Nouveau Monde Graphite (NMG) 6-K Condensed consolidated interim unaudited financial statements

Exhibit 99.1

 

FINANCIAL STATEMENTS

Condensed consolidated interim unaudited financial statements

For the three-month periods ended March 31, 2023 and 2022

(Expressed in thousands of Canadian dollars, except where otherwise indicated)

 

 

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 the condensed consolidated interim financial statements	5

NOUVEAU MONDE GRAPHITE INC.
	Consolidated statements of financial position (Amounts expressed in thousands of Canadian dollars - unaudited)

Consolidated statements of financial position

	Notes	As at March 31, 2023			As at December 31, 2022
ASSETS
CURRENT
Cash and cash equivalents			48,798			59,924
Grants receivable and other current assets			2,064			3,983
Sales taxes receivable			1,453			1,972
Tax credits receivable			4,362			4,362
Restricted cash and deposits			621			621
Prepaid expenses			1,547			3,062
Total current assets			58,845			73,924
NON-CURRENT
Tax credits receivables			5,533			5,458
Investment – Listed shares			1,475			800
Property, plant and equipment	4		65,773			64,135
Intangible assets			136			182
Right-of-use assets			2,531			2,656
Restricted cash and deposits			2,843			2,919
Total non-current assets			78,291			76,150
Total assets			137,136			150,074
LIABILITIES
CURRENT
Accounts payables and accrued liabilities			13,072			15,429
Deferred grants			883			20
Current portion of lease liabilities			445			431
Current portion of borrowings			345			225
Total current liabilities			14,745			16,105
NON-CURRENT
Asset retirement obligation			976			952
Borrowings			1,606			1,763
Lease liabilities			2,271			2,386
Convertible notes	5		68,002			56,544
Total non-current liabilities			72,855			61,645
Total liabilities			87,600			77,750
EQUITY
Share capital	6.1		210,786			210,786
Other reserves	5		2,446			829
Contributed surplus			26,054			25,313
Deficit			(189,750	)		(164,604	)
Total equity			49,536			72,324
Total liabilities and equity			137,136			150,074
Going Concern	1
Commitments	14
Subsequent Events	16

APPROVED BY THE BOARD OF DIRECTORS
(s) Eric Desaulniers – “Director”
(s) Daniel Buron – “Director”
The accompanying notes are an integral part of the condensed consolidated interim financial statements.

1

NOUVEAU MONDE GRAPHITE INC.
	Consolidated statements of loss and comprehensive loss (Amounts expressed in thousands of Canadian dollars - unaudited)

Consolidated statements of loss and comprehensive loss

		For the three-month periods ended
	Notes	March 31, 2023 $			March 31, 2022 $
EXPENSES
Exploration and evaluation expenses	7		1,647			1,982
Battery Material Plant project expenses	8		4,733			5,615
General and administrative expenses	9		6,909			8,350
Operating loss			13,289			15,947
Net financial costs	10		11,757			124
Loss before tax			25,046			16,071
Income tax			100			-
Net loss and comprehensive loss			25,146			16,071
Basic and diluted loss per share	6.1		(0.45	)		(0.29	)
Weighted average number of shares outstanding	6.1		56,034,874			55,176,921

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

2

NOUVEAU MONDE GRAPHITE INC.
	Consolidated statements of changes in equity (Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)

Consolidated statements of changes in equity

	Notes	Number		Share capital $		Contributed surplus and warrants $		Other reserves $		Deficit  $			Total equity $
Balance as at January 1, 2023			55,873,898		210,786		25,313		829		(164,604	)		72,324
Share-based compensation	6.2		-		-		741		-		-			741
Settlement of interest on 2022 Convertible Notes	5		-		-		-		1,617		-			1,617
Net loss and comprehensive loss			-		-		-		-		(25,146	)		(25,146	)
Balance as at March 31, 2023			55,873,898		210,786		26,054		2,446		(189,750	)		49,536

	Notes	Number		Share capital $			Contributed surplus and warrants $			Deficit $			Total equity $
Balance as at January 1, 2022			55,118,316		206,483			16,102			(116,890	)		105,695
Shares issued from offering	6.1		19,901		192			-						192
Options exercised	6.2		79,500		394			(135	)		-			259
Share-based compensation	6.2		-		-			3,266			-			3,266
Share issue costs			-		(192	)		-			-			(192	)
Net loss and comprehensive loss			-		-			-			(16,071	)		(16,071	)
Balance as at March 31, 2022			55,217,717		206,877			19,233			(132,961	)		93,149

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

3

NOUVEAU MONDE GRAPHITE INC.
	Consolidated statements of cash flow (Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)

Consolidated statements of cash flows

		For the three-month periods ended
	Notes	March 31, 2023 $			March 31, 2022 $
OPERATING ACTIVITIES
Net loss			(25,146	)		(16,071	)
Depreciation and amortization	4		1,157			995
Change in fair value – listed shares			(675	)		-
Change in fair value – embedded derivatives	5		10,279			-
Interest on convertible notes	5		1,617			-
Unrealized foreign exchange loss (gain)			(40	)		192
Share-based compensation	6.2		582			3,266
Accretion included within financial costs			1,183			20
Net change in working capital	11		2,229			(1,206	)
Cash flows used in operating activities			(8,814	)		(12,804	)
INVESTING ACTIVITIES
Additions to property, plant, and equipment	4 - 11		(4,224	)		(6,040	)
Restricted cash and deposits			56			112
Grants received			2,743			-
Cash flows used in investing activities			(1,425	)		(5,928	)
FINANCING ACTIVITIES
Proceeds from offering			-			192
Costs from convertible notes			(659	)
Repayment of borrowings and lease liabilities			(155	)		(137	)
Proceeds from the exercise of stock options	6.2		-			259
Share and deferred share issue costs			(62	)		(269	)
Cash flows from financing activities			(876	)		45
Effect of exchange rate changes on cash			(11	)		(181	)
Net change in cash and cash equivalents			(11,126	)		(18,868	)
Cash and cash equivalent at the beginning of the period			59,924			62,355
Cash and cash equivalents at the end of the period			48,798			43,487
Non-cash investing and financing activities	11

The accompanying notes are an integral part of the condensed consolidated interim financial statement

4

NOUVEAU MONDE GRAPHITE INC.
	Notes to the condensed consolidated interim financial statements (Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)

Notes to the condensed consolidated interim financial statements

1. NATURE OF OPERATIONS AND GOING CONCERN

Nouveau Monde Graphite Inc. (the “Company”, or “parent 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 NMG on the New York Stock Exchange, NOU on the TSX Venture Exchange (“TSXV”), and NM9A on the Frankfurt Stock Exchange. The Company’s registered office is located at 481 Brassard Street, Saint-Michel-des-Saints, Québec, Canada, J0K 3B0.

The Company’s condensed consolidated interim financial statements have been prepared using International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) applicable to a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business as they come due for the foreseeable future.

During the three-month period ended March 31, 2023, the Company reported net loss after tax of $25.1 million; cash outflows from operating activities of $8.8 million and an accumulated deficit of $189.8 million and has yet to generate positive cash flows or earnings. Based on all available information about the future, which includes at least, but not limited to, the next twelve months, management believes that without additional funding, the Company does not have sufficient liquidity to pursue its planned expenditures.

These circumstances indicate the existence of material uncertainties that cast substantial doubt as to the ability of the Company to continue as a going concern and accordingly, the appropriateness of the use of accounting principles applicable to a going concern.

The Company's ability to continue future operations and fund its development and acquisition activities is dependent on management's ability to secure additional financing, which may be completed in a number of ways including, but not limited to, the issuance of debt or equity instruments, expenditure reductions, or a combination of strategic partnerships, joint venture arrangements, project debt finance, offtake financing, royalty financing and other capital markets alternatives. 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.

These consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities, expenses and financial position classifications that would be necessary if the going concern assumption was not appropriate. These adjustments could be significant.

2. BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE

The Company’s condensed consolidated interim financial statements have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) as published by the International Accounting Standards Board (“IASB”) applicable to the preparation of interim financial statements, including IAS 34 Interim Financial Reporting, and also using the same accounting policies and procedures as those used for the Company’s audited consolidated financial statements as at December 31, 2022. These condensed consolidated interim financial statements do not include all the disclosures and notes required for annual consolidated financial statements and should therefore be read with the Company’s audited consolidated financial statements as at December 31, 2022, which have been prepared in accordance with IFRS.

The condensed consolidated interim financial statements for the three-month periods ended March 31, 2023 (including comparative statements) were approved and authorized for publication by the Board of Directors on May 10, 2023.

5

NOUVEAU MONDE GRAPHITE INC.
	Notes to the condensed consolidated interim financial statements (Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)

3. 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 can be found in the note 5 of the Consolidated audited annual financial statement. Actual results may differ significantly.

6

NOUVEAU MONDE GRAPHITE INC.
	Notes to the condensed consolidated interim financial statements (Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)

4. PROPERTY, PLANT AND EQUIPMENT

	For the three-month period ended March 31, 2023
	Land $		Buildings $		Equipment $		Computers $		Furniture $		Rolling stock $		Mine under construction [1] $		Battery Material Demonstration Plant under construction [1] $		Total $
COST
Balance as at January 1, 2023		2,455		3,267		9,813		141		118		128		37,785		14,591		68,298
Additions		-		-		25		-		-		-		2,109		490		2,624
Balance as at March 31, 2023		2,455		3,267		9,838		141		118		128		39,894		15,081		70,922
ACCUMULATED DEPRECIATION
Balance as at January 1, 2023		-		551		3,478		72		25		37		-		-		4,163
Depreciation		-		56		908		12		4		6		-		-		986
Balance as at March 31, 2023		-		607		4,386		84		29		43		-		-		5,149
Net book value as at March 31, 2023		2,455		2,660		5,452		57		89		85		39,894		15,081		65,773

	For the year ended December 31, 2022
	Land $		Buildings $		Equipment $		Computers $		Furniture $		Rolling stock $			Mine under construction [1] $		Battery Material Demonstration Plant under construction [1] $			Total $
COST
Balance as at January 1, 2022		2,412		2,791		163		141		25		53			18,032		18,886			42,503
Additions		43		15		248		-		-		50			19,753		5,687			25,796
Transfers		-		461		9,402		-		93		26			-		(9,982	)		-
Write-Off/Disposals		-		-		-		-		-		(1	)		-		-			(1	)
Balance as at December 31, 2022		2,455		3,267		9,813		141		118		128			37,785		14,591			68,298
ACCUMULATED DEPRECIATION
Balance as at January 1, 2022		-		330		19		25		11		15			-		-			400
Depreciation		-		221		3,459		47		14		23			-		-			3,764
Write-Off/Disposals		-		-		-		-		-		(1	)		-		-			(1	)
Balance as at December 31, 2022		-		551		3,478		72		25		37			-		-			4,163
Net book value as at December 31, 2022		2,455		2,716		6,335		69		93		91			37,785		14,591			64,135

[1] Assets under construction are not being depreciated as they are not in the condition necessary to be capable of being operated in the manner intended by management.

7

NOUVEAU MONDE GRAPHITE INC.
	Notes to the condensed consolidated interim financial statements (Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)

The amount of borrowing costs included in mine under construction for the three-month period ended March 31, 2023, is $56 (nil for the three-month period ended March 31, 2022). The rate used to determine the amount of borrowing costs to be capitalized is the weighted average interest rate applicable to the entity’s general borrowings during the three-month period ended March 31, 2023.

5. CONVERTIBLES NOTES

2022 – US$50 Million Convertible Notes with Mitsui, Pallinghurst, and Investissement Québec

	Host (amortized cost) $			Derivative (FVTPL) $			Deferred amount $			Total $
Issuance		48,703			20,453			(2,773	)		66,383
Interest accretion		732			-			-			732
Fair value adjustment		-			(11,199	)		-			(11,199	)
Amortization		-			-			140			140
Foreign exchange		382			127			(21	)		488
Balance as of December 31, 2022		49,817			9,381			(2,654	)		56,544
Interest accretion		1,218			-			-			1,218
Fair value adjustment		-			10,041			-			10,041
Amortization		-			-			238			238
Foreign exchange		(40	)		(1	)		2			(39	)
Balance as of March 31, 2023		50,995			19,421			(2,414	)		68,002

On November 8, 2022, the Company completed a private placement of unsecured convertible notes (the “Notes”) for aggregate gross proceeds of $67.2 million (US$50 million). The Notes are denominated in US Dollars with a term of 36 months and carry a quarterly coupon interest payment of the greater between (a) the 3-month CME Term SOFR plus 4% and (b) 6%.

Subsequently and effective January 1, 2023, the Notes contracts were amended by:

- Removing the interest capitalization provisions, such that accrued interest will be deemed paid in full in shares each quarter following the Exchanges approval; and

- Increasing the interest rate to the greater of (a) 7% and (b) the 3-month CME Term SOFR plus 5%.

The Notes include the following material conversion and settlement options available to the holders and the Company:

- General conversion option: The holder of a Note, at any time before maturity, can convert the outstanding principal amount into units for US$5/unit. Each unit comprises one common share of the Company and one share warrant. The share warrant can be used to subscribe one common share of the Company at an exercise price of US$5.70/share for a period of 24 months from the date of conversion of the Note.

- Repurchase option: The Company has, at its sole discretion, an option to repay the Notes at the Repurchase Amount (as defined in the subscription agreement) at the earlier of (i) December 31, 2023; or (ii) the date of a final investment decision (FID) as defined in the subscription agreement. Depending on the circumstances, the repurchase amount is affected by the remaining time to maturity and the cumulative interests paid to date to the investors.

- Interest repayment option: At the end of each quarter starting December 31, 2022, the Company has an option to pay the interest in (i) cash; or (ii) in Common Shares subject to TSXV and NYSE approvals, by delivering share certificates to the Holders upon maturity, conversion or redemption at a US Dollar equivalent of the Company’s market share price determined at the quarter end on which such interest become payable.

- The Notes also include redemption mechanisms at the option of the holders in the event of a change of control or an event of default.

For the three-month period ended March 31, 2023, the interest coupon totalled an aggregate amount of $1,617 (US$1,196). The Company elected to pay the quarterly interest coupon with 234,029 common shares at a price of US$ 5.11 that will be issued at maturity or conversion of the Notes. The common shares to be issued are recorded as other reserves in the consolidated statements of changes in equity.

8

NOUVEAU MONDE GRAPHITE INC.
	Notes to the condensed consolidated interim financial statements (Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)

Sensitivity analysis on inputs that have an impact on the fair value revaluation of the derivative:

	December  31, 2022		Reasonably possible change	Sensitivity [1] $ (derivative liability)	March 31, 2023		Reasonably possible change	Sensitivity [1] $ (derivative liability)
Observable inputs
Share Price	US$3.82		+/- 10%	+3.6M/-1.9M	US$5.13		+/- 10%	+4.3M/-6.1M
Foreign Exchange rate	1.35		+/- 5%	+/- 0.5M	1.35		+/- 5%	+/-1M
Unobservable inputs
Expected volatility	50	%	+/- 10% (absolute)	+3.2M/-1.7M	49	%	+/- 10% (absolute)	+2.4M/-4.8M
Credit Spread	9	%	+/- 1% (absolute)	+/- 0.3M	6	%	+/- 1% (absolute)	+/-0.7M

[1] Holding all other variables constant

6. EQUITY

6.1 SHARE CAPITAL

Authorized share capital

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

	For the three-month period ended March 31, 2023		For the year ended December 31, 2022
Shares issued at the start of the period		55,873,898		55,118,316
Shares issued from offering		-		502,082
Options exercised		-		253,500
Shares issued at the end of period		55,873,898		55,873,898

On January 21, 2022, the Company filed a prospectus supplement establishing a new at-the-market equity offering (“ATM Offering”). The ATM Offering allows the Company to offer for sale and issue up to US$75 million (or the equivalent in Canadian dollars) of common shares of the Company from time to time, at the Company’s discretion. From January 21, 2022 to December 31, 2022, the Company issued 502,082 common shares at an average price of $7.94 for gross proceeds of $3,987, commissions of $100, for total net proceeds of $3,887. During the three-month period ended March 31, 2023, no common shares were issued in connection with the ATM Offering.

6.2 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. 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.

9

NOUVEAU MONDE GRAPHITE INC.
	Notes to the condensed consolidated interim financial statements (Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)

The Company’s share options are as follows:

	For the three-month period ended March 31, 2023					For the year ended December 31, 2022
	Number			Weighted average exercise price $		Number			Weighted average exercise price $
Opening balance		3,911,804			7.42		2,352,249			7.07
Granted		453,048			8.20		2,219,304			8.13
Exercised		-			-		(253,500	)		2.90
Expired		-			-		(385,000	)		12.21
Forfeited		(20,250	)		7.18		(21,249	)		9.47
Cancelled		(487,804	)		8.20		-			-
Ending balance		3,856,798			7.42		3,911,804			7.42
Options that can be exercised		3,138,125			7.29		2,872,500			7.22

On February 17, 2023, the TSXV approved the cancellation of 487,804 options (initial options) previously issued to consultants and which were replaced with the grant of 453,048 new options (replacement options). The options have been issued as a consideration to secure Project financing for the Matawinie Mine and the Bécancour Battery Material Plant. The initial options had an exercise price of $8.20 and vested on the closing of the project financing subject to expiry on March 28, 2023. The replacement options have an exercise price of $8.20, vest on the closing of the project financing (no later than March 28, 2025) and will expire two years following the vesting of those options (no later than March 28, 2027). The incremental fair value of this modification is $1,036, which was measured using the Black-Sholes option pricing model based on the assumptions below and is being recognized as an expense over the period from the modification date to the end of the extended vesting period.

· Stock price: $8.20

· Expected volatility: 93%

· Risk-free rate: 3.79%

· Expected dividend: nil

The expense representing the fair value of the initial options granted will continue to be recognized as if the terms had not been modified.

7. EXPLORATION AND EVALUATION EXPENSES

	For the three-month period ended March 31, 2023 $			For the three-month period ended March 31, 2022 $
Wages and benefits		815			933
Share-based compensation		79			262
Engineering		-			60
Professional fees		175			43
Materials, consumables, and supplies		166			310
Maintenance and subcontracting		204			300
Geology and drilling		-			15
Utilities		104			148
Depreciation and amortization		73			60
Other		65			41
Uatnan mining project		95			-
Grants		(54	)		-
Tax credits		(75	)		(190	)
Exploration and evaluation expenses		1,647			1,982

10

NOUVEAU MONDE GRAPHITE INC.
	Notes to the condensed consolidated interim financial statements (Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)

8. BATTERY MATERIAL PLANT PROJECT EXPENSES

	For the three-month period ended March 31, 2023 $			For the three-month period ended March 31, 2022 $
Wages and benefits		908			535
Share-based compensation		75			9
Engineering		1,519			3,367
Professional fees		203			349
Materials, consumables, and supplies		600			375
Maintenance and subcontracting		396			183
Utilities		214			213
Depreciation and amortization		1,021			879
Other		34			41
Grants		(237	)		(336	)
Battery Material Plant project expenses		4,733			5,615

9. GENERAL AND ADMINISTRATIVE EXPENSES

	For the three-month period ended March 31, 2023 $		For the three-month period ended March 31, 2022 $
Wages and benefits		2,062		2,024
Share-based compensation		429		2,995
Professional fees		1,032		398
Consulting fees		755		512
Travelling, representation and convention		210		87
Office and administration		2,226		2,157
Stock exchange, authorities, and communication		126		111
Depreciation and amortization		63		56
Other financial fees		6		10
General and administrative expenses		6,909		8,350

10. NET FINANCIAL COSTS

	For the three-month period ended March 31, 2023 $			For the three-month period ended March 31, 2022 $
Foreign exchange loss (gain)		(31	)		164
Interest income		(636	)		(81	)
Interest expense on lease liabilities		5			2
Change in fair value - listed shares		(675	)		-
Change in fair value - embedded derivative and deferred amount amortization		10,279			-
Accretion on borrowings and notes		1,183			20
Interest on borrowings and notes		1,632			19
Net financial costs		11,757			124

11

NOUVEAU MONDE GRAPHITE INC.
	Notes to the condensed consolidated interim financial statements (Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)

11. ADDITIONAL CASH FLOW INFORMATION

	For the three-month period ended March 31, 2023 $			For the three-month period ended March 31, 2022 $
Grants receivable and other current assets		130			490
Deferred grants		25			-
Mining tax credits		(75	)		(191	)
Sales taxes receivable		519			174
Prepaid expenses		1,535			1,452
Accounts payable and accrued liabilities		95			(3,131	)
Total net change in working capital		2,229			(1,206	)
Non-cash investing and financing activities
Property, plant and equipment included in accounts payable and accrued liabilities		5,587			4,740
Share issue costs included in accounts payable and accrued liabilities		-			267
Deferred expenses included in accounts payable and accrued liabilities		87			-

12. RELATED PARTY TRANSACTIONS

During the three-month period ended March 31, 2023, share-based compensation expenses for key management personnel totalled $107 ($1,762 for the three-month period ended March 31, 2022) and nil for directors ($1,247 for the three-month period ended March 31, 2022).

During the three-month period ended March 31, 2023, the Company also incurred interest to be paid to Investissement Québec and Pallinghurst, as disclosed in Note 5 – Convertible Notes above. The Company has elected to pay the accrued interest in common shares which will be issued at maturity or conversion of the Notes.

13. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

FAIR VALUE

Current financial assets and financial liabilities are valued at their carrying amounts, which are reasonable estimates of their fair value due to their relatively short-maturities; this includes cash and cash equivalents, grants receivable and other current assets and accounts payable and other. Borrowings and the convertible debt host are accounted for at amortized cost using the effective interest method, and their fair value approximates their carrying value except for the convertible debt host for which fair value is estimated at $50.1 million (US$37 million) (level 3).

Fair Value Hierarchy

Subsequent to initial recognition, the Company uses a fair value hierarchy to categorize the inputs used to measure the financial instruments at fair value grouped into the following levels based on the degree to which the fair value is observable.

- Level 1: Inputs derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

- Level 2: Inputs derived from other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

- Level 3: Inputs that are not based on observable market data (unobservable inputs).

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NOUVEAU MONDE GRAPHITE INC.
	Notes to the condensed consolidated interim financial statements (Amounts expressed in thousands of Canadian dollars, except per share amounts - unaudited)

	As at March 31, 2023
	Level 1		Level 2		Level 3		Total
Financial Assets at FVTPL
Non-current investments (Equity investment in publicly listed entities)		1,475		-		-		1,475
Financial liabilities at FVTPL
Convertible notes - Embedded derivatives (note 5)		-		-		17,007		17,007

	As at December 31, 2022
	Level 1		Level 2		Level 3		Total
Financial Assets at FVTPL
Non-current investments (Equity investment in publicly listed entities)		800		-	��	-		800
Financial liabilities at FVTPL
Convertible notes - Embedded derivatives (note 5)		-		-		6,727		6,727

There were no transfers between Level 1, Level 2 and Level 3 during the three-month period ended March 31, 2023 (none in 2022).

Financial Instruments Measured at FVTPL

Non-Current investments

Equity instruments publicly listed are classified as a Level 1 in the fair value hierarchy. Their fair values are a recurring measurement and are estimated using the closing share price observed on the relevant stock exchange.

14. COMMITMENTS

In the normal course of business, the Company enters into contracts that give rise to commitments. As at March 31, 2023, the Company had issued $3,402 of purchase orders for the acquisition of property, plant and equipment and $4,070 in relation to the operations.

15. COMPARATIVE FIGURES

The Company added a new category of expense namely "utilities" within Note 8 "Battery Material Plant Project Expenses". Consequently, comparative figures have been reclassified to conform to current year presentation. The reclassification had no impact on the net loss.

16. SUBSEQUENT EVENTS

On April 17, 2023, the Company concluded an underwritten public offering agreement for 4,850,000 common shares, at a price of US$4.55 per share for gross proceeds of $29.5M (US$22.0M). The Offering was conducted on a bought deal basis through a syndicate of underwriters led by BMO Capital Markets and Cormark Securities Inc. In consideration for the services rendered by the underwriters, the Company has agreed to pay the underwriters a cash fee equal to 6% of the gross proceeds of the Offering.

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