinding, flotation, polishing, thickening,
filtering and drying. The dried concentrate is then classified into various sized products as required by customers.

 

The concentrator tailings are de-sulphurized in
the de-sulphurization plant. The NAG tailings and the sulphide tailings (PAG) are conveyed to separate stockpiles before being
trucked to the co-disposition storage facility.

 

All-Electric Operations

 

Based on the work carried out in the Technical
Report, it was concluded that for this project, the following all-electric operation scheme was appropriate:

 

		•	Waste rocks (0-750 mm) to be transported from the pit to the CSF by electric haul trucks;

 

		•	Both NAG and PAG tailings to be transported from their respective stockpiles to the CSF by electric
haul trucks;

 

		•	Backfill material to be transported to the pit by electric haul trucks; and

 

		•	ROM ore (0-750 mm) to be transported by electric haul trucks to electrically-cabled in-pit
crushers, and then subsequently by electrically-fed overland conveyors (0-150 mm) to the concentrator.

 

Market

 

The Corporation is developing a natural graphite
project which will have competitive advantages due to its privileged location, cost structure and experienced team. The Flake Demonstration
Plant (see press release dated September 18, 2018) located near the mine site has been constructed to allow the Corporation
to have an earlier debut in the market and de-risk the first years of sales. One of the goals of this Flake Demonstration Plant
is to secure medium to long term supply agreements with different customers.

 

Economic Analysis

 

The Technical Report shows that the project is
technically feasible as well as economically viable.

 

Based on a 26-year production period and assuming
100% equity financing, the IRR is 40.6% before taxes and 32.2% after taxes.

    
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The Authors of the Technical Report consider that
the project is sufficiently robust to warrant moving it to the mine development phase.

 

Risk Evaluation

 

There are a number of risks and uncertainties identifiable
to any new project and usually cover the mineralization, process, financial, environment and permitting aspects. This project is
no different and an evaluation of the possible risks was undertaken which is summarized in this section. For further details
on the risk factors associated with the Matawinie Graphite Property, see “Risk Factors” in this Annual Information
Form.

 

Mineralization

 

		•	The estimates of Mineral Resources and Mineral Reserves for the Matawinie Graphite Property have
been prepared in accordance with NI 43-101 rules and guidelines. There are numerous uncertainties inherent in estimating Mineral
Resources and Mineral Reserves and no assurance can be given that the anticipated tonnages and grades will be achieved, that the
indicated level of recovery will be realized or that any categories of Mineral Resources or Reserves will be upgraded to higher
categories. The estimation of mineralization is a subjective process and the accuracy of estimates is a function of quantity
and quality of available data, the accuracy of statistical computations and the assumptions and judgments made in interpreting
engineering and geological information.

 

		•	The Probable Mineral Reserves on which the Technical Report is based are derived from Indicated
Resources and thus, have a lower level of confidence than Proven Mineral Reserves which are derived from Measured Mineral Resources.
Hence, there could be unexpected internal grades or variations which could result in the project being uneconomic.

 

		•	Limited mineralogical data is presently available for the West Zone mineralization. While this
is not an immediate risk, a better understanding of the host rock mineralogy may assist in the final optimization of the graphite
and sulphide circuits and may provide an opportunity for generating a saleable by-product.

 

		•	Hydrogeology studies are ongoing. Potential water sources that affect the mining operation are
surface run-off, rainfall, snowmelt, and groundwater. Additional information will be required prior to construction to assess possible
risks. The work needed to gather the necessary data will be included in the next phase of the project.

 

Process

 

		•	The process has been developed based on significant test work on representative samples extracted
from the mineralization. Major variations in the quality of mineralization could result in limitation of throughput and quality
throughout the process. These limitations include:

 

		o	The crushing and grinding circuit has been designed based on limited comminution data. Significant
variations in hardness throughout the life of mine resource could cause a throughput limitation in the comminution circuit;

    
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		o	Variability flotation tests completed to-date have revealed a consistent metallurgical response
of composites representing large areas within the resource. However, the risk of increased variation for smaller areas within the
deposit still exists. Any significant variation in the metallurgical response of the mill feed during the first few months and
years of operation can have a significant impact on the economics of the project;

 

		•	The addition of xanthate in the sulphide circuit which may lead to residual xanthate in the process
water that is cycled back to the front end of the graphite circuit. The xanthate could result in elevated sulphur recovery into
the graphite cleaning circuit and possibly the final graphite concentrate.

 

All-Electric

 

		•	Maintenance intervals of battery-electric mobile fleet is uncertain due to a general lack of reference
data available in the industry.

 

		•	The information from Hydro-Québec for the costs and the schedule to build the new 120 kV
power line is incomplete.

 

Mine Infrastructure

 

		•	Lack of detailed geotechnical assessment could result in unintended consequences and have a significant
impact in the construction Capex and hence must be completed before the start of basic engineering and the finalization of the
project budget.

 

Financing

 

		•	The results of the Technical Report were based on certain assumptions that were given as of the
date of the Technical Report. The economic assessment reveals that the project’s viability will not be significantly vulnerable
to variations in capital and operating costs, within the margins of error associated with the Technical Report estimates. However,
the project’s viability remains more vulnerable to the USD/CAD exchange rate and the larger uncertainty in future market
prices. Delays and cost overrun can impact the project rendering it uneconomic.

 

		•	Currently, there is a significant demand on the mining community for funds for mining opportunities
worldwide. The Corporation is one of those mining companies who would be seeking financing for a project. Even though, the results
of this financial analysis is very positive and shows an excellent return on investment, the Corporation is a smaller mining operator
and funds could be difficult to obtain.

 

		•	The mining industry is heavily dependent upon the market price of the metals or minerals being
mined. There is no assurance that a profitable market will exist for the sale of the same. There can be no assurance that mineral
prices will be such that the project can be mined at a profit. Mineral prices largely fluctuated over the last years and any serious
downturn could prevent the continuation of the exploration, construction and development activities of the Corporation.

    
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Environmental and Permitting

 

		•	The project requires licenses and permits from various governmental authorities such as the MELCC.
There can be no assurance that the Corporation will be able to obtain or maintain all necessary licenses and permits that may be
required to carry out exploration, development and mining operations and failure to do so could delay or prevent the construction
and start-up of the mine as planned.

 

		•	Any delay in obtaining the anticipated construction permits would have an adverse effect on the
timing and costs associated with start-up. Such delays could also allow other third-party projects to commence production before
the Matawinie Graphite Property, thereby potentially reducing the Corporation’s target market share, which would have an
adverse impact on the level of product sales and economics of the Matawinie Graphite Property.

 

		•	Although the Corporation has had communications with the local communities and has worked with
these communities to mitigate their concerns about the potential project’s environmental and social impact, the project could be
delayed by changes in the communities’ attitudes necessitating additional studies and design alternatives.

 

Recommendations

 

Next Phase Estimated Costs

 

The table below presents the estimated costs for
the next phase and the section below describes the work to be done.

 

Table – Next Phase Estimated Costs

 

	Activity	 	Estimated Costs
 ($)	 
	Condemnation Drilling Program, Geotechnical, Hydrology and Hydrogeology Studies	 	 	1,050,000	 
	Metallurgical Studies and Tests Works	 	 	100,000	 
	Complementary Environmental Studies or Surveys	 	 	100,000	 
	Hydro-Québec Preliminary Study	 	 	700,000	 
	Hydro-Québec Down Payment	 	 	3,000,000	 
	Advance Engineering	 	 	2,142,000	 
	Estimated Total Costs	 	 	7,092,000	 

    
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Mining and Geology

 

Condemnation Drilling
and Geotechnical Studies for Infrastructure

 

It is proposed to proceed with a 1,500 m drilling
program in the sector of the West Zone Deposit aimed at providing more detailed geological data in areas where permanent infrastructure
is planned. The goal is to ensure that the permanent infrastructure does not conflict with possible economic mineral deposits in
the area. Condemnation drilling will also be combined with geotechnical studies since both aim to characterize the planned locations
of the co-disposal stockpiles, the main concentrator site and the water collecting basins. Results will also help in determining
the suitability of the underlying material for use in construction. The provisions estimated for the work include all field-work
expenses, personnel, laboratory analysis, and the preparation of a final report.

 

Further geotechnical investigation will have to
be carried out at the location of the proposed CSF and water management infrastructure (collecting basins, ditches). Investigations
will include additional geotechnical boreholes with rock coring supplemented with laboratory tests including particle size distribution,
moisture content, and uniaxial compressive strength on selected soils and rock samples.

 

Geotechnical and hydrogeology studies aimed at
characterizing the overburden, pit wall stability and water pressure within the pit area are a necessary step for the project to
go forward. The pit angles could be optimized further once geotechnical and hydrogeological assessments of the mine site are completed.

 

The work program aims to enhance the understanding
of the geotechnical and hydrogeological conditions onsite and to characterize materials in support of the design of the open pit.
The work program also includes consultant support to perform geo-mechanical mapping, drilling, trenching and a laboratory program
as well as computer modelling to simulate groundwater regime and effects from the mining activities. Additional drilling and testing
are recommended in the open pit area to get detailed geotechnical information of the overburden.

 

The use of existing and future exploration drill
holes could help in lowering the proposed budget for the hydrogeology program.

 

Metallurgical Studies and Test
Work

 

A number of process areas require additional characterization
in preparation of the detailed engineering stage. Testing to optimize the process and conditions will be completed in the Flake
Demonstration Plant due to the larger scale and continuous operating mode:

 

		•	Optimize the process variables associated with the polishing and stirred media mills. This includes
a systematic investigation of the impact of grinding media type and size, retention time, mill speed, and pulp density on the metallurgical
response in terms of concentrate grade and flake size distribution. The results of this will help determine whether polishing/cleaning
of the coarse fraction is required, and whether upgrading of the graphite using spirals or wet high intensity magnetic separator
(WHIMS) is required to meet the required specifications.

 

		•	Establish realistic reagent dosages for the various flotation circuits. Since the Flake Demonstration
Plant recirculates 100% of the process water, any residual frother and collector will reduce the reagent dosage requirements.

    
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		•	Optimize any process equipment design specifications that will require modifications due to the
specific nature of graphite. For example, operation of the intermediate and final concentrate thickeners can be challenging due
to the persistent froth often observed for graphite concentrates. Specific measures may have to be implemented to address these
frothing issues.

 

		•	Develop a better understanding of the relationship between PAX dosage in the sulphide rougher and
the recovery of sulphides into the final graphite concentrate under continuous operating conditions. This includes the implementation
of control mechanisms to reduce the risk of overcollection and the investigation of xanthate destruction technologies and xanthate
degradation over time.

 

		•	Evaluation of the SkimAir® technology. Outotec can provide a pilot scale cell, which aligns
well with the 3.5 t/h nameplate capacity of the Flake Demonstration Plant.

 

		•	Evaluation of screening and cycloning as dewatering technologies to confirm technical requirements
for dewatering.

 

		•	Full characterization work on representative low-sulphide and high-sulphide tailings.

 

		•	Determine the material characteristics for storage and handling of ore and products. Parameters
required for proper bin and pile sizing shall be determined whether with the Flake Demonstration Plant or with specialized laboratories.

 

		•	Packaging cycle times will be determined and logistics will be optimized for bag loading, inflating,
filling, and storage.

 

Co-Disposal and Water Management
Infrastructure

 

The following additional information is required
to address project design refinements and confirm the assumptions made in co-disposal and water treatment engineering:

 

		•	Additional stability analysis will be required to include recommendations and optimization in the
next engineering phases for:

 

		o	The co-disposal stockpile including the pit wall data for areas where the pile will be located
near the pit.

 

		o	The co-disposal stockpile when placed over the backfilled mine pit.

 

		o	Depending of geotechnical data interpretation after the next investigation, stability analysis
for collecting basins design may be required.

 

		o	Additional stability analyses to evaluate the effect of the blasting activities on the pit and
the co-disposal pile will have to be carried out.

 

		•	Additional validation and engineering will have to be carried out regarding a protective rock layer
between the in-pit co-disposal and the northern part of the pit where a lake will form after site reclamation.

    
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		•	Perform instrumented experimental test cell monitoring on site and gather data (oxygen consumption,
water content, suction) to confirm or improve co-disposal design.

 

		•	Collect surface water and process water quality data from laboratory tests and the demonstration
project.

 

All-Electric Operations

 

		•	It is recommended that automated (unmanned) charging technology be demonstrated in Canadian climatic
conditions, in order to de-risk the project.

 

		•	It is recommended for the Corporation to market benchmark EV operations for open pit mining
applications. It could also target underground mining EV applications which would use the same technology.

 

Environment

 

		•	Finalize air emission, noise, hydrogeology and landscape modelling during the preparation of the EIES.

 

		•	Perform a land survey in order to properly assess the location and proximity of private and leased
lands within a 1 km radius of the proposed open pit.

 

		•	Continue the collaborative work with the community, the Atikamekw First Nation of Manawan and the
stakeholder committee.

 

		•	Continue the engagement with the Atikamekw First Nation of Manawan and the Council of the Atikamekw
First Nation in order to reach the pre-development agreement.

 

		•	Ensure that all stakeholders and members of the public are engaged for the purpose of the upcoming
ESIA.

 

		•	Continue holding public consultations in order to properly inform and take into account the local
communities’ and stakeholders’ concerns regarding the project.

 

		•	Pursue the proactive acquisition process.

 

		•	Fulfill the Corporation’s engagements and put forth mitigation measures when possible.

 

		•	Complete the ESIA report in winter 2019 following the directive that has been issued by the MELCC
for the project (February 2018) and the new set of directives issued after the approval of the new Loi sur la qualité
de l’environnement (March 23, 2018).

    
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Opportunities

 

The location of the Corporation’s project
is a key competitive advantage to supply natural graphite to the North American market. The Corporation’s Flake Demonstration
Plant, which uses ore material from the West Zone to create natural graphite flakes concentrate, (see press releases dated May 24,
2018, September 18, 2018 and December 17, 2018) is a pivotal component in de-risking the Corporation’s open pit natural
graphite mining project on its Matawinie Graphite Property. The Flake Demonstration Plant serves to:

 

		•	Supply enough quantities of each material group to support an adequate market approach;

 

		•	Qualify the Corporation graphite products and establish a sales record;

 

		•	Test and improve processes for commercial operation optimization;

 

		•	Implement high standard and innovative technology for tailings and mine waste management as well
as site reclamation;

 

		•	Start employee training and local future workforce outreach program.

 

Technical Information Update as of
the Date of this Annual Information Form

 

On March 19, 2020, the Corporation announced an
updated pit-constrained mineral resource estimate for its West Zone Deposit, located in the Tony Claim Block, which is part of
its Matawinie Graphite Property. This update followed the drilling campaign completed in the fall of 2019 as announced by the Corporation
on December 3, 2019. The survey enabled the transformation of resources towards 24.5 Mt of measured resources. The mineral resource
estimate is summarized in the table below and is also compared to the previous pit-constrained mineral resource estimate comprised
in the Technical Report (the “Previous Resource”). This new resource estimate is based on additional drilling
done in 2019 to increase the deposit model’s level of detail:

 

Table: Pit-Constrained Mineral Resource Estimate
for the West Zone1

 

	 	 	 	Current
    Resource 
 (as of March 19, 2020)8	 	 	Previous
    Resource 
 (as of June 27, 2018)8	 
	Resource
    Category2	 	 	Tonnage

    (Mt)5,7	 	 	Grade

    (% Cg)3	 	 	Cg

    (Mt)	 	 	Tonnage

    (Mt)6,7	 	 	Grade

    (% Cg)3	 	 	Cg

    (Mt)	 
	Measured	 	 	 	24.5	 	 	 	4.27	 	 	 	1.05	 	 	 	0	 	 	 	0	 	 	 	0	 
	Indicated	 	 	 	95.8	 	 	 	4.26	 	 	 	4.08	 	 	 	95.8	 	 	 	4.28	 	 	 	4.10	 
	Measured
    + Indicated9	 	 	 	120.3	 	 	 	4.26	 	 	 	5.13	 	 	 	95.8	 	 	 	4.28	 	 	 	4.10	 
	Inferred4	 	 	 	4.5	 	 	 	4.43	 	 	 	0.20	 	 	 	14.0	 	 	 	4.19	 	 	 	0.59	 

 

Notes:

 

	(1) 	The mineral resources provided in this table were estimated using current Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Standards on Mineral Resources and Reserves, Definitions and Guidelines.
	(2)	Mineral resources are not to be considered mineral reserves as their economic viability has not been demonstrated. Additional drilling and/or trenching will be required to convert inferred and indicated mineral resources to indicated and measured mineral resources.
	(3)	All analyses used for the resource estimates were performed by ALS Minerals Laboratories and delivered as graphitic carbon (“% Cg”), internal analytical code C-IR18.
	(4)	Inferred mineral resources represent material that is considered too speculative to be included in economic evaluations. Additional drilling and/or trenching will be required to convert inferred mineral resources to indicated or measured mineral resources.
	(5)	Current Resource effective as of March 19, 2020.
	(6)	Previous Resource published on June 27, 2018 and comprised in the Technical Report.

    
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	(7)	The current and Previous Resources are stated at a cut-off grade of 1.78% Cg.
	(8)	The standards used for this resource update are the same standards produced over the course of the Technical Report. The difference between the Current and Previous Resources comes from new drilling done in 2019 mainly in the south-west sector of the deposit and from deep drilling.
	(9)	Mineral Resource tonnage, grade and quantity have been rounded to reflect the accuracy of the estimate, and the totals therefore may not represent the exact sums of their components.

 

Table: Current and Previous Resource Pit Envelope
Characteristics

 

	PIT
    ENVELOPE CHARACTERISTICS	 	Current
    Resource 
 (as of March 19, 2020)3	 	 	Previous
    Resource 
 (as of June 27, 2018)3	 
	Length
    (m)1	 	 	2,700	 	 	 	2,690	 
	Maximum
    Width (m)	 	 	430	 	 	 	430	 
	Surface
    Area (km2)	 	 	0.991	 	 	 	0.896	 
	Minimum
    Pit Elevation (m)2	 	 	215	 	 	 	255	 

 

Notes:

 

	(1) 	Measured length is approximate.
	(2)	Elevation is measured above sea level or “ASL.”
	(3)	The current resource is constrained within an optimized pit envelope using the same parameters as those for the Previous Resource. The parameters used are summarized in table below entitled “Current Resource Pit Envelope Generation Parameters”.

 

The block model, used
to generate the current resource of the West Zone Deposit, is based on a total of 149 core drill holes which produced 8,274 samples
as well as 207 samples collected from channeling work in three (3) trenches. In all, 23 mineralized horizons encased in paragneiss
units were interpreted and modelled from this data.

 

Mineralized material classification
was performed through an automated classification algorithm using search ellipsoids centred on composites.

 

The indicated resource
extent is based on the distance between drill holes. The total thickness of the mineralized volumes is attributed the same category. The
indicated resource is a continuous zone measuring approximately 2.7 km long by 175 m wide. Drill holes are typically spaced 100
m apart or less from section to section and spaced every 75 m or less on the sections for the indicated resource zones. Drilling
in the measured resource portion is typically spaced 50 m apart or less from section to section and spaced 60 m apart or less
on the sections. All resources outside this area are attributed the inferred category by default. 

    
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The current resource block
model for the West Zone was prepared by Yann Camus, P.Eng., of SGS Canada Inc. — Geological Services from Blainville, Quebec,
using the Genesis© mining software. Interpolation was performed using inverse square distance (ID2) as well as different search
ellipses which were adapted for the geology of the deposit. The block model was then fed to GEOVIA’s WhittleTM software
to provide an optimized pit envelope constraining the current resource. For results comparison, the parameters used to generate
the current pit envelope were the same as those used for the previous pit envelope. The parameters used for the modelling are summarized
below entitled “Current Resource Pit Envelope Generation Parameters”.

 

Table: Current Resource Pit Envelope Generation
Parameters

 

	PARAMETERS	 	VALUES
	Currency
    (CAD unless otherwise specified)	 	1.28
    CAD = USD 1.00
	Block
    Size	 	5
    m x 5 m x 5 m
	Specific
    Gravity	 	2.76
    t/m3
	Overall
    Slope Angle	Rock 

        Overburden 
	55° 

        25
        ° 

	Selling
    Price of Concentrate	 	$1,124.00
    USD/t – Transportation Cost

 

A strict quality assurance control protocol was
adopted for the 2019 drilling campaign. An analysis of the results of the quality control samples showed that the graphitic carbon
analyses for this campaign are reliable.

 

Other properties

 

Properties Description

 

The Corporation owns the following property: Yates
Property. This property is comprised of one (1) claim covering 42 hectares. There is currently no exploration program
on this property.

 

The Corporation also owns the following properties:

 

		•	Mac’s Lead property; and

 

		•	Rivière-au-Castor property.

 

These properties are comprised of three (3) claims
covering 148 hectares. During the fiscal year ended December 31, 2017, the Corporation decided to put on hold its exploration
program on these properties, as management chose to focus its efforts on the Matawinie Graphite Property and no further work is
planned in the short term on these properties.

    
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Risk Factors

 

The Corporation operates in an industry that contains
various risks and uncertainties. The risks and uncertainties listed below are not the only ones to which the Corporation is subject.
Additional risks and uncertainties not presently known by the Corporation, or which the Corporation deems to be currently insignificant,
may impede the Corporation’s performance. The materialization of one of the following risks could harm the Corporation’s
activities and have significant negative impacts on its financial situation and its operating results. In that case, the Corporation’s
stock price could be affected.

 

Risk of New Mining Operations 

 

The Matawinie Mine does not have an operating history.
Whether income will result from any of the Corporation’s activities, including, without limitation, the Matawinie Mine project,
will depend on the successful establishment of new mining operations and expansion of current operations, including the construction
and operation of the Matawinie Mine, the LiB Anode Plant project and related infrastructure. As a result, the Corporation is subject
to all of the risks associated with establishing or expanding new mining operations and business enterprises, including the timing
and cost, which can be considerable, of the construction of mining and processing facilities and related infrastructure; the availability
and cost of skilled labour and mining equipment; the need to obtain necessary environmental and other governmental approval and
permits and the timing of the receipt of those approvals and permits; the availability of funds to finance construction and development
activities; potential opposition from non-governmental organizations, environmental groups or local groups which may delay or prevent
development activities; and potential increases in construction and operating costs due to changes in the cost of fuel, power,
materials and supplies.

 

Various factors, including the successful construction,
commissioning and ramp-up of the Matawinie Mine, costs, actual mineralization, consistency and reliability of graphite grades,
commodity prices, future cash flow and profitability can affect successful project development, and there can be no assurance that
current or future estimates of these factors will reflect actual results and performance. The design and construction of efficient
processing facilities, the cost and availability of suitable machinery, supplies, mining equipment and skilled labour, the existence
of competent operational management and prudent financial administration, as well as the availability and reliability of appropriately
skilled and experienced consultants can also affect successful project development. It is common in new mining operations to experience
unexpected problems and delays during construction, development, mine start-up and commissioning activities. Such factors can add
to the cost of mine development, production and operation and/or impair production and mining activities, thereby affecting the
Corporation’s profitability. Accordingly, there is no assurance that the Matawinie Mine project will ever be brought into
a state of commercial production or that the Corporation’s activities will result in profitable mining operations.

    
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Increase in Production Costs

 

Changes in the Corporation’s production costs
could have a major impact on its financial condition and results of operations. Changes in costs of the Corporation’s mining
and processing operations could occur as a result of unforeseen events, including international and local economic and political
events, a change in commodity prices, increased costs and scarcity of labour, and could result in changes in profitability or mineral
reserve estimates. Many of these factors may be beyond the Corporation’s control. The Corporation prepares estimates of future
cash costs and capital costs for its operations and projects. There is no assurance that actual costs will not exceed such estimates.
Exceeding cost estimates could have an adverse impact on the Corporation’s future results of operations or financial condition.

 

Infrastructure, Supplies and Inflation

 

Prices for goods and services will fluctuate in
relation to the level of investment in the mining sector; it is reasonable to expect that increased demand could impact the Corporation’s
future economic projections and competitiveness, as it may entail a meaningful increase in costs for various goods and services.
Improvements in the economic conditions for the mining industry as a whole will typically result in increases to both the costs
of planned exploration and development activities, which must also be factored into economic models used in projections for future
development and potential operations. Increased demand for, and costs of, goods or services could result in delays if they cannot
be obtained in a timely manner due to inadequate availability, and may cause scheduling difficulties and delays due to the need
to coordinate their availability, any of which could materially increase project exploration, development and/or construction costs.
These factors could have a material adverse impact on the Corporation’s operations and profitability.

 

Economic Assessment Disclosure

 

The results of the Technical Report were based
on certain assumptions that were given as of the date of the Technical Report. The economic assessment reveals that the Matawinie
Mine project’s viability will not be significantly vulnerable to variations in capital and operating costs, within the margins
of error associated with a feasibility level of estimate. However, the Matawinie Mine project’s viability remains more vulnerable
to the USD/CAD exchange rate and the larger uncertainty in future market prices. Furthermore, there is no assurance that the assumptions
used in the Technical Report will prove to be accurate and adverse changes may occur which may affect actual results.

 

Uncertainty of Processing Technology on a Commercial
Basis

 

The Corporation’s process of preparing micronized
spheronized and purified graphite has not been used on a commercial basis by the Corporation and there is no certainty that results
achieved during small-scale testing, including those performed at the Flake Demonstration Plant and at the Shaping Demonstration
Plant, can be replicated in commercial quantities, which would have a material adverse impact on the finance of the Corporation’s
project. The Corporation will be required to provide graphite that meets certain specifications. In addition, the Corporation
is planning for the commissioning of the Purification Demonstration Plant and the Coating Demonstration Plant, both of which have
not commenced operations. The inability of the Corporation to fully commission and scale-up its operations to produce micronized
spheronized and purified graphite that meet those specifications may have a material adverse effect on the Corporation.

    
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The Corporation currently holds a license to commercialize
Hydro-Québec’s Anode Material technologies which forms part of the processing technology contemplated by the Corporation.
Such agreement contains certain covenants on the part of to the Corporation and failure by the Corporation to comply with such
covenants may result in a breach of contractual obligations and may cause the license to be terminated. The Corporation is currently
evaluating if it will use the Hydro-Québec technologies within the LiB Anode Plant or its own developed processes. The inability
of the Corporation to use the license or to use the Corporation’s own developed processes would have a material adverse effect
on the Corporation and may prevent the Corporation from commercializing its processing technology within the contemplated timeline.

 

The development of the Corporation’s process
of preparing micronized spheronized, purified and coated graphite may be complicated by third-party intellectual property rights
(otherwise known as freedom to operate issues), because of the types of patents allowed by national patent offices. The Corporation
may be forced to adapt its technology in order to ensure it does not conflict with any such third-party intellectual property rights.
Further, the Corporation’s ability to successfully challenge third-party patent rights is dependent on the laws of national
courts and there can be no assurance that the Corporation would successfully challenge third-party patent rights. In addition,
the Corporation may face increasing competition from similar technology in the future. Similar technology can be a threat to the
Corporation and it could prevent the Corporation from achieving commercial operations on a basis that is economically viable.

 

Uncertainty of Mineral Resources and Mineral
Reserves

 

The estimates of mineral resources and mineral
reserves for the Matawinie Mine have been prepared in accordance with NI 43-101. There are numerous uncertainties inherent
in estimating mineral resources and mineral reserves and no assurance can be given that the anticipated tonnages and grades will
be achieved, that the indicated level of recovery will be realized or that any categories of mineral resources or reserves will
be upgraded to higher categories. The estimation of mineralization is a subjective process and the accuracy of estimates is a function
of quantity and quality of available data, the accuracy of statistical computation and the assumptions and judgments made
in interpreting engineering and geological information. Mineral reserves at the Matawinie Mine have been determined to be economic
ore in the context of a feasibility study in accordance with NI 43-101. However, factors such as market price fluctuations,
increased production costs, reduced recovery rates, and changes to other assumptions applied to the estimates, may render the mineral
reserves uneconomic.

 

It should be understood that the mineral resources
and mineral reserves are estimates of the size and grade of the deposits based on a number of drillings and samplings and on assumptions
and parameters available. The level of confidence in the estimates depends upon a number of uncertainties. These uncertainties
include, but are not limited to, future changes in product prices and/or production costs, differences in size and grade and recovery
rates from those expected, and changes in project parameters. There is no assurance that the Matawinie Mine implementation will
be realized or that the current estimates of volume and grade of minerals mined/processed or of cash flows derived from production
will be achieved.

    
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Substantial expenditures and time are required
to establish mineral reserves through drilling and to develop the mining and processing facilities and infrastructure at mine site.
There is no certainty that future expenditures made in the exploration of the Corporation’s other mineral properties or additional
areas at the Matawinie Mine will result in the identification of commercially recoverable quantities of ore or that ore reserves
will ever be mined or processed profitably. While the Technical Report demonstrates the economic feasibility of the Matawinie Mine,
the inability to achieve commercial operations on a basis that is economically viable may have a material adverse effect on the
Corporation.

 

Construction and Commissioning of Processing
and Demonstration Facilities

 

The design and construction of efficient processing
and demonstration facilities, the cost and availability of suitable machinery, supplies, equipment and skilled labour, the existence
of competent operational management and prudent financial administration, as well as the availability and reliability of appropriately
skilled and experienced employees can affect successful project development.

 

The Corporation intends to construct the LiB Anode
Plant, which will be equipped to produce graphite-based materials through onsite micronization, spheronization, purification, and
coating transformation units. In addition, the Corporation expects to process the purification of spherical graphite at the Purification
Demonstration Plant which will rely on new infrastructure. The Corporation is also currently in the detailed engineering phase
and has initiated the procurement to build the first module of the Coating Demonstration Plant. It is common in new processing
facilities to experience unexpected problems and delays during construction, development, start-up and commissioning activities.
The costs, timing and complexities of developing the LiB Anode Plant, the Purification Demonstration Plant and the Coating Demonstration
Plant, may be significantly higher than anticipated which can add to the cost of development, production and operation and/or impair
production and activities, thereby affecting the Corporation’s profitability.

 

Need for Funding and Time of Development

 

There is a risk that the development of the LiB
Anode Plant and the Matawinie Mine into commercial production will not be completed on time or on budget, or at all. The Corporation’s
mining projects are still subject to the receipt of various permits. The development and construction schedule of the LiB Anode
Plant, the Shaping Demonstration Plant, the Purification Demonstration Plant, the Coating Demonstration Plant and the Matawinie
Mine is based on management’s expectations, and may be delayed by a number of factors, some of which are beyond the Corporation’s
control. It is common in new mining operations to experience unexpected costs, problems and delays during permitting, construction,
development and mine start-up. Most, if not all, projects of this kind suffer delays in start-up and commissioning due to late
delivery of components, the inadequate availability of skilled labour and mining equipment, adverse weather or equipment failures,
the rate at which expenditures are incurred, delays in construction schedules, or delays in obtaining the required permits or consents,
or to obtain the required financing. In addition, delays in the early stages of mineral production often occur. During this time,
the economic feasibility of production may change.

 

Capital and operating costs are estimates based
on the interpretation of geological data, pre-feasibility and feasibility studies and other conditions, and there can be no assurance
that they will prove to be accurate. The costs, timing and complexities of developing the LiB Anode Plant project and the Matawinie
Mine project may be significantly higher than anticipated, including because the availability of infrastructure such as surface
access, skilled labour, and energy at an economic cost, cannot be assured. In addition, cost estimates may increase significantly
as more detailed engineering work and studies are completed.

    
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The Corporation requires financing through equity
and/or debt securities to complete the development, construction and commissioning of the LiB Anode Plant, the Shaping Demonstration
Plant, the Purification Demonstration Plant, the Coating Demonstration Plant and the Matawinie Mine and to fund future working
capital, capital expenditures, operating and exploration costs and other general corporate requirements. The success and the pricing
of any such capital raising and/or debt financing is dependent upon the prevailing market conditions at that time and upon the
Corporation’s ability to attract significant amounts of debt and/or equity. There is no assurance that such financing will
be obtained on terms satisfactory to the Corporation and, if raised by offering equity securities, any financing may involve a
dilution to existing shareholders. Failure to obtain any financing necessary for the Corporation’s capital expenditure could
result in the delay or indefinite postponement of further construction and development of the LiB Anode Plant, the Shaping Demonstration
Plant, the Purification Demonstration Plant, the Coating Demonstration Plant and the Matawinie Mine, which in turn would materially
and adversely affect the financial and operating results of the Corporation and the market price of the Corporation’s securities
and, ultimately, could result in the loss of its properties.

 

The impacts of COVID-19 and government responses
thereto may also continue to have a material impact on financial results and could constrain the Corporation’s ability to
obtain equity or debt financing in the future, which may have a material adverse effect on its business, financial condition and
results of operations. There is a risk that commodity prices or demand for the products decline, including as a result of the impact
of the COVID-19 crisis. The availability of such cash may be adversely impacted by uncertainty in the financial markets, including
as a result of the COVID-19 crisis. Failure to obtain financing on a timely basis may cause the Corporation to postpone the development
and construction of the LiB Anode Plant, the Shaping Demonstration Plant, the Purification Demonstration Plant, the Coating Demonstration
Plant as well as the Matawinie Mine.

 

Construction and Start-Up of New Mines and Industrial
Plants

 

The development and construction of the Matawinie
Mine require the construction of significant new industrial facilities including the LiB Anode Plant. The success of construction
projects and the start-up of new mines and industrial plants by the Corporation is subject to a number of risks and challenges
including the availability and performance of engineering and construction contractors, suppliers and consultants; unforeseen
geological formations; the implementation of new mining and industrial processes; the receipt of required governmental approvals
and permits in connection with the construction of mining and industrial facilities and the conduct of operations, including environmental
and operating permits; price escalation on all components of construction and start-up; engineering and mine design adjustments;
the underlying characteristics, quality and unpredictability of the exact nature of mineralogy of a deposit and the consequent
accurate understanding of ore or concentrate production; and the successful completion and operation of haulage ramp and conveyors
to move ore and other operational elements. Any delay in the performance of any one or more of the contractors, suppliers, consultants
or other persons on which the Corporation is dependent in connection with its construction and development activities, a delay
in or failure to receive the required governmental approvals and permits in a timely manner or on reasonable terms, or a delay
in or failure in connection with the completion and successful operation of the operational elements in connection with the mine
and the industrial facilities could delay or prevent the construction and start-up as planned and may result in additional costs
being incurred by the Corporation beyond those budgeted. There can be no assurance that current or future construction and start-up
plans implemented by the Corporation will be successful.

    
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The Corporation’s Dependence Upon the
Matawinie Mine and the LiB Anode Plant

 

The Corporation currently expects future mining
operations at the Matawinie Mine to account for all of the Corporation’s graphite production for the foreseeable future.
In addition, the Corporation currently expects its future operations to be performed at the LiB Anode Plant to account for all
of its processing activities to produce VAP and Anode Material for LiBs. Consequently, the Corporation expects to generate all
its revenues from its production activities at the Matawinie Mine, including through the sale of natural graphite to third parties,
and from its processing activities at the LiB Anode Plant, including through the sale of VAP and Anode Material for LiBs to third
parties, respectively.

 

Any adverse condition affecting any of the Matawinie
Mine or the LiB Anode Plant, or any adverse conditions affecting the revenues from any graphite products sale or the costs for
producing graphite products at the Matawinie Mine or processing graphite products at the LiB Anode Plant could be expected to have
a material adverse effect on the Corporation’s financial performance and results of operations and could require the Corporation
to raise additional financing, which may not be obtainable under such circumstances.

 

Life of Mine Plan

 

Significant changes in the life of mine plan can
occur as a result of experience obtained in the course of carrying out the Corporation’s mining activities, changes in mining
methods and rates, process changes, investments in new equipment and technology, graphite price assumptions and other factors.
There can be no assurance that the estimates in the Corporation’s plan will be consistent with future economic factors or
actual results and performance or that the Corporation will not amend its existing life of mine plan for its Matawinie Mine in
the future. A decline in net cash flow may also require the Corporation to record an impairment charge against the carrying value
of its net assets.

 

Mineral Exploration and Development Activities
Inherently Risky

 

The business of exploration for minerals and mining
involves a high degree of risk that even a combination of experience, knowledge and careful evaluation may not be able to overcome.
Few properties that are explored are ultimately developed into mineral deposits with significant value. Unusual or unexpected
ground or water conditions, geological formation pressures, fires, rock bursts, power outages, labour disruptions, flooding, earthquakes,
explosions, cave-ins, landslides, mechanical equipment and facility performance problems, the inability to obtain suitable adequate
machinery, equipment or labour and other unfavourable operating conditions are some of the risks involved in the operation of
mines and the conduct of exploration and development programs. Unknown rock mechanics and hydrogeological conditions that cannot
be predicted ahead of mining, such as faulting, zones of weak rock, or zones of unanticipated water inflow, may only be discovered
during mining and may require significant changes to the mining plan. While lab testing may reduce uncertainty in some of the
rock properties, it is never possible to identify all of these potential risks in advance. The Corporation’s exploration
or development properties and any future mining operations will be subject to all the hazards and risks normally incidental to
exploration, development and production, any of which could result in work stoppages and damage to or destruction of exploration
or development facilities, mines and other producing facilities, damage to life and property, environmental damage and possible
legal liability for any or all damage.

    
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Risks Related to Future Sale of Graphite Products

 

The Corporation is dependent on future sales of
graphite-based products. Although the Corporation has and will continue to strive to enter into sales agreements, including offtake
agreements for future sales, no assurance can be given that the Corporation will be able to sell graphite-based products at such
terms and conditions as are favourable for, or necessary to sustain the operations of the Corporation.

 

The Corporation has entered into the Offtake and
Joint Marketing Agreement with Traxys on February 14, 2019 for the sale of the production of flake graphite concentrate
produced by the Corporation at the Flake Demonstration Plant. Such agreement contains certain representations, terms and conditions
in order to result in firm commitments, and no assurance can be made that such representations, terms and conditions can or will
be satisfied.

 

Except for the Offtake and Joint Marketing Agreement
with Traxys, the Corporation has not yet entered into any other agreements for the sale of graphite-based products. There can be
no guarantee that the Corporation will be able to secure additional sales agreements, including offtake agreements for future sales
and, if so, there can be no guarantee as to the amount of purchase orders or commitments, the quantity of graphite represented
by such orders and commitments or the timing for receiving same. Factors that may impact such orders and commitments include the
ability of the Corporation to reliably and consistently produce graphite meeting client requirements and confidence of clients
in such ability, market conditions and demand for products requiring graphite, overall market conditions and the strength of the
economy.

 

If the Corporation, for whatever reason, is not
able to produce the products in accordance with the terms and specifications of any sales agreements, such noncompliance or violation,
resulting in termination or damages, may have an adverse effect on the Corporation’s operations and financial position. Even
if the Corporation is able to meet the requirements set out therein, there is no assurance that the contract counterparties will
be willing or able to purchase the production at the prices or quantities they have agreed to in the offtake agreement.

 

Uncertainty Relating to Future Production Estimates

 

The Corporation prepares estimates and projections
of future production for the Matawinie Mine and the LiB Anode Plant, which are based on the Technical Report and the FEL-1, respectively.
Any such information is forward-looking and no assurance can be given that such estimates will be achieved. These estimates are
based on existing plans and other assumptions which change from time to time, including: mineral reserve and mineral resource
estimates; the availability, accessibility, sufficiency and quality of graphite; the Corporation’s costs of production;
the Corporation’s ability to sustain and increase production levels; the sufficiency of the Corporation’s infrastructure;
the performance of the Corporation’s workforce and equipment; the Corporation’s ability to maintain and obtain mining
interests and permits; and the Corporation’s compliance with existing and future laws and regulations. The Corporation’s
actual production may vary from estimates for a variety of reasons, including: actual graphite mined varying from estimates of
grade, tonnage, dilution and metallurgical and other characteristics; revisions to mine plans; risks and hazards associated with
mining; natural phenomena, such as inclement weather conditions, water availability, floods, and seismic activity; and unexpected
labour shortages, strikes, local community opposition or blockades. Failure to achieve the estimated forecasts could have an adverse
impact on the Corporation’s future cash flows, earnings, results of operations and financial condition.

    
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Lack of Revenue and History of Losses

 

As the Corporation does not have revenues, it is
dependent upon future financings to continue its plan of operation, yet stay in business. The Corporation has not generated any
revenues since its incorporation. The Corporation’s business objectives include the construction and operation of the Matawinie
Mine and the LiB Anode Plant project. There is no assurance that they will be commercially viable.

 

In addition, the Corporation does not have a history
of profitable operations and there can be no assurance that the Corporation will ever be profitable. It sustained net losses in
the fiscal years ended December 31, 2018, 2019 and 2020. Management of the Corporation does not expect any income for
the fiscal years to come and assesses that the Corporation may incur ongoing losses in the near future, and there is no guarantee
it will become profitable in the short term or at all.

 

The Corporation’s future success will depend
to a large extent on its ability to ensure the respect of its contractual commitments which are important from an operational and
financial point of view. In general, the Corporation’s revenues will also be affected by economic conditions and the capacity
of the Corporation to start production and manage its growth.

 

Negative Operating Cash Flow (in thousands of
dollars)

 

The Corporation has no history of revenues from
its operating activities. The Corporation’s cash and cash equivalents amounted to $4,520, $4,077 and $3,794 as at December 31,
2020, as at December 31, 2019 and December 31, 2018, respectively. During the fiscal year ended December 31, 2018,
December 31, 2019 and December 31, 2020, the Corporation had negative cash flow usage from operating activities of $16,869,
$18,654 and $18,049, respectively. For the fiscal year ended December 31, 2020, the Corporation has had an average monthly
cash expenditure rate of approximately $1,559 per month, including addition to property, plant and equipment, intangible assets,
deposit to suppliers and all operating expenses and development capitalized costs not covered by grants. For the fiscal year ended
December 31, 2020, the Corporation recorded a net loss and comprehensive loss of $17,978. As of December 31, 2020, the
Corporation had current liabilities of $10,587 and an outstanding convertible bond with a principal of $15,000 to be repaid at
latest on August 28, 2023. For the year ended December 31, 2019, the Corporation has had an average monthly cash expenditure rate
of approximately $1,694 per month, including addition to property, plant and equipment, intangible assets, deposit to suppliers
and all operating expenses and development capitalized costs not covered by grants. The Corporation anticipates it will continue
to have negative cash flow from operating activities in future periods at least until commercial production is achieved at the
Matawinie Mine and/or the LiB Anode Plant. To the extent that the Corporation has negative operating cash flows in future periods,
the Corporation may need to allocate a portion of its existing working capital to fund such negative cash flow.

 

Obligations, Covenants and Restrictions in the
Terms of Financing Transactions with Pallinghurst International 

 

The terms of the Amended and Restated Investment
Agreement, the Bond and the Royalty contain financial and operating covenants that limit the discretion of management with respect
to certain business matters. These covenants will restrict the Corporation’s ability to incur additional indebtedness for
borrowed money in an aggregate principal amount exceeding $1 million which may limit the Corporation’s ability to finance
any additional capital expenditure for the Matawinie Mine and the LiB Anode Plant that may be necessary or appropriate once the
project has been completed, to finance additional development activities, to fund working capital requirements and to service
debt requirements, if applicable, which may greatly restrict the Corporation’s ability to adjust to changing market conditions
and may render the Corporation vulnerable to a downturn in general economic conditions and unable to make expenditures that are
important to its growth and strategy.

    
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These covenants also place restrictions on, among
other things, the Corporation’s ability to sell, assign, transfer or otherwise dispose of assets other than in the ordinary
course of business, to enter into preferred share financing, or any royalty, stream or similar alternative financing, and to create,
other than with respect to certain permitted liens, any encumbrance on the Matawinie Mine ranking pari passu with, or senior to,
the Bond, or otherwise create, incur, assume or suffer to exist any security interest or lien on any of its assets ranking pari
passu with, or senior to, the Bond, which will limit the Corporation’s operating flexibility and could prevent the Corporation
from taking advantage of business opportunities. In addition, under the Amended and Restated Investment Agreement, Pallinghurst
International has been granted anti-dilution rights over subsequent equity offerings by the Corporation in order to maintain its
ownership in shares of the Corporation on an as-converted basis.

 

The terms of the Amended and Restated Investment
Agreement, the Bond and the Royalty also contain various provisions requiring the Corporation to take certain positive actions
in order to fulfill its commitments, such as providing confirmations and documents as may be required under these agreements. The
terms of the Amended and Restated Investment Agreement, the Bond and the Royalty Agreement also contain customary events of default,
such as failure to make payment when due of the principal amount outstanding or of any accrued and unpaid or uncapitalized interest
under the Bond, breach of covenants, conditions or obligations, inaccuracy of representations and warranties, the occurrence of
a material adverse effect with respect to the Corporation, the occurrence of an insolvency event with respect to the Corporation,
any execution, distress or other enforcement process against any material property and assets of the Corporation, the delisting
of the Common Shares from the TSXV, and the Corporation being no longer a “reporting issuer” under the applicable securities
laws. Events may occur in the future, including events beyond the Corporation’s control that could cause the Corporation
to fail to satisfy its obligations under these agreements.

 

The obligations of the Corporation under the Bond
are currently secured by a charge against the universality of all of the Corporation’s movable and immovable property, corporeal
and incorporeal, present and future, subject to certain existing permitted encumbrances. A failure to comply with its obligations
and restrictive covenants could result in an event of default which, if not cured or waived, could permit acceleration of the related
debt and acceleration of debt under other instruments that contain cross acceleration or cross default provisions and lead to enforcement
actions or proceedings under the security granted under the Bond and any other debt entered into by the Corporation. The occurrence
of any such events would have a material adverse effect and could, among other things, result in the bankruptcy or liquidation
of the Corporation, and could result in the loss of the Corporation’s entire interest in the Matawinie Mine and LiB Anode
Plant.

 

Graphite Demand

 

Graphite is considered an industrial mineral and
the sales prices are not public. Graphite is not a traded commodity like base and precious metals. Sales agreements are negotiated
on an individual and private basis with each different end-user. Therefore, it is possible that the sales prices used in any assumptions
made by the Corporation will be different than the actual prices at which the Corporation is able to sell its graphite. In addition,
there are a limited number of producers of graphite and it is possible that these existing producers will try to prevent new-comers
from entering the chain of supply by increasing their production capacity and lowering sales prices. Factors such as foreign currency
fluctuation, supply and demand, industrial disruption and actual graphite market sale prices could have an adverse impact on operating
costs and stock market prices and on the Corporation’s ability to fund its activities. In each case, the economics of the
Matawinie Graphite Property could be materially adversely affected, even to the point of being rendered uneconomic. The Corporation
intends to produce graphite to address the increasing demand, which is favoured in the making of LiB. If battery manufacturers
use less graphite than expected, or if the demand for batteries, mainly used in electric and hybrid vehicles, is less than forecasted,
it could have a material adverse effect on the sales price, profitability and development strategy of the Corporation.

    
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Fluctuating Mineral Prices

 

The mining industry is heavily dependent upon the
market price of the metals or minerals being mined. There is no assurance that a profitable market will exist for the sale of the
same. There can be no assurance that mineral prices will be such that the Corporation’s properties can be mined at a profit.
The price of the common shares and the financial results of the Corporation, like its mining activities, could undergo in the future
important negative effects because of the fall of the prices of minerals, resulting in an impact on the capacity of the Corporation
to finance its activities. The prices of minerals fluctuate in an important way and are tributary to various factors which are
independent of the will of the Corporation, such as the sale or the purchase of minerals by various brokers, central banks and
financial institutions, the interest rates, the foreign exchange rates, the rates of inflation, of deflation, the fluctuations
in the value of the CAD and the currencies, the regional and world offer and demand, the economic conjuncture and policy which
prevails in the countries of the world which are large mineral producers, or countries where large customers and end users are
located, and the COVID-19 pandemic. The prices of mineral largely fluctuated these last years and any serious fall could prevent
the continuation of the exploration, construction and development activities of the Corporation.

 

Competition

 

The mining industry is intensely and increasingly
competitive, and the Corporation competes with many companies with greater financial resources and technical facilities than those
of the Corporation. Competition in the mining industry could adversely affect the Corporation’s ability to put the Matawinie
Mine into production and to secure sale agreements for its products.

 

Level of Indebtedness 

 

Subject to the limits contained in the Bond and
the Royalty Agreement and any other debt instruments entered into by the Corporation, the Corporation may be able to incur additional
debt. If the Corporation does so, the risks related to the Corporation’s level of indebtedness could increase.

 

The Corporation’s degree of leverage in
the future could have adverse consequences for the Corporation, due to the following factors that may affect the Corporation:
(i) increased difficulty in satisfying obligations with respect to indebtedness; (ii) limitations on the ability to obtain additional
financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements; (iii) requirements
that a substantial portion of the Corporation’s cash flows be dedicated to debt service, if any, payments instead of other
purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other
general corporate purposes; (iv) increased vulnerability to general adverse economic and industry conditions; (v) decreased flexibility
in planning for and reacting to changes in the industry in which it competes; (vi) placing the Corporation at a disadvantage compared
to other, less leveraged competitors; and (vii) increased cost of borrowing.

    
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The Corporation’s ability to make scheduled
payments on or refinance its debt obligations, depends on the Corporation’s financial condition and operating performance
at that time, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative,
regulatory and other factors beyond its control. The Corporation may be unable to generate or maintain a level of sufficient cash
flow from operating activities to satisfy its debt obligations or to refinance its indebtedness on commercially reasonable terms
or at all, which would have a material adverse effect on the Corporation’s financial condition and results of operations.

 

The Corporation can provide no assurance that it
will achieve sufficient future cash flow and earnings to satisfy its debt obligations. If cash flows and capital resources are
insufficient to fund debt service obligations, if any, the Corporation could face substantial liquidity problems and could be forced
to reduce or delay investments and capital expenditures, seek additional debt or equity capital or restructure or refinance indebtedness.
If the Corporation cannot make scheduled payments on its debt, the Corporation could be in default and holders of any indebtedness
could declare all outstanding principal and interest to be due and payable which could lead to cross default and cross acceleration
provisions under certain of the Corporation’s other debt agreements. The Corporation’s creditors could foreclose against
the collateral securing the Corporation’s obligations and the Corporation could be forced into bankruptcy or liquidation,
or to initiate other insolvency proceedings.

 

Going Concern and Insolvency Risk

 

The Corporation’s audited consolidated financial
statements for the year ended December 31, 2020 have been prepared on a going concern basis, which assumes that the Corporation
will be able to realize its assets and discharge its liabilities in the normal course of business as they come due into the foreseeable
future. However, the Corporation does not currently have guaranteed sources of funding or cash flow to repay indebtedness, penalties
or interest that it could incur or in the event it enters into any permitted working capital facilities. The inability to secure
additional financing in the future, which may be completed in a number of ways including, but not limited to, the issuance of debt
or equity instruments, or a combination of strategic partnerships, joint venture arrangements, project debt finance, offtake financing,
royalty financing and other capital market alternatives would cast significant doubt as to the Corporation’s ability to continue
as a going concern. There are other elements included in this section “Risk Factors” related to the Corporation that
could cast a doubt on the ability of the Corporation to continue its operation and development on a going concern basis.

 

Governmental and Environmental Regulations,
Permits and Licences

 

The current operations of the Corporation and
anticipated future operations, including further exploration, development activities and commencement of production for the Matawinie
Mine, the LiB Anode Plant and the various demonstration plants are subject to laws and regulations governing prospecting, development,
mining, construction, production, exports, taxes, labour standards, occupational health, waste disposal, land use, environmental
protection, mine safety and other matters. Companies engaged in exploration activities, and in the construction, development and
operation of mines and related facilities, generally experience increased costs and delays in production and other schedules as
a result of the need to comply with applicable laws, regulations and permitting requirements.

    
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The Corporation’s operations are also subject
to various laws and regulations governing the protection of the environment. Environmental legislation provides for restrictions
and prohibitions on spills, releases or emissions of various substances produced in association with certain mining industry operations,
such as seepage from tailings disposal areas, which would result in environmental pollution. A breach of such legislation may result
in the imposition of fines and penalties. Environmental legislation is evolving in a direction of stricter standards and enforcement,
and higher fines and penalties for non-compliance. Even though the Corporation received a positive ESIA for the Matawinie Mine
from the Québec Government, the LiB Anode Plant may require the additional
submission of ESIA and further review and approval by governmental authorities, such as the environmental impact assessment and
review procedure which can include public hearing held by the BAPE. Environmental assessments of proposed projects carry a heightened
degree of responsibility for companies and directors, officers and employees. The cost of compliance with changes in governmental
regulations has the potential to reduce the profitability of operations. The Corporation intends to, and attempts to, fully comply
with all applicable environmental regulations.

 

On April 11, 2019, the Corporation filed the ESIA
for the Matawinie Mine, which is available on the Québec Government’s
Environmental Assessment Register. The submission of the ESIA, which was authored by SNC-Lavalin Inc., was an important milestone
in the permitting of the project. Successful public hearings on the project were held by the Québec
Government in 2020. On February 10, 2021, the Corporation received a positive environmental assessment decision for the
Matawinie Mine supported by a decree from the Québec Government. The Matawinie
Mine has now received the government authorization required to apply for permits needed for site-specific construction and operating
activities under the authority of the overall global authorizations, but no assurance can be given that such permits which the
Corporation may require in the normal course for its current and anticipated mining operations will be obtainable or maintainable
on reasonable terms or on a timely basis or at all.

 

In Canada, the issuance of permits may also trigger
the Crown’s duty to consult and potentially accommodate the Indigenous peoples of Canada. Section 35 of the Constitution
Act, 1982, protects aboriginal and treaty rights for Indian (also referred to as First Nation), Inuit and Métis people.
As a result of this protection, in appropriate circumstances, the Crown has a duty to consult with Indigenous people and, potentially,
to seek workable accommodation of their interests before making decisions that may affect their ability to exercise their constitutionally
protected rights. In certain circumstances Indigenous people can file legal action on the basis of inadequate consultation, which
could have the consequence of delaying the commencement of construction or operation of projects or increasing costs of projects.
The Corporation intends to and attempts to support the Crown in conducting procedural aspects of the duty as required.

 

Failure to comply with applicable laws, regulations,
and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities
causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation
of additional equipment, or remedial actions. Parties engaged in mining operations may be required to compensate those suffering
loss or damage by reason of mining activities and may have civil or criminal fines or penalties imposed for violations of applicable
laws or regulations and, in particular, environmental laws. The Corporation believes it is in substantial compliance with all
material laws and regulations which currently apply to its activities. However, there is no assurance that future changes to existing
laws and regulations will not impact the Corporation. Amendments to current laws, regulations and permits governing the operations
and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on the Corporation
and cause increases in capital expenditures or production costs, reduction in levels of production or require abandonment or delays
in the development of current or new mining projects.

    
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The Corporation’s activities and operations
require permits from various domestic authorities. There can be no assurance that various permits which the Corporation may require
in the normal course for its current and anticipated exploration, development and construction activities as well as mining operations,
including without limitation, on the Matawinie Mine, the LiB Anode Plant and the various demonstration plants will be maintainable
or obtainable on reasonable terms or on a timely basis or that such laws and regulations would not have an adverse effect on any
project which the Corporation might undertake, including, without limitation, the Matawinie Mine, the LiB Anode Plant and the various
demonstration plants. Furthermore, any delays in obtaining the anticipated construction permits would have an adverse effect on
the Corporation’s timing and costs associated with the start-up. Such delays could also allow other third-party projects
to commence production before the Matawinie Mine and the LiB Anode Plant, thereby potentially reducing the Corporation’s
target market share, which would have an adverse impact on the level of product sales and economics of the Matawinie Mine and the
LiB Anode Plant.

 

Title Matters and Territorial Claims

 

While the Corporation has reviewed and is satisfied
with the titles to its mineral properties, and, to the best of its knowledge, such titles are in good standing, there is no guarantee
that titles to such properties will not be challenged or impugned. The properties may be subject to prior unregistered agreements
of transfer or aboriginal land claims, and titles may be affected by undetected defects. In addition, according to the applicable
mining legislation in the Province of Québec, the Corporation will need to incur expenditures on its properties and pay
a rent in order to renew claims upon their expiry. There can be no assurance that the Corporation will be successful in renewing
all such claims.

 

The framework agreement dated April 12, 2018 between
the Corporation, the Conseil des Atikamekw de Manawan and the Conseil de la Nation Atikamekw establishes negotiation topics to
be discussed and goals to be met in order to arrive at a successful agreement in the best interests of all parties concerned.
It also states subjects and guidelines to consider throughout the discussion process to favour an environment propitiatory to
a sound negotiation. Then, on April 23, 2019, the Corporation entered into a pre-development agreement (the “PDA”)
with the Conseil des Atikamekw de Manawan and the Conseil de la Nation Atikamekw for the Matawinie Mine project. The PDA outlines
the respective rights and interests of all parties with respect to pre-development activities and provides a guideline for negotiating
an impact and benefit agreement (the “IBA”) relating to the Matawinie Mine project. No assurance can, however,
be provided that the parties will reach an agreement in regard to the IBA. On November 18, 2020, the Conseil des Atikamekw de
Manawan and the Conseil de la Nation Atikamekw issued a press release in which they affirm that following recent consultation
with the Crown (Québec Government), there is no social acceptability for the Matawinie Mine project from the standpoint
of the Conseil des Atikamekw de Manawan and the Conseil de la Nation Atikamekw. The Corporation intends to and attempts to continue
to engage with the Conseil des Atikamekw de Manawan and the Conseil de la Nation Atikamekw about the Matawinie Graphite Property.
If the Corporation, for any reason, is unable to reach satisfactory agreements with the Conseil des Atikamekw de Manawan and the
Conseil de la Nation Atikamekw, such incapacity could have a material adverse impact on the Corporation and could result in an
increase in capital expenditures or production costs, a decrease in production levels or the need to cancel or postpone the development
of the Matawinie Mine project.

    
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Community Relations

 

The Corporation’s relationships with the
communities in which it is located and other stakeholders are critical to ensure the future success of the construction and development
of Matawinie Mine and LiB Anode Plant. There is an increasing level of public concern relating to the perceived effect of mining
activities on the environment and on communities impacted by such activities. The evolving expectations related to human rights,
indigenous rights, and environmental protection may result in opposition to the Corporation’s future operations or further
development or new development of the Matawinie Mine and LiB Anode Plant. Such opposition may be directed through legal or administrative
proceedings or expressed in manifestations such as protests, roadblocks or other forms of public expression against the Corporation’s
activities, and may have a negative impact on the Corporation’s reputation and operations.

 

Opposition by any of the aforementioned groups
to the Corporation’s operations may require modification of, or preclude the operation or development of, the Matawinie Mine
and LiB Anode Plant or may require the Corporation to enter into agreements with such groups or local governments with respect
to the Matawinie Mine and LiB Anode Plant, in some cases causing increased cost and considerable delays to the advancement of the
Matawinie Mine and the LiB Anode Plant. Further, publicity adverse to the Corporation, its operations or extractive industries
generally, could have an adverse effect on the Corporation and may impact relationships with the communities in which the Corporation
operates and other stakeholders. While the Corporation is committed to operating in a socially responsible manner, there can be
no assurance that its efforts in this respect will mitigate this potential risk.

 

The Corporation has been and is actively engaged
in certain community projects to improve both local employment opportunities and local quality of life. Such projects may negatively
impact the Corporation’s relationships with such local communities if the projects fail to provide the expected benefits.

 

Dependence on Key Personnel

 

The Corporation’s success and viability depends,
to some extent, on its ability to attract and maintain qualified key management personnel. Competition for such personnel is intense
and may impact the ability to attract and retain such personnel. The loss of any key personnel may have a material adverse effect
on the Corporation, its business and its financial position.

 

Labour Relations

 

While the Corporation has
good relations with its employees, there can be no assurance that it will be able to maintain positive relationships with its employees.
In addition, relations between the Corporation and its employees may be impacted by regulatory or governmental changes introduced
by the relevant authorities in whose jurisdictions the Corporation carries on business as well as by the COVID-19 pandemic. Adverse
changes in such legislation or in the relationship between the Corporation and its employees could have a material adverse impact
on the Corporation’s business, results of operations and financial condition.

 

Health and Safety Risks

 

The mineral exploration,
development and production business carries an inherent risk of liability related to worker health and safety, including the risk
of government-imposed orders to remedy unsafe conditions, potential penalties for contravention of health and safety laws, requirements
for permits and other regulatory approvals, and potential civil liability. Compliance with health and safety laws, and any changes
to such laws, and the requirements of applicable permits and other regulatory requirements remains material to the Corporation’s
business. The Corporation may become subject to government orders, investigations, inquiries or other proceedings (including civil
claims) relating to health and safety matters. The occurrence of any of these events or any changes, additions to or more rigorous
enforcement of health and safety laws, permits or other approvals could have a significant impact on operations and result in
additional costs or penalties. In turn, these could have a material adverse effect on the Corporation’s reputation, operations
and future prospects.

    
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Global Financial Conditions

 

The Corporation’s financial results are tied
to Canada and world economic conditions. Increased uncertainty regarding regional and global financial stability could cause the
Corporation to experience revenue declines and a decrease in the availability of credit and on the Corporation’s ability
to raise capital. Global financial conditions continue to be characterized as volatile. In recent years, especially since the recent
outbreak of COVID-19, global markets have been adversely impacted by various credit crises. Many industries, including the mining
industry, have been impacted by these market conditions. Global financial conditions remain subject to sudden and rapid destabilizations
in response to future events, as government authorities may have limited resources to respond to future crises. A continued or
worsened slowdown in the financial markets or other economic conditions, including but not limited to consumer spending, employment
rates, business conditions, inflation, energy costs, consumer debt levels, lack of available credit, the state of the financial
markets, interest rates and tax rates, may adversely affect the Corporation’s growth and profitability. Future crises may
be precipitated by any number of causes, including natural disasters, geopolitical instability, changes to energy prices or sovereign
defaults. If increased levels of volatility continue or in the event of a rapid destabilization of global economic conditions,
it may result in a material adverse effect on commodity prices, demand for metals, availability of credit, investor confidence,
and general financial market liquidity, all of which may adversely affect the Corporation’s business and the market price
of the Corporation’s securities.

 

Public Health Crisis

 

Global financial conditions and the global economy
in general have, at various times in the past and may in the future, experience extreme volatility in response to economic shocks
or other events, such as the recent outbreak of respiratory illness caused by COVID-19. Many industries, including the mining
industry, are impacted by volatile market conditions in response to the widespread outbreak of epidemics, pandemics or other health
crises. Some of the key impacts of these conditions include devaluations and high volatility in global equity, commodities, foreign
exchange and mining markets and a lack of market confidence and liquidity. Financial institutions and large corporations may be
forced into bankruptcy or need to be rescued by government authorities. Access to financing may also be negatively impacted by
future liquidity crises throughout the world. These factors may impact the Corporation’s ability to obtain equity or debt
financing and, where available, to obtain such financing on terms favourable to the Corporation. Increased levels of volatility
and market turmoil could have a material adverse impact on the Corporation’s operations and planned growth and the trading
price of the securities of the Corporation may be adversely affected.

    
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The international response to the spread of COVID-19
has led to significant restrictions on travel, temporary business closures, quarantines and a general reduction in consumer activity.
The continued spread of COVID-19 globally could materially and adversely impact the Corporation’s business, including, without
limitation, employee health, workforce availability and productivity, limitations on travel, supply chain disruptions, increased
insurance premiums, the availability of industry experts and personnel and other factors that depend on future developments beyond
the Corporation’s control.

 

Even though the Corporation is implementing business
continuity measures and governmental recommendations to mitigate and reduce any potential impacts of COVID-19 on its business,
operations, supply chain and financial condition, the spread of COVID-19 could have a material adverse impact on the Corporation’s
workforce and the development of its Matawinie Mine and LiB Anode Plant. Despite COVID-19, the Corporation is continuing to develop
its Matawinie Mine and LiB Anode Plant through remote work solutions with its management team, employees, consultants, business
partners and government representatives. The full extent and impact of COVID-19 on the Corporation’s operations cannot currently
be ascertained, as it depends upon future developments which cannot be predicted, and includes among other matters: the duration
of the outbreak, the severity of the virus and the ability to treat it, the ability to collect sufficient data to track the virus
and the collective actions taken to curb the spread of the virus.

 

Volatility of Share Price and Market Price of
the Common Shares

 

The price of the shares of resource companies tends
to be volatile. Fluctuations in the world price of graphite in response to, among other things, the COVID-19 pandemic and many
other elements beyond the control of the Corporation could materially affect the price of the Common Shares.

 

There can be no assurance that an active market
for the Common Shares will be sustained after any offering of securities. Securities of companies with smaller capitalizations
have experienced substantial volatility in the past, often based on factors unrelated to the financial performance or prospects
of the companies involved. These factors include global economic developments and market perceptions of the attractiveness of certain
industries. There can be no assurance that continuing fluctuations in price will not occur. If an active market for the Common
Shares does not continue, the liquidity of a purchaser’s investment may be limited. If such a market does not develop, purchasers
may lose their entire investment in the Common Shares.

 

As a result of any of these factors, the market
price of the Common Shares at any given point in time may not accurately reflect the long-term value of the Corporation. Securities
class-action litigation often has been brought against companies following periods of volatility in the market price of their
securities. The Corporation may in the future be the target of similar litigation. Securities litigation could result in substantial
costs and damages, and also divert management’s attention and resources.

    
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Project Management Risks 

 

The Corporation is concurrently overseeing the
advancement of two major graphite projects, namely the LiB Anode Plant and the Matawinie Mine. This requires the dedication of
considerable time and resources by the Corporation and its management team. The advancement of two major projects concurrently
brings with it the associated risk of strains arising on managerial, human and other resources. The Corporation’s ability
to successfully manage each of these processes will depend on a number of factors, including its ability to manage competing demands
on time and other resources, financial or otherwise, and to successfully retain personnel and recruit new personnel to support
its growth and the advancement of its projects.

 

Risk Factors Related to the Consolidation

 

Effective as of March 24, 2021, the Corporation
implemented the Consolidation on the basis of the Consolidation Ratio. Reducing the number of issued and outstanding Common Shares
through the Consolidation was intended, absent other factors, to increase the per share market price of the Common Shares. However,
the market price of the Common Shares may also be affected by the Corporation’s financial and operational results, its financial
position, including its liquidity and capital resources, the development of its reserves and resources, industry conditions, the
market’s perception of the Corporation’s business and other factors, which are unrelated to the number of Common Shares
outstanding. There is no assurance that the market price following the implementation of the Consolidation will be sustained or
will increase in the future.

 

Although the Corporation believes that establishing
a higher market price for the Common Shares could (i) increase investment interest for the Common Shares in equity capital
markets by potentially broadening the pool of investors that may consider investing in the Corporation, including investors whose
internal investment policies prohibit or discourage them from purchasing stocks trading below a certain minimum price, and (ii)
enable the Corporation to satisfy certain minimum trading price requirements of stock exchanges in the United States for a potential
listing of the Common Shares, including on the NYSE, there is no assurance that the Consolidation will achieve these results in
the future.

 

Public Company Obligations

 

As a publicly listed corporate
entity, the Corporation is subject to evolving rules and regulations promulgated by a number of governmental and self-regulated
organizations, including the Canadian Securities Administrators (CSA), the TSXV, and the International Accounting Standards Board,
which govern corporate governance and public disclosure regulations. These rules and regulations continue to evolve in scope and
complexity creating many new requirements, which increase compliance costs and the risk of non-compliance. The Corporation’s
efforts to comply with these rules and obligations could result in increased general and administration expenses and a diversion
of management time and attention from financing, development, operations and, eventually, revenue-generating activities.

 

Intellectual Property Risks

 

The Corporation relies on
the ability to protect its intellectual property rights and depends on patent, trademark and trade secret legislation to protect
its proprietary know-how. There is no assurance that the Corporation has adequately protected or will be able to adequately protect
its valuable intellectual property rights, or will at all times have access to all intellectual property rights that are required
to conduct its business or pursue its strategies, or that the Corporation will be able to adequately protect itself against any
intellectual property infringement claims. There is also a risk that the Corporation’s competitors could independently develop
similar technology, processes or know- how; that the Corporation’s trade secrets could be revealed to third parties; that
any current or future patents, pending or granted, will be broad enough to protect the Corporation’s intellectual property
rights; or, that foreign intellectual property laws will adequately protect such rights. The inability to protect the Corporation’s
intellectual property could have a material adverse effect on the Corporation’s business, results of operations and financial
condition.

    
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Risk of No Dividends

 

The Corporation has not paid
dividends on the Common Shares as of the date of this Annual Information Form. The Corporation has no current plans to pay any
cash dividends for the foreseeable future. Any decision to declare and pay dividends in the future will be made at the discretion
of the Board of Directors and will depend on, among other things, the Corporation’s financial results, cash requirements,
contractual restrictions and other factors that the Board of Directors may deem relevant. In addition, the Corporation’s
ability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness that the Corporation or
its subsidiaries incur. As a result, investors may not receive any return on an investment in the Corporation’s securities
unless they sell the securities for a price greater than that which they paid for them.

 

Risks of Relying on Consultants

 

The Corporation has relied
on, and may continue to rely on, consultants and others for mineral exploration and processing expertise. The Corporation believes
that those consultants are competent and that they have carried out their work in accordance with internationally recognized industry
standards. However, if the work conducted by those consultants is ultimately found to be incorrect or inadequate in any material
respect, the Corporation may experience delays or increased costs in developing its properties and processing facilities.

 

Currency Fluctuations

 

Currency fluctuations may have an effect on the
Corporation’s costs, revenue and cash flow. Although the Corporation raised equity in CAD, certain of the Corporation’s
estimated capital costs in connection with the Matawinie Graphite Property were converted from quotes obtained in foreign currencies
and converted into CAD applying a fixed exchange rate. The Corporation may pursue debt financing which may be denominated in United
States dollars (USD) or other currencies. Accordingly, adverse fluctuations in the relative prices of Euros, USD and other currencies
could increase the cost of development and production or increase the cost of borrowing and could materially and adversely affect
the Corporation’s earnings and financial condition.

 

Climate Change

 

Climate change is an international
concern and, as a result, poses risk of both climate changes and government policy in which governments are introducing climate
change legislation and treaties that could result in increased costs, and therefore, could decrease profitability of the Corporation’s
operations.

 

The Canadian government has
established a number of policy measures in response to concerns relating to climate change. The impacts of these measures will
most likely be to increase costs for fossil fuels, electricity and transportation; restrict industrial emission levels; impose
added costs for emissions in excess of permitted levels; and increase costs for monitoring and reporting. Compliance with these
initiatives could have a material adverse effect on the Corporation’s results of operations.

    
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In addition, the physical
risks of climate change may also have an adverse effect on the operations of the Corporation. Global climate change could exacerbate
certain of the threats facing the Corporation’s business, including the frequency and severity of weather-related events,
resource shortages, changes in rainfall and storm patterns and intensities, water shortages and changing temperatures, which can
disrupt the Corporation’s operations, damage its infrastructure or properties, create financial risk to Corporation’s
business or otherwise have a material adverse effect on its results of operations, financial position or liquidity. These may result
in substantial costs to respond during the event, to recover from the event and possibly to modify existing or future infrastructure
requirements to prevent recurrence. Climate changes could also disrupt the Corporation’s operations by impacting the availability
and cost of materials needed for mining operations and could increase insurance and other operating costs.

 

Cyber Security Risks

 

Threats to information technology systems associated
with cyber security risks and cyber incidents or attacks continue to grow, particularly as a result of remote work during the COVID-19
pandemic. The level of sophistication of such attacks has also increased. It is possible that the business, financial and other
systems of the Corporation could be compromised, which could go unnoticed for some time. Risks associated with these threats include,
among other things, loss of intellectual property, disruption of business operations and safety procedures, loss or damage to worksite
data delivery systems, privacy and confidentiality breaches, and increased costs to prevent, respond to or mitigate cyber security
incidents. The occurrence of a cyber security incident could have a material adverse effect on the Corporation’s business
and result in a prolonged disruption to it.

 

Insurance Risk 

 

Any industries, including the mining industry,
are subject to significant risks that could result in damage to or destruction of property and facilities, personal injury or
death, environmental damage and pollution, delays in production, expropriation of assets and loss of title to mining claims and
mining lease. No assurance can be given that insurance to cover the risks to which the Corporation’s activities are subject
will be available at all or at commercially reasonable premiums. The Corporation currently maintains insurance within ranges of
coverage that it believes to be consistent with industry practice for companies of a similar stage of development. Moreover, the
Corporation may have to renew and/or acquire additional insurance coverage. The Corporation may become subject to liability for
pollution or other hazards against which it cannot insure or against which it may elect not to insure because of high premium
costs or other reasons. The Corporation carries liability insurance with respect to its exploration, development and transformation
operations, including certain limited environmental liability insurance coverage. The payment of any such liabilities would reduce
the funds available to the Corporation. If the Corporation is unable to fully fund the cost of remedying an environmental problem,
it might be required to suspend operations or enter into costly interim compliance measures pending completion of a permanent
remedy. The Corporation may also become subject to liabilities which exceed policy limits. In such circumstances, the Corporation
may be required to incur significant costs that could have a material adverse effect upon its performance, results of operations
and economic viability.

    
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Tax Risks

 

The Corporation was partly financed by the issuance
of flow-through shares. However, there is no guarantee that the funds spent by the Corporation will qualify as Canadian exploration
expenses, even if the Corporation has committed to take all the necessary measures for this purpose. Refusals of certain expenses
by tax authorities could have negative tax consequences for investors and, in such an event, the Corporation will have to indemnify
each flow-through share subscriber for any additional taxes.

 

Conflicts of Interest

 

Some of the directors and
officers of the Corporation may be engaged in the search for additional business opportunities on behalf of other corporations,
and situations may arise where these directors and officers will be in direct competition with the Corporation. Conflicts, if any,
will be dealt with in accordance with the relevant provisions of the CBCA. Some of the directors and officers of the Corporation
may become directors of other companies engaged in same or other business ventures.

 

Dilution 

 

Additional financing needed
to continue funding the development and operation of the Matawinie Mine and the LiB Anode Plant may require the issuance of additional
securities. The issuance of additional securities and the exercise of common share purchase warrants, options and other convertible
securities, as applicable, will result in dilution of the equity interests of any persons who are or may become holders of Common
Shares.

 

As of the date of this Annual
Information Form, an aggregate of 37,081,645 Common Shares (post-Consolidation) are currently issued and outstanding as fully paid
and non-assessable and (i) 2,202,250 stock options (post-Consolidation) are currently issued and outstanding, collectively
entitling the holders thereof to purchase an aggregate of up to 2,202,250 Common Shares (post-Consolidation); and (iii) and
aggregate of 7,500,000 Common Shares (post-Consolidation) may be issued upon conversion of the Bond. On a fully diluted basis,
assuming the exercise in whole of the issued and outstanding stock options and the conversion in whole of the Bond, 46,783,895
Common Shares would be issued and outstanding as fully paid and non-assessable.

 

Pallinghurst Graphite is
the wholly-owned subsidiary of Pallinghurst International, an insider of the Corporation and the beneficial owner of an aggregate
of 5,628,877 Common Shares (post-Consolidation) representing 15.18% of the issued and outstanding Common Shares. Assuming the
conversion in whole of the Bond, Pallinghurst International would beneficially own 13,128,877 Common Shares (post-Consolidation)
representing 29.45% of the issued and outstanding Common Shares. The concentration of an important percentage of the issued and
outstanding Common Shares in the hands of a single shareholder may discourage an unsolicited bid for the Common Shares, and this
may adversely impact the value and trading price of the Common Shares. In addition, sales of Common Shares by Pallinghurst Graphite
may adversely affect the trading price of the Common Shares.

    
	 	94	Annual Information Form

     

    

Structural Subordination
of the Common Shares 

 

In the event of a bankruptcy,
liquidation or reorganization of the Corporation, holders of certain of its indebtedness and certain trade creditors will generally
be entitled to payment of their claims from the assets of the Corporation before any assets are made available for distribution
to the shareholders. The Common Shares will be effectively subordinated to most of the other indebtedness and liabilities of the
Corporation.

 

Forward-Looking Statements

 

By their nature, forward-looking
statements involve numerous assumptions, known and unknown risks and uncertainties, of both a general and specific nature, that
could cause actual results to differ materially from those suggested by the forward-looking statements or contribute to the possibility
that predictions, forecasts or projections will prove to be materially inaccurate.

 

Litigation and Other Legal
Proceedings

 

Like most companies, the Corporation is subject
to the threat of litigation and may be involved in disputes with other parties which may result in litigation or other proceedings.
The Corporation’s operations are subject to the risk of legal claims by employees, unions, contractors, debt holders, lenders,
suppliers, future joint venture partners, shareholders, governmental agencies or others through private actions, class actions,
administrative proceedings, regulatory actions or other litigation.

 

Shareholder Activism

 

In recent years, publicly-traded companies have
been increasingly subject to demands from activist shareholders advocating for changes to corporate governance practices, such
as executive compensation practices, social issues, or for certain corporate actions or reorganizations. There can be no assurances
that activist shareholders won’t publicly advocate for the Corporation to make certain corporate governance changes or engage
in certain corporate actions. Responding to challenges from activist shareholders, such as proxy contests, media campaigns or other
activities, could be costly and time consuming and could have an adverse effect on the Corporation’s reputation and divert
the attention and resources of the Corporation’s management and Board of Directors, which could have an adverse effect on
the Corporation’s business and results of operations. Even if the Corporation does undertake such corporate governance changes
or corporate actions, activist shareholders may continue to promote or attempt to effect further changes, and may attempt to acquire
control of the Corporation to implement such changes. If shareholder activists seeking to increase short-term shareholder value
are elected to the Corporation’s Board of Directors, this could adversely affect the Corporation’s business and future
operations. Additionally, shareholder activism could create uncertainty about the Corporation’s future strategic direction,
resulting in loss of future business opportunities, which could adversely affect the Corporation’s business, future operations,
profitability and ability to attract and retain qualified personnel.

 

Project Opposition Risks 

 

The Matawinie Mine project, like many mining projects,
may have opponents. Opponents of other mining projects have, in some cases, been successful in bringing public and political pressure
against mining projects. Substantial opposition to any of the Corporation’s mining projects could result in delays to developments
or plans, or prevent the project from proceeding at all, despite the commercial viability of the project.

    
	 	95	Annual Information Form

     

    

Disclosure and Internal Controls

 

Internal control over financial reporting is a
process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with IFRS. Disclosure controls and procedures are designed to ensure that the information
required to be disclosed by the Corporation in reports filed with securities regulatory agencies is recorded, processed, summarized
and reported on a timely basis and is accumulated and communicated to the Corporation’s management, as appropriate, to allow
timely decisions regarding required decisions. The Corporation has invested resources to document and analyze its system of disclosure
controls and its internal control over financial reporting. A control system, no matter how well designed and operated, can provide
only reasonable, not absolute, assurance with respect to the reliability of financial reporting and financial statement preparation.
The Corporation’s failure to satisfy the requirements of applicable Canadian securities laws on an ongoing, timely basis
could result in the loss of investor confidence in the reliability of its financial statements, which in turn could harm its business
and negatively impact the trading price of the Common Shares. In addition, any failure to implement required new or improved controls,
or difficulties encountered in their implementation, could harm the Corporation’s operating results or cause it to fail to
meet its reporting obligations.

 

Dividends

 

During the three most recently completed fiscal
years and as of the date of this Annual Information Form, The Corporation has not paid any dividends on the Common Shares. Any
decision to declare and pay dividends on the Common Shares in the future will be made at the discretion of the Board of Directors
and will depend on, among other things, the Corporation’s financial results, cash requirements, contractual restrictions
and other factors that the Board of Directors may deem relevant at such time. In addition, the Corporation’s ability to pay
dividends may be limited by covenants of any existing and future outstanding indebtedness that the Corporation or its subsidiaries
incur.

 

description
of capital structure

 

The following description of the Corporation’s
share capital summarizes certain provisions contained in the Corporation’s Articles and by-laws. These summaries do not
purport to be complete and are subject to, and are qualified in their entirety by reference to, all of the provisions of the Corporation’s
Articles and by-laws, which have been filed under the Corporation’s profile on SEDAR at www.sedar.com.

 

Effective as of March 24, 2021, the Corporation
implemented the Consolidation on the basis of the Consolidation Ratio. The numbers and prices of Common Shares and the information
on securities convertible into Common Shares provided in this section are stated prior to giving effect to the Consolidation.

 

Common Shares

 

The Corporation’s authorized capital consists
of an unlimited number of Common Shares without par value. As of December 31, 2020, 272,993,315 Common Shares were issued
and outstanding as fully paid and non-assessable. Effective as of March 24, 2021, the Corporation implemented the Consolidation
on the basis of the Consolidation Ratio. Consequently, as of the date of this Annual Information Form, 37,081,645 Common
Shares are issued and outstanding as fully paid and non-assessable. The holders of Common Shares are entitled to vote at all shareholder
meetings. They are also entitled to dividends, if, as and when declared by the Board of Directors and, upon liquidation or winding-up
of the Corporation, to share the residual assets of the Corporation. The Common Shares do not have any pre-emptive, conversion
or redemption rights, and all have equal voting rights. There are no special rights or restrictions of any nature attached to
any of the Common Shares, all of which rank equally as to all benefits which might accrue to the holders of the Common Shares.

    
	 	96	Annual Information Form

     

    

Warrants

 

As of December 31, 2020, an aggregate of 78,534,391 warrants
issued by the Corporation were outstanding, collectively entitling the holders thereof to purchase an aggregate of up to 78,534,391 Common
Shares.

 

	 	 	 	Number of Warrants	 	 	Exercise Price	 	 	Expiry Date
	 	 	 	 	75,000,000	 	 	$	0.22	 	 	August 28, 2023
	 	 	 	 	3,534,391	 	 	$	0.35	 	 	February 7, 2021
	Total	 	 	 	78,534,391	 	 	 	 	 	 	 

 

Between January 1, 2021 and the date of this
Annual Information Form, no warrants were issued, 78,217,000 warrants were exercised and 317,391 warrants expired. As
a result, and as of the date of this Annual Information Form, no warrants issued by the Corporation are outstanding.

 

For further details about the warrants issued
by the Corporation as of December 31, 2020, reference is made to note 15.3 to the Corporation’s audited annual consolidated
financial statements for the fiscal year ended December 31, 2020, which are available under the Corporation’s profile
on SEDAR at www.sedar.com.

 

Compensation Options

 

Broker Warrants

 

As of December 31, 2020, and up to the date
of this Annual Information Form, no broker warrants issued by the Corporation were outstanding.

 

Advisory Warrants

 

As of December 31, 2020, and up to the date
of this Annual Information Form, no advisory warrants issued by the Corporation were outstanding.

 

Stock Options Issued Under the Stock Option
Plan

 

As of December 31, 2020, an aggregate number
of 24,000,000 stock options issued by the Corporation were outstanding, collectively entitling the holders thereof to purchase
an aggregate of up to 24,000,000 Common Shares as follows:

 

	 	Number of Stock

 Options	 	 	Number of Vested

 Stock Options	 	 	Exercise Price	 	 	Expiry Date
	 	 	225,000	 	 	 	225,000	 	 	$	0.20	 	 	January 7, 2021

    
	 	97	Annual Information Form

     

    

	 	Number of Stock

 Options	 	 	Number of Vested

 Stock Options	 	 	Exercise Price	 	 	Expiry Date
	 	 	250,000	 	 	 	250,000	 	 	$	0.20	 	 	February 11, 2021
	 	 	75,000	 	 	 	75,000	 	 	$	0.20	 	 	March 18, 2021
	 	 	100,000	 	 	 	100,000	 	 	$	0.30	 	 	June 15, 2021
	 	 	250,000	 	 	 	250,000	 	 	$	0.25	 	 	November 1, 2021
	 	 	575,000	 	 	 	575,000	 	 	$	0.25	 	 	December 23, 2021
	 	 	500,000	 	 	 	500,000	 	 	$	0.30	 	 	January 1, 2022
	 	 	1,500,000	 	 	 	1,500,000	 	 	$	0.275	 	 	February 13, 2022
	 	 	500,000	 	 	 	500,000	 	 	$	0.30	 	 	July 1, 2022
	 	 	725,000	 	 	 	725,000	 	 	$	0.345	 	 	September 25, 2022
	 	 	150,000	 	 	 	150,000	 	 	$	0.40	 	 	September 25, 2022
	 	 	200,000	 	 	 	200,000	 	 	$	0.39	 	 	October 20, 2022
	 	 	200,000	 	 	 	200,000	 	 	$	0.42	 	 	November 27, 2022
	 	 	2,300,000	 	 	 	2,300,000	 	 	$	0.32	 	 	May 18, 2023
	 	 	100,000	 	 	 	100,000	 	 	$	0.31	 	 	June 21, 2023
	 	 	1,500,000	 	 	 	500,000	 	 	$	0.375	 	 	November 1, 2023
	 	 	1,125,000	 	 	 	1,125,000	 	 	$	0.235	 	 	May 27, 2024
	 	 	2,800,000	 	 	 	2,800,000	 	 	$	0.235	 	 	September 12, 2024
	 	 	150,000	 	 	 	150,000	 	 	$	0.205	 	 	November 29, 2024
	 	 	350,000	 	 	 	350,000	 	 	$	0.21	 	 	November 29, 2024
	 	 	150,000	 	 	 	150,000	 	 	$	0.195	 	 	January 15, 2025
	 	 	150,000	 	 	 	150,000	 	 	$	0.195	 	 	January 16, 2025
	 	 	75,000	 	 	 	75,000	 	 	$	0.21	 	 	February 13, 2025
	 	 	6,325,000	 	 	 	3,325,000	 	 	$	0.185	 	 	September 2, 2025
	 	 	150,000	 	 	 	150,000	 	 	$	0.24	 	 	October 1, 2025
	 	 	3,575,000	 	 	 	3,575,000	 	 	$	0.70	 	 	November 30, 2025
	Total	 	24,000,000	 	 	 	20,000,000	 	 	 	 	 

    
	 	98	Annual Information Form

     

    

Between January 1, 2021 and the date of this
Annual Information Form, 2,977,500 stock options were exercised, 1,000,000 stock options were granted, and no stock option expired.
As a result, and as of the date of this Annual Information Form, an aggregate of 22,022,500 stock options issued by the Corporation
were outstanding, collectively entitling the holders thereof to purchase an aggregate of up to 22,022,500 Common Shares as
follows:

 

	 	 	 	Number of Stock 

Options	 	 	Number of Vested

 Stock Options	 	 	Exercise Price	 	 	Expiry Date
	 	 	 	 	 	250,000	 	 	 	250,000	 	 	$	0.25	 	 	November 1, 2021
	 	 	 	 	 	375,000	 	 	 	375,000	 	 	$	0.25	 	 	December 23, 2021
	 	 	 	 	 	500,000	 	 	 	500,000	 	 	$	0.30	 	 	January 1, 2022
	 	 	 	 	 	850,000	 	 	 	850,000	 	 	$	0.275	 	 	February 13, 2022
	 	 	 	 	 	500,000	 	 	 	500,000	 	 	$	0.30	 	 	July 1, 2022
	 	 	 	 	 	725,000	 	 	 	725,000	 	 	$	0.345	 	 	September 25, 2022
	 	 	 	 	 	150,000	 	 	 	150,000	 	 	$	0.40	 	 	September 25, 2022
	 	 	 	 	 	100,000	 	 	 	100,000	 	 	$	0.39	 	 	October 20, 2022
	 	 	 	 	 	200,000	 	 	 	200,000	 	 	$	0.42	 	 	November 27, 2022
	 	 	 	 	 	2,300,000	 	 	 	2,300,000	 	 	$	0.32	 	 	May 18, 2023
	 	 	 	 	 	100,000	 	 	 	100,000	 	 	$	0.31	 	 	June 21, 2023
	 	 	 	 	 	1,500,000	 	 	 	500,000	 	 	$	0.375	 	 	November 1, 2023
	 	 	 	 	 	1,125,000	 	 	 	1,125,000	 	 	$	0.235	 	 	May 27, 2024
	 	 	 	 	 	2,092,500	 	 	 	2,092,500	 	 	$	0.235	 	 	September 12, 2024
	 	 	 	 	 	350,000	 	 	 	350,000	 	 	$	0.21	 	 	November 29, 2024
	 	 	 	 	 	30,000	 	 	 	30,000	 	 	$	0.195	 	 	January 16, 2025
	 	 	 	 	 	75,000	 	 	 	75,000	 	 	$	0.21	 	 	February 13, 2025
	 	 	 	 	 	6,325,000	 	 	 	3,325,000	 	 	$	0.185	 	 	September 2, 2025
	 	 	 	 	 	150,000	 	 	 	150,000	 	 	$	0.24	 	 	October 1, 2025
	 	 	 	 	 	3,325,000	 	 	 	3,325,000	 	 	$	0.70	 	 	November 30, 2025
	 	 	 	 	 	1,000,000	 	 	 	500,000	 	 	$	1.29	 	 	January 6, 2026
	 	Total	 	 	 	22,022,500	 	 	 	17,522,500	 	 	 	 	 

 

As of December 31, 2020, the Board of Directors
was entitled to grant stock options in accordance with the Nouveau Monde Graphite Inc. 2018 Stock Option Plan, as adopted
by the Board of Directors on May 22, 2019, to employees, officers, directors or consultants of the Corporation or any
subsidiary thereof, and to persons employed to perform investor relations activities.

 

For further details about the stock options issued
by the Corporation as of December 31, 2020, reference is made to note 15.6 to the Corporation’s audited annual consolidated
financial statements for the fiscal year ended December 31, 2020 which are available under the Corporation’s profile
on SEDAR at www.sedar.com.

    
	 	99	Annual Information Form

     

    

agreements
with PALLINGHURST GRAPHITE

 

Bond

 

The Bond issued in connection with the Bond Transaction
is a three-year instrument in the principal amount of $15 million, which bears interest at a rate of 15% per annum, payable annually
commencing on December 31, 2020. Accrued interest under the Bond is capitalized quarterly and added to the principal amount
thereunder unless the Corporation elects to settle any accrued interest with Pallinghurst Graphite at the end of a given calendar
quarter; otherwise, the annual payment of any interest shall be made in cash or shares at the Corporation’s discretion. The
principal amount, together with all accrued and unpaid or uncapitalized interest thereunder, will become payable on July 14, 2023.
The Corporation’s obligations under the Bond are secured by a hypothec in favour of Pallinghurst Graphite over substantially all
of the Corporation’s movable and immovable assets, subject to certain existing permitted encumbrances. At any time, Pallinghurst
Graphite has the right to convert all or a portion of the Bond into such number of Common Shares equal to the principal amount
being converted, divided by the conversion price of $0.20 per Common Share. Pallinghurst Graphite also has the right to convert
all or a portion of any accrued and unpaid or uncapitalized interest under the Bond into Common Shares at the market price of the
Common Shares (within the meaning provided in the Bond) at the future time of conversion subject to the TSXV’s approval at
such time.

 

Amended and
Restated Investment Agreement

 

Pursuant to the Amended and Restated Investment
Agreement entered into on April 2, 2019 upon closing of the Bond Transaction, Pallinghurst Graphite is entitled to nominate three
(3) nominees to the Board of Directors so long as it holds (on an as-converted basis assuming the conversion of the Bond) more
than 20% of the issued and outstanding Common Shares. In the event Pallinghurst Graphite holds less than 20% of the issued and
outstanding Common Shares but greater than 10% of the issued and outstanding Common Shares (in each case on an as-converted basis
assuming the conversion of the Bond), Pallinghurst Graphite shall be entitled to nominate two (2) nominees to the Board of Directors.
Pallinghurst Graphite shall no longer be entitled to nominate any nominee once it as-converted ownership falls below 10% of the
issued and outstanding Common Shares. Under the Amended and Restated Investment Agreement, Pallinghurst Graphite has agreed to
a lock-up restriction pursuant to which it shall not sell or otherwise dispose of its Common Shares until August 28, 2021. Pallinghurst
Graphite was also granted anti-dilution rights over subsequent equity offerings by the Corporation in order to maintain its relative
ownership in shares of the Corporation on an as-converted basis. Such anti-dilution rights are in force until August 28, 2021.
If Pallinghurst Graphite’s as-converted ownership falls below 10%, the Corporation and Pallinghurst Graphite shall cease
to have any rights and obligations with respect to the anti-dilution rights granted under the Amended and Restated Investment Agreement.

 

Royalty

 

Concurrently with the entering into of the Bond
Transaction, the Corporation entered into the Royalty Transaction whereby the Corporation issued and sold a 3% royalty to Pallinghurst
Graphite for an aggregate purchase price of approximately $5 million, including accrued interest. Until July 14, 2023,
the Royalty is subject to a 1% buy back right in favour of the Corporation. The consideration to be paid by the Corporation upon
exercise of its buy back right will be equal to approximately $1.3 million, plus an amount equal to interest accrued at a rate
of 9% per annum from and after the closing of the Pallinghurst Transactions up to the buyback date. Pursuant to the Royalty, Pallinghurst
Graphite will have the right, until July 14, 2023, to request that the Royalty be converted into a graphite stream agreement or
other similar forward purchase agreement, provided that the Corporation will not be required to complete any such conversion if
such conversion could have a negative impact on the Corporation. The purchase price for the Royalty was satisfied by setting-off
all principal and accrued interest amounts owing by the Corporation to Pallinghurst Graphite under the promissory note dated June
27, 2019 in the principal amount of $2 million and the promissory note dated March 16, 2020 in the principal amount of $2 million,
each of which was cancelled.

    
	 	100	Annual Information Form

     

    

Assignment
and Assumption Agreement

 

Pursuant to the Assignment and Assumption Agreement,
the rights and obligations of Pallinghurst Graphite under the Pallinghurst Transactions had been assigned to Pallinghurst International.
See “Fiscal Year Ended December 31, 2020 and up to the date of this Annual Information Form – The Bond Transaction
and the Royalty Transaction.”

    
	 	101	Annual Information Form

     

    

Market
for securities

 

Market

 

The
issued and outstanding Common Shares are listed and posted for trading on the TSX Venture Exchange (“TSXV”)
under the symbol “NOU”, on the OTCQX under the symbol “NMGRF” and on the Frankfurt Stock Exchange under
the symbol “NM9”. The Corporation has applied to list the Common Shares on the NYSE. Listing will be subject to the
Corporation fulfilling all the listing requirements of the NYSE.

 

Trading
Price and Volume

 

The
Common Shares are listed and posted for trading on the TSXV under the symbol “NOU”. The following table shows the
variation in price and the trading volume of the Common Shares on the TSXV (as reported by https://www.tmxmoney.com) on
a monthly basis for each month of the financial year ended December 31, 2020 and up to the date of this Annual Information
Form.

 

Effective
as of March 24, 2021, the Corporation implemented the Consolidation on the basis of the Consolidation Ratio. The numbers, prices
and trading volumes of the Common Shares provided in the table below have been adjusted to take into consideration the Consolidation.
The Common Shares commenced trading on the TSXV on a post-Consolidation basis at the open of markets on March 31, 2021.

 

	Month	 	 	High ($)(1)	 	 	Low ($)(2)	 	 	Trading Volume(3)	 
	January 2020	 	 	 	2.300	 	 	 	1.900	 	 	 	334,603	 
	February 2020	 	 	 	2.700	 	 	 	2.250	 	 	 	756,395	 
	March 2020	 	 	 	2.450	 	 	 	1.250	 	 	 	608,598	 
	April 2020	 	 	 	2.400	 	 	 	1.400	 	 	 	426,553	 
	May 2020	 	 	 	2.300	 	 	 	1.850	 	 	 	274,002	 
	June 2020	 	 	 	2.200	 	 	 	1.800	 	 	 	312,137	 
	July 2020	 	 	 	2.200	 	 	 	1.800	 	 	 	342,069	 
	August 2020	 	 	 	2.200	 	 	 	1.900	 	 	 	296,934	 
	September 2020	 	 	 	2.600	 	 	 	1.800	 	 	 	561,743	 
	October 2020	 	 	 	4.300	 	 	 	2.350	 	 	 	1,937,567	 
	November 2020	 	 	 	10.000	 	 	 	3.750	 	 	 	4,995,240	 
	December 2020	 	 	 	14.500	 	 	 	5.300	 	 	 	2,958,932	 
	January 2021	 	 	 	19.800	 	 	 	10.400	 	 	 	4,343,395	 
	February 2021	 	 	 	27.400	 	 	 	14.800	 	 	 	5,065,404	 
	March 2021	 	 	 	22.300	 	 	 	15.200	 	 	 	3,402,410	 
	April 1 to April 29, 2021	 	 	 	20.500	 	 	 	12.000	 	 	 	1,941,363	 

 

Notes:

 

		(1)	Includes
                                         intra-day high prices.

		(2)	Includes
                                         intra-day low prices.

		(3)	Total
                                         volume traded in the relevant period.

    
	 	102	Annual Information Form

     

    

Prior
sales

 

The
following table summarizes details of the following securities that are not listed or quoted on a marketplace issued by the Corporation
during the Corporation’s fiscal year ended December 31, 2020 and up to the date of this Annual Information Form.
Effective as of March 24, 2021, the Corporation implemented the Consolidation on the basis of the Consolidation Ratio. The numbers
and prices of Common Shares and other information on securities convertible into Common Shares provided in this section are stated
prior to giving effect to the Consolidation.

 

	Issue Date	 	Number and Class of Securities	 	Issue Price or 

Exercise Price 

per Security	 
	January 15, 2020	 	150,000 options	 	$	0.195	 
	January 16, 2020	 	150,000 options	 	$	0.195	 
	February 13, 2020	 	75,000 options	 	$	0.210	 
	August 28, 2020	 	75,000,000 convertible bonds(1)	 	$	0.200	 
	August 28, 2020	 	75,000,000 warrants(1)	 	$	0.220	 
	September 2, 2020	 	6,325,000 options	 	$	0.185	 
	October 1, 2020	 	150,000 options	 	$	0.240	 
	November 1, 2020	 	1,500,000 options	 	$	0.375	 
	November 30, 2020	 	3,575,000 options	 	$	0.700	 
	January 6, 2021	 	1,000,000 options	 	$	1.290	 

 

Note:

 

		(1)	Issued
                                         pursuant to the Bond Transaction. See “Agreements with Pallinghurst Graphite”.

    
	 	103	Annual Information Form

     

    

Escrowed
securities and Securities subject TO contractual

RESTRICTION ON TRANSFER

 

The
following table sets out information on the escrowed securities of the Corporation and the securities of the Corporation that
are subject to a contractual restriction on transfer. Effective as of March 24, 2021, the Corporation implemented the Consolidation
on the basis of the Consolidation Ratio. The numbers and prices of Common Shares and other information on securities convertible
into Common Shares provided in this section are stated prior to giving effect to the Consolidation.

 

	ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER	 
	Description of Class Shares	 	 	Number of Securities Held in 

Escrow or that are Subject to a 

Contractual Restriction on 

Transfer	 	 	 	Percentage of Class	 
	Common Shares	 	 	52,350,000	(1)	 	 	19.18	%(2)

 

Notes:

 

		(1)	Represents
                                         Common Shares held by Pallinghurst Graphite, which are subject to a lock-up restriction
                                         pursuant to which it shall not sell or otherwise dispose of its Common Shares until August
                                         28, 2021. This value represents the number of Common Shares held by Pallinghurst Graphite
                                         as at December 31, 2020.

 

		(2)	This
                                         percentage is calculated based on the number of outstanding Common Shares as at December
                                         31, 2020.

 

See
 “Agreements with Pallinghurst Graphite – Amended and Restated Investment Agreement” for additional information.

 

Directors
and EXECUTIVE officers

 

Pursuant
to the Articles of Amalgamation of the Corporation, the Board of Directors shall consist of a minimum of three and a maximum of
15 directors. The directors of the Corporation are elected annually by the shareholders at the annual general meeting of shareholders.
Each director so elected shall hold office until the next annual general meeting of the shareholders of the Corporation, unless
he shall resign or his office becomes vacant by death, removal or other cause.

 

Name,
Occupation and Securities Holding

    
	 	104	Annual Information Form

     

    

The
following table contains certain information on the Corporation’s directors and executive officers as of the date of this
Annual Information Form.

 

	Name
    and 

Residence	Position
    Held with the Corporation 

and Period Served as Director	Principal
    Occupation During Past 

Five Years
	Yannick
Beaulieu (1)

        Québec,
Canada
	Director
    of the Corporation since February 2017	Chief
    Financial Officer of Verval Ltd.
	Daniel
Buron (2)

        Québec,
Canada
	Director
    of the Corporation since September 2019	Executive
    Vice-President and Chief Financial Officer of Domtar Corp.
	Éric
Desaulniers (3)

        Québec,
Canada
	President
and Chief Executive Officer

        Director
of the Corporation since January 2013
	President
    and Chief Executive Officer of the Corporation
	Arne
H. Frandsen (4)

        Geneva,
Switzerland
	Director
    of the Corporation since May 2019	Co-Founder
    and Managing Partner of The Pallinghurst Group
	Nathalie
Jodoin (5)

        Québec,
Canada
	Director
    of the Corporation since January 2016	Lawyer,
    Patent Agent and Partner of Robic, LLP
	Jürgen
    Köhler (6)

    Kelkheim, Germany	Director
    of the Corporation since April 2021	Former
    Chief Executive Officer, SGL Carbon SE
	Nathalie
Pilon (7)

        Québec,
Canada
	Director
    of the Corporation since December 2020	Former
    President of ABB Inc.
	James
    Scarlett (8)

    Ontario, Canada	Director
    of the Corporation since December 2020	Former
    Executive Vice-President and Chief Legal Officer of Hydro One Limited
	Christopher
Shepherd (9) 

        London,
England
	Director
    of the Corporation since June 2019	Partner
    of The Pallinghurst Group
	Charles-Olivier
Tarte 

        Québec,
Canada
	Chief
    Financial Officer of the Corporation	Chief
    Financial Officer of the Corporation
	David
Torralbo

        Québec,
Québec
	Chief
    Legal Officer and Corporate Secretary of the Corporation	Chief
                                         Legal Officer and Corporate Secretary of the Corporation

         

        Former
        Chief Legal Officer and Corporate Secretary of Atrium Innovations Inc.

         

 

 Notes:

 

		(1)	Member
                                         of the Audit Committee, the Governance, Compliance and Legal Committee and the ESG, Community,
                                         Sustainability and Diversity Committee.

 

		(2)	Lead
                                         Independent Director, Chairperson of the Audit Committee and member of the Human Resources,
                                         Nominating and Remuneration Committee and the Governance, Compliance and Legal Committee.

 

		(3)	Chairperson
                                         of the Project and Development Committee and member of the Safety, Health and Well-Being
                                         Committee.

 

		(4)	Chairperson
                                         of the Board of Directors, of the Human Resources, Nominating and Remuneration Committee
                                         and the Governance, Compliance and Legal Committee and member of the ESG, Community,
                                         Sustainability and Diversity Committee.

 

		(5)	Chairperson
                                         of the Safety, Health and Well-Being Committee and member of the Human Resources, Nominating
                                         and Remuneration Committee and the ESG, Community, Sustainability and Diversity Committee.

    
	 	105	Annual Information Form

     

    

		(6)	Member
                                         of the Audit Committee and the Project and Development Committee.

 

		(7)	Member
                                         of the Audit Committee, the Safety, Health and Well-Being Committee and the Project and
                                         Development Committee.

 

		(8)	Member
                                         of the Human Resources, Nominating and Remuneration Committee, the Governance, Compliance
                                         and Legal Committee and the Safety, Health and Well-Being Committee.

 

		(9)	Chairperson
                                         of the ESG, Community, Sustainability and Diversity Committee and member of the Project
                                         and Development Committee.

 

As
of the date of this Annual Information Form, the Corporation’s directors and executive officers as a group beneficially
owned, directly or indirectly, an aggregate of 1 005 148 Common Shares (post-Consolidation), representing approximately
2.71 % of the issued and outstanding Common Shares.

 

Cease
Trade Orders, Bankruptcies, Penalties or Sanctions

 

To
the knowledge of the Board of Directors and based on the information provided by the directors or executive officers of the Corporation,
none of these persons:

 

		(a)	is,
                                         as at the date of this Annual Information Form, or has been, within ten years before
                                         this date, director, chief executive officer or a chief financial officer of any corporation,
                                         including the Corporation, which has been subject to one of the following orders:

 

		(i)	a
                                         cease trade order, an order similar to a cease trade order or an order that denied the
                                         corporation access to any exemption under securities legislation, that was in effect
                                         for a period of more than 30 consecutive days, while the person was acting in the
                                         capacity as director, chief executive officer or chief financial officer; or

 

		(ii)	a
                                         cease trade order, an order similar to a cease trade order or an order that denied the
                                         corporation access to any exemption under securities legislation, that was in effect
                                         for a period of more than 30 consecutive days, after the person ceased to be a director,
                                         chief executive officer or chief financial officer and which resulted from an event that
                                         occurred while the person exercised these duties.

 

To
the knowledge of the Board of Directors and based on the information provided by the directors or executive officers of the Corporation
or shareholders holding a sufficient number of securities of the Corporation to affect materially the control of the Corporation,
none of these persons:

 

		(a)	is,
                                         as at the date of this Annual Information Form, or has been within ten years before this
                                         date, a director or executive officer of any corporation, including the Corporation,
                                         that, while the person was acting in that capacity, or within a year of that person ceasing
                                         to act in that capacity, became bankrupt, made a proposal under any legislation relating
                                         to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement
                                         or compromise with creditors or had a receiver, receiver manager or trustee appointed
                                         to hold its assets; or

 

		(b)	has,
                                         within the ten years before the date of this Annual Information Form, become bankrupt,
                                         made a proposal under any legislation relating to bankruptcy or insolvency, or become
                                         subject to or instituted any proceedings, arrangement or compromise with creditors, or
                                         had a receiver, receiver manager or trustee appointed to hold its assets; or

    
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		(c)	has
                                         been imposed any penalties or sanctions by a court relating to securities legislation
                                         or by a securities regulatory authority or has entered into a settlement agreement with
                                         a securities regulatory authority or has been imposed any penalties or sanctions by a
                                         court or a regulatory body that would likely be considered important to a reasonable
                                         investor in making an investment decision.

 

On
or about March 20, 2012, the Corporation completed a private placement with 109 investors, including 82 Québec
residents. Three of these Québec investors have declared and guaranteed, in a Schedule to the subscription agreement, that
they were accredited investors. An investigation conducted by the Autorité des marchés financiers (the “AMF”)
revealed that these three Québec investors could not benefit from the accredited investor exemption provided for in Section 2.3
of Regulation 45-106 respecting Prospectus Exemptions, since they had incorrectly stated that they owned, at that time,
financial assets with an aggregate value of more than one million dollars. The AMF has therefore established that additional verification
measures should have been completed by Mr. Éric Desaulniers with respect to the quality of these three Québec
investors, thereby enabling the AMF to impose to Mr. Desaulniers an administrative monetary penalty pursuant to the Securities
Act (Québec). Pursuant to a settlement agreement between the AMF and Mr. Desaulniers, and ratified by the Tribunal
administratif des marchés financiers on April 4, 2018, Mr. Desaulniers agreed to pay an administrative fine
of $10,000.

 

CONFLICTS
OF INTEREST

 

Certain
of the Corporation’s directors and officers serve or may agree to serve as directors or officers of other reporting companies
that may compete with the Corporation in some respects or may hold significant shareholdings in the Corporation or other companies
that compete with the Corporation and, to the extent that such other companies may have conflicting interests, the directors of
the Corporation may have a conflict of interest. From time to time, several companies may participate in the acquisition, exploration
and development of natural resource properties thereby allowing for their participation in larger programs, permitting involvement
in a greater number of programs and reducing financial exposure in respect of any one program. It may also occur that a particular
company will assign all or a portion of its interest in a particular program to another of these companies due to the financial
position of the company making the assignment.

 

In
the event that such a conflict of interest arises at a meeting of the Corporation’s directors, a director who has such a
conflict will abstain from voting for or against the approval of such participation or such terms and such director will not participate
in negotiating and concluding terms of any proposed transaction. Under the CBCA, the directors of the Corporation are required
to act honestly, in good faith and in the best interests of the Corporation. In determining whether or not the Corporation will
participate in a particular program and the interest therein to be acquired by it, the directors will primarily consider the degree
of risk to which the Corporation may be exposed and its financial position at that time. See “Risk Factors” in this
Annual Information Form.

 

LEGAL
PROCEEDINGS AND REGULATORY ACTIONS

 

Since
the beginning of the fiscal year ended December 31, 2020 and up to the date of this Annual Information Form, there was no
legal proceedings outstanding or regulatory actions pending involving the Corporation or any of its properties or to which the
Corporation is a party or to which its properties are subject, nor to the knowledge of the Corporation are any such legal proceedings
contemplated or such regulatory actions threatened, as of the date hereof, which could become material to a purchaser of securities
of the Corporation.

    
	 	107	Annual Information Form

     

    

Since
the beginning of the fiscal year ended December 31, 2020 and up to the date of this Annual Information Form: (i) the
Corporation has not been the subject of penalties or sanctions imposed by a court relating to securities legislation or by a securities
regulatory authority; (ii) the Corporation has not entered into any settlement agreement before a court relating to securities
legislation or with a securities regulatory authority; and (iii) no penalties or sanctions has been imposed by a court or
regulatory body against the Corporation that would likely be considered important to a reasonable investor in making an investment
decision.

 

interest
of management and others in material transactions

 

To
the knowledge of the Corporation, with the exception of what is provided herein, no director, executive officer, or person that
beneficially owns, or controls or directs, directly or indirectly, more than 10% of any class or series of outstanding voting
securities of the Corporation, or an associate or affiliate of any of the foregoing, have had any material interest, direct or
indirect, in any transaction within the three most recently completed financial years or during the current financial year prior
to the date of this Annual Information Form that has materially affected or is reasonably expected to materially affect the Corporation
or its subsidiaries.

 

Pallinghurst
Graphite is the wholly-owned subsidiary of Pallinghurst International, the beneficial owner of a total 5,628,877 Common Shares
(post-Consolidation) representing 15.18% of the issued and outstanding Common Shares. Assuming the conversion in whole of the
Bond, Pallinghurst International would beneficially own 13,128,877 Common Shares (post-Consolidation) representing 29.45% of the
issued and outstanding Common Shares. On April 3, 2019, the Corporation entered into a subscription agreement in connection
with the Pallinghurst Private Placement. See “Fiscal Year Ended December 31, 2019 – Pallinghurst Private Placement
and Institutional Private Placement”. On June 28, 2019, the Corporation closed the 2019 Unsecured Financing with Pallinghurst
Graphite for an aggregate amount of $2,000,000. See “Three-Year History – Fiscal Year Ended December 31, 2019 –
2019 Unsecured Financing”. On March 16, 2020, the Corporation closed the 2020 Unsecured Financing with Pallinghurst Graphite
for an aggregate amount of $2,000,000. On July 15, 2020, the Corporation entered into financing transactions with Pallinghurst
Graphite in connection with the Pallinghurst Transactions. On February 1, 2021, the Corporation announced it had secured $16.5
million from the exercise of the Pallinghurst Warrants. See “Fiscal Year Ended December 31, 2020 and up to the date of this
Annual Information Form– Issuances for Cash Consideration”.

 

Investissement
Québec is the beneficial owner of 3,817,241 Common Shares (post-Consolidation) representing 10.29% of the issued and outstanding
Common Shares. On April 29, 2020, the Corporation closed a financing agreement with Investissement Québec for an aggregate
amount received of $1,994,405 through the Loan Offers. See “Fiscal Year Ended December 31, 2020 and up to the date of this
Annual Information Form– Issuances for Cash Consideration”.

    
	 	108	Annual Information Form

     

    

TRANSFER
AGENT AND REGISTRAR

 

The
Corporation’s transfer agent and registrar in Canada is AST Trust Company (Canada) (“AST”). The register
of transfers of the Common Shares in Canada is held at AST’s offices located in its place of business at 2001 Robert-Bourassa
Blvd. Suite 1600, Montréal, Québec H3A 2A6.

 

The
Corporation’s co-transfer agent in the United States is American Stock Transfer & Trust Co LLC located at 6201 15th
Avenue, Brooklyn, NY 11219.

 

MATERIAL
CONTRACTS

 

The
following lists any contract material to the Corporation that was entered into outside the normal course of business during the
most recently completed fiscal year or before the last fiscal year that is still in effect:

 

		a)	the
                                         Warrant Indenture dated September 19, 2017 between the Corporation and AST, as warrant
                                         agent for the warrants issued in connection with the first tranche of the private placement
                                         closed on September 19, 2017;

 

		b)	the
                                         Warrant Indenture dated October 20, 2017 between the Corporation and AST, as warrant
                                         agent for the warrants issued in connection with the second tranche of the private placement
                                         closed on October 20, 2017;

 

		c)	the
                                         Agency Agreement dated July 13, 2018 between the Corporation, Eight Capital, Haywood
                                         Securities Inc., Desjardins Securities Inc. and Canaccord Genuity Corp., as amended on
                                         October 2, 2018;

 

		d)	the
                                         Warrant Indenture dated July 13, 2018 between the Corporation and AST, as warrant
                                         agent for the warrants issued in connection with the first tranche of the brokered private
                                         placement closed on July 13, 2018;

 

		e)	the
                                         Warrant Indenture dated September 27, 2018 between the Corporation and AST, as warrant
                                         agent for the warrants issued in connection with the second tranche of the brokered private
                                         placement closed on September 28 2018;

 

		f)	the
                                         Subscription Agreement dated April 2, 2019 between the Corporation and Pallinghurst Graphite
                                         in connection with the Pallinghurst Private Placement;

 

		g)	the
                                         Investment Agreement dated April 2, 2019 between the Corporation and Pallinghurst Graphite
                                         for the purposes of granting certain rights to Pallinghurst Graphite in connection with
                                         the Pallinghurst Private Placement, as amended and restated pursuant to the Amended and
                                         Restated Investment Agreement dated August 28, 2020 between the Corporation and Pallinghurst
                                         Graphite;

 

		h)	the
                                         Pallinghurst Subscription Agreement dated July 14, 2020 between the Corporation and Pallinghurst
                                         Graphite;

 

		i)	the
                                         Royalty Purchase Agreement dated July 14, 2020 between the Corporation and Pallinghurst
                                         Graphite; and

 

		j)	the
                                         underwriting agreement dated January 15, 2021 between the Corporation and BMO.

    
	 	109	Annual Information Form

     

    

INTERESTS
OF EXPERTS

 

Certain
information of a scientific or technical nature in respect of the Matawinie Graphite Property contained in this Annual Information
Form is based on the Technical Report. Ms. Céline M. Charbonneau P. Eng., M. Sc., a Senior Project Manager with
Met-Chem, has reviewed and approved the scientific and technical information summarized from the Technical Report and contained
in this Annual Information Form. Ms. Charbonneau is considered, by virtue of her education, experience and professional association,
to be a “qualified person” within the meaning of NI 43-101. As of the date hereof, Ms. Charbonneau had no beneficial
or registered interests, direct or indirect, in the Corporation’s securities or properties.

 

The
Technical Report was prepared by the Authors of the Technical Report, as this term is defined above. As of the date of this Annual
Information Form, Mr. Bernard-Olivier Martel, P. Geo., B. Sc., Mr. Yann Camus, P. Eng., Mr. Oliver Peters, P. Eng.,
M. Sc., MBA, Mr. Patrick Perez P. Eng., M. Sc., Mr. Ewald Pengel, P. Eng., M. Sc., Mr. Jordan Zampini, P.
Eng., Mr. Martin Saint-Amour, P. Eng. and Ms. Céline M. Charbonneau, P. Eng., each of whom is a “qualified
person” within the meaning of NI 43-101, had no beneficial or registered interests, direct or indirect, in the Corporation’s
securities or properties, except for Ms. Martine Paradis, Eng., who has been appointed as Vice-President, Chief Engineer Infrastructure
and Environment of the Corporation on May 15, 2019 and owns, directly or indirectly, less than 1% of the Corporation’s securities
or properties.

 

Mr.
Yann Camus, P. Eng. of SGS Canada Inc. - Geological Services, has reviewed and approved the scientific and technical information
contained in the section entitled “Technical Information Update as of the Date of this Annual Information Form”. Mr. Yann
Camus is considered, by virtue of his education, experience and professional association, to be a “qualified person”
within the meaning of NI 43-101. As of the date hereof, Mr. Camus had no beneficial or registered interests, direct or indirect,
in the Corporation’s securities or properties.

 

The
auditors of the Corporation are PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l. (“PwC”), a partnership of Chartered
Professional Accountants, located at 1250 René-Lévesque Boulevard West, Suite 2500, Montréal, Québec,
Canada, H3B 4Y1. PwC has advised the Corporation that it is independent with respect to the Corporation within the meaning
of the Code of ethics of chartered professional accountants (Québec).

    
	 	110	Annual Information Form

     

    

ADDITIONAL
INFORMATION

 

Additional
information regarding the Corporation, including directors’ and officers’ remuneration and indebtedness, principal
holders of the Corporation’s securities and securities authorized for issuance under equity compensation plans, is contained
in the Corporation’s management proxy circular dated July 27, 2020 prepared in connection with the annual general
and special meeting of shareholders held on August 27, 2020, which is available under the Corporation’s profile on SEDAR
at www.sedar.com.

 

Additional
information regarding the Consolidation is contained in the Corporation’s management proxy circular dated February 22, 2021
prepared in connection with the special meeting of shareholders of the Corporation held on March 23, 2021, which is available
under the Corporation’s profile on SEDAR at www.sedar.com.

 

Additional
financial information regarding the Corporation is provided in the audited annual financial statements and the management’s
discussion and analysis of the Corporation for the fiscal year ended December 31, 2020, which are available under the Corporation’s
profile on SEDAR at www.sedar.com.

 

Additional
information regarding the Corporation is also available under its profile on SEDAR at www.sedar.com and on the Corporation’s
web site at www.nouveaumonde.ca.

    
	 	111	Annual Information Form

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