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Focus Graphite – A Mine-to-High Tech Graphite Company

Focus Graphite Inc.

OVERVIEW

Focus Graphite Inc. (TSXV:FMS,OTCQX:FCSMF,FWB:FKC) is an emerging mid-tier junior mining development company, a technology solutions supplier and a business innovator. Focus is the sole owner of the high-grade (16%), high-purity Lac Knife graphite deposit located near Fermont, Quebec. Focus’ goal is to assume an industry leading position by becoming a low-cost producer of technology-grade graphite. Its Lac Knife project has robust economics and excellent potential for profitability. As a technology-oriented enterprise with a view to building long-term, sustainable shareholder value, Focus Graphite and its shareholders hold a globally unique position in their 40% ownership of Grafoid Inc., a cutting edge technology company investing in graphene applications and a company involved in the development of a novel, low-cost graphite ore-to-graphene transformation process.

INVESTMENT HIGHLIGHTS

  • Life of Mine production of 928,000 tonnes of concentrate at Lac Knife, or approximately 46,600 tonnes of concentrate per year, with 40% of that production assigned to 99.99% purity technology-grade material production
  • Average graphite price of $4,196 per tonne of primary concentrate for the project, based on graphite market prices
  • $246 million pre-tax Net Present Value (NPV) (at a 10% discount rate)
  • 32% pre-tax Internal Rate of Return (IRR)
  • $926 million pre-tax undiscounted cash flow
  • $3.7 billion total net revenue
  • Pre-tax payback period of 2.8 years
  • $154 million initial capital cost, inclusive of $33 million and $24 million in working capital and contingency (25%) respectively
  • $68 per tonne average unit operating cost at Lac Knife
  • $435 per tonne average unit operating cost
  • Cash cost of $3,041 per tonne of primary concentrate
  • 2012 infill and exploration drilling results highlighted by 42 meters grading at 20.43%
  • Lac Knife’s 8.1 million ton high-grade (16%) graphite deposit enables Focus Graphite to become one of the lowest cost producers in the world. Its 2013 drilling programs are intended to upgrade the deposit’s status in a revised resource estimate
  • SGS Phase II Locked Cycle Tests confirmed an average concentrate purity of 96.6% and a global recovery of more than 92%
  • Grafoid Inc., a graphene investment and business development company has introduced a mass production process for industrial scale applications. Five R&D partnerships underway
  • Management has in depth experience and knowledge of the graphite technology market and is actively developing markets with graphite customers and global lithium-ion battery manufacturers
  • Technology and marketing alliance with Hydro-Quebec’s Institute de Recherche de l’Hydro-Quebec (IREQ), a global leader in graphite purification and production of graphite anodes for lithium-ion batteries

KEY PROJECT

Lac Knife Graphite Mining Project, Quebec, Canada

The Lac Knife Graphite Project, located 35km south of Fermont in the mining friendly province of Quebec, is Focus Graphite’s crown jewel. The property has a proven history including a 1990 drill program which confirmed 8.1 million tons grading 16.7% graphite. The project lay dormant for many years under depressed commodity prices, but has been revived by Focus Graphite which acquired full ownership from IAMGOLD in 2010.

A 2011 drill campaign confirmed a NI 43-101 compliant measured and indicated resource estimate of 4.9 million tons at 15.8% Cgr (Carbon as graphite) and an inferred resource of 3 million tons at 15.6% Cgr. The high concentration of large, medium and small flake graphite makes Lac Knife well-suited to meeting rising global demand for both industrial and technology end uses.

All zones remain open in all directions and at depth. Results of the company’s 2012 drilling campaign of a 5,000 meter infill, and an additional 2,500 meter exploration drilling program were intended to upgrade and expand the deposit to an indicated from inferred. A 2013 drilling program is intended further define the deposit’s limits and refine the company’s understanding of Lac Knife’s potential.

A Preliminary Economic Assessment was published in October 2012. Infrastructure, surface mining and primary processing (95% purity) facility construction activities are planned for completion in 2014. A secondary enrichment, purification and anode manufacturing facility capable of producing technology-grade, 99.9% – 99.99% graphite and anodes for use in lithium ion batteries is scheduled for commissioning in 2015.

SUMMARY

Focus Graphite Inc. (TSXV:FMS) is a technology mining developer with the aim of becoming one of the lowest cost producers of high purity natural flake graphite in the world. It also holds a unique position as the only graphite mining developer in the world whose shareholders own a 40% stake in an emerging graphene investment and industrial scale application development company, Grafoid Inc.

Focus’ management has a particular corporate goal of becoming a dominant global source of technology graphite.

The Company’s management has a history of enterprise success, technology development and innovation.

MANAGEMENT

Donald K.D. Baxter, P. Eng. — President
Holds a degree in Mining Engineering from Queen’s University, is a Registered Professional Engineer and a Qualified Person under NI 43-101. Mr. Baxter served as President of Northern Graphite Corporation between February 2, 2011 and July 8, 2013 and was responsible for all technical aspects relating to the Bissett Creek graphite project including the bankable feasibility study, metallurgical test work and environmental and mine permitting. He also served as Mine Superintendent at the Kearney Graphite mine when it operated in the 1990s. Mr. Baxter served as a Director of Mining at Ontario Graphite Ltd., has worked for Inco and Noranda Minerals as well as numerous consulting projects for base and precious metals.

Gary Economo – Chief Executive Officer, and Director
Mr. Economo has a distinguished business leadership career, serving as CEO for a number of public and private high technology companies during the last 20 years. A former President and CEO of Dynasty Components Inc., Mr. Economo enjoys a long history of graphite marketing and sales for high-tech applications. Immediately prior to joining Focus Graphite Inc., a company he founded with Jeffrey York, he served as Director, Corporate Communications and Investor Relations for Everton Resources Inc.

Over the span of his business career, Mr. Economo provided strategic consulting and representation services to technology companies in North America and Asia. In particular, he has a track record of success and expertise in building shareholder value when tasked with bringing discovery companies to market. Born in Greece and raised in Montreal, Mr. Economo is tri-lingual and lives with his family in Ottawa.

Jeffrey York – Chairman and Director
As a co-founder and Chairman of the Board of Focus Graphite Inc., Mr. York is an activist director in terms of shaping the company’s business growth and development. He graduated from Princeton in 1986 with a degree in Economics and obtained his Chartered Accountant designation in 1989. Mr. York is currently Chief Executive Officer of Farm Boy stores, named one of the best managed companies in Canada in 2011.

A chartered accountant, Mr. York began his professional career with Ward Mallette, Chartered Accountants, before joining Giant Tiger Stores, a regional retail chain which he grew into a national, billion dollar company. During his 20-years with Giant Tiger, he served as President and CEO of the company for 10 years. Mr. York is an active member of the Young Presidents Organization and has been involved in that executive network since 2002.

Benoit Lafrance – Vice President of Exploration
Mr. Lafrance assumes his responsibilities with Focus Graphite after serving three years as scientific researcher for CONSOREM, an applied research group for mineral exploration. His previous experience includes four years with Cogitore Resources Inc. as senior geologist and five years with the Quebec Government geological survey.

Judith T. Mazvihwa-MacLean – Chief Financial Officer
A Vancouver-based geologist, Ms. Mazvihwa-MacLean has over 16-years experience in mineral exploration, mining, management and corporate finance. Prior to joining Focus Graphite Inc., Ms. Mazvihwa-MacLean was the CFO for Golden Harp Resources Ltd., Logan Resources Ltd., and Acme Resources Ltd (formerly, International KRL Resources Corp.).

She also served as a member of the Board for both Logan Resources Ltd., and Acme Resources Ltd. She has a significant academic background. She holds a B. Sc. (Geology) from the University of Zimbabwe, an M. Sc. from Brunel University in England and earned her MBA at Simon Fraser University in British Columbia. She was accredited a Certified Management Accountant by the Certified Management Accountants Society of British Columbia.

Francis Pomerleau – Director
A Civil Engineer, Mr. Pomerleau was born and raised in St. Georges, Quebec. He joined the Pomerleau Group of companies in 1991 as an assistant project manager. Currently, Mr. Pomerleau serves as a Director of the Pomerleau Group and is President of Ottawa-based Pomerleau Ontario. He also serves as Co-President Beaubois, an architectural millwork company.

In addition to his day-to-day management responsibilities, Mr. Pomerleau is actively involved with several industry-linked committees and is Chair of the General Contractor Council of the Canadian Construction Association. Mr. Pomerleau holds a civil engineering degree from École Polytechnique de Montréal, and an MBA from the International Institute for Management Development (IMD) in Lausanne, Switzerland.

Chester Burtt – Director
Mr. Burtt is President of Chester Burtt & Associates Ltd. (CBAL), a corporate and public affairs advisory firm that specializes in connecting private and public companies with domestic and international opportunities. CBAL also arranges for the provision and supply of financial services in mergers, acquisitions and joint ventures. Working through an international network and associate firms, CBAL has a 25-year history of offering a full range of services to assist companies with strategy development and decisions to best suit their investor and corporate relations. Mr. Burtt graduated with a BA from Waterloo Lutheran University and MA from Wilfrid Laurier University in Political Science.

Marc-Andre Bernier – Director, Senior Technical Advisor, and Qualified Person
Mr. Bernier is Focus Graphite’s Qualified Person. A geoscientist with more than 26 years professional experience, Mr. Bernier specializes in exploration geochemistry in support of regional and international mineral development initiatives. A resident of Chibougamau, Quebec, Mr. Bernier has directed or managed mining development projects in Canada, the Caribbean, Africa and South America. Mr. Bernier also holds the position of Senior Geoscientist with the Table Jamésienne de Concertation Minière (TJCM) a regional development agency dedicated to promoting sustainable mineral development across northern Québec and an advisor to Makivik Corporation, the economic and political representative of the Inuit of Northern Québec.

He is past-president of Majescor Resources Inc.; a director of SIMACT Alliance Copper-Gold Inc. (Canada) and Daraina Exploration SARL (Madagascar); a director and executive vice-president of SOMINE SA (Haiti); Vice-President and a director of Chibougamau-Chapais SADC and remains an active member of the Association of Professional Geoscientists of Ontario and the Ordre des géologues du Québec, as well as a member of the Canadian Institute of Mining and Metallurgy.

Dr. Gordon Chiu, B.Sci, M.Sci, MSTP recipient, ND. – Advisor and Chief Scientist
Dr. Gordon Chiu is Focus Graphite’s Chief Scientist and is Vice President and co-founder of Grafoid Inc., Focus Graphite’s joint venture to develop, patent and secure the global rights for specific graphene technologies. Described as an “execution-driven businessman,” Dr. Chiu has combined domestic and international experience in the biomedical, chemical, cosmetic, medical, and technology industries. A lecturer and corporate advisor, Dr. Chiu is engaged in the discovery and research of graphene on behalf of Grafoid and provides advice on project selection with a view to increasing overall shareholder value.

Dr. Chiu is a former research scientist at Pfizer Inc. and Merck & Co., Inc. and has healthcare and marketing experience with strong links to Wall Street and Asia. He holds a B.S. degree summa cum laude in chemistry from Rensselaer Polytechnic Institute; graduated with an M.S. degree in chemistry from Seton Hall University with honors, and is globally distinguished by his acceptance as an MD/PhD candidate under the National Institutes of Health’s Medical Scientist Training Program at the Mount Sinai School of Medicine. He jointly combined his cumulative training with an ND degree in naturopathic medicine from the University of Bridgeport.