2022-02-23 09:37 ET - News Release

Mr. Gregory Bowes reports


Northern Graphite Corp. has entered into an agreement that provides it with the option to acquire a 100-per-cent interest in the Mousseau West graphite project, subject to the owners retaining a 2-per-cent net smelter royalty (NSR). The property is located approximately 80 kilometres, and in economic trucking distance, from the producing Lac-des-Iles (LDI) graphite mine in Quebec. On Dec. 2, 2021, Northern announced that it had entered into binding purchase agreements to acquire LDI and a graphite deposit/ processing plant in Namibia from subsidiaries of Imerys SA.

Pursuant to the option agreement, Northern has agreed to pay $50,000 for the six-month exclusive right to conduct due diligence on the property. If the company elects to exercise its option, it can acquire Mousseau West through the payment of $500,000 in cash and the issuance of 900,000 common shares of the company, subject to the acceptance of the TSX Venture Exchange. Northern will also have the right to acquire the 2-per-cent NSR from the owners at any time upon the payment of $1-million.

A technical report entitled "Technical Report and Resources Estimate of the Mousseau West property," dated Sept. 24, 2013, was completed by Alain Tremblay, geol eng, and Yvan Bussieres, geol eng, in accordance with the requirements of National Instrument 43-101, Standards of Disclosure for Mineral Projects. It was filed on SEDAR on Oct. 17, 2013, and is available under the profile of NanoXplore Inc. From 1996 to 2008, Mr. Tremblay was in charge of exploration at the LDI mine, and is well acquainted with the geology and mining of graphite mineralization in the area. The report states that the nature of mineralization at Mousseau West is similar to LDI, which "indicates high confidence in the possibility of mining, milling and concentrating it into a final graphite product suitable for customers."

Gregory Bowes, chief executive officer, commented: "The company's main priority when the Imerys transaction closes is to extend the mine life at LDI, increase production back to its nameplate capacity of 25,000 tonnes per year and solidify its position as the only producing graphite mine in North America. The Mousseau West deposit not only provides an attractive option for meeting these objectives, it also has the potential to become a significant project in its own right." He added, "The world requires significantly more graphite production to support the evolution to electric vehicles and Northern believes that high-quality deposits located close to infrastructure in politically stable jurisdictions will become very valuable commodities."

Mousseau West consists of 12 claims totalling 489 hectares in size. It is located approximately 150 kilometres north of Montreal in the Mont-Laurier area and can be accessed from Highway 117 over 12 kilometres of good-quality logging roads. Over 7,500 metres of drilling have been carried out on the property and the report estimates that it contains an inferred resource of 4.1 million tonnes grading 6.2 per cent graphitic carbon (Cg). The resource includes 2.7 million tonnes that have been drilled on 25-metre centres which the report states "are considered to have reached a high level of definition and do not need additional work." In 1990, Derry, Michener, Booth & Wahl (DMBW) estimated probable reserves of 1.7 million tonnes grading 7.2 per cent Cg and possible reserves of 700,000 tonnes grading 7.8 per cent Cg.

The company is classifying both the inferred resources contained in the report and the reserves calculated by DMBW as historical estimates as the company's qualified person (as defined by National Instrument 43 101) has not performed sufficient work to classify them as either current mineral resources or mineral reserves. However, the company considers the data to be relevant as they are indicative of potential mineralization on the property. The company is not aware of any more recent resource estimates.

The Mousseau West deposit outcrops at surface and the report indicates that the morphology of the deposit is potentially very suitable for open-pit mining, with a low waste-to-ore stripping ratio. Also, zonation in the deposit allows access to richer mineralization first. The deposit is 250 metres long and lies at the western end of an electromagnetic conductor that extends another 400 metres east to the property boundary. This area represents a prime exploration target with the potential to expand the size of the deposit. Other conductors also exist on the property and represent additional exploration targets. The graphite is mainly hosted by calcitic marbles which provide buffering capacity for the low level of sulphides. Like LDI, this likely indicates that any tailings would be non-acid generating.

Update on the Imerys transaction

Closing of the Imerys transaction is subject to a number of conditions, including acceptance of the TSX Venture Exchange and completion of $55-million (U.S.) in related equity/stream/royalty/debt financings. The first tranche of the equity financing has closed and the company anticipates that the royalty/stream/debt financing and the Imerys transaction will close within two weeks.

About Northern Graphite Corp.

Northern Graphite is a Canadian company listed on the TSX Venture Exchange, and focused on becoming a world-leading producer of natural graphite and upgraded, high-value products critical to the green energy revolution, including anode material for lithium-ion batteries/electric vehicles, fuel cells and graphene, as well as advanced industrial technologies.

Completion of the transaction will enable Northern to become the only North American and the world's third-largest graphite-producing company outside of China. Northern will also own two large-scale development projects that have high-quality flake graphite and are located close to infrastructure in politically stable jurisdictions. These projects will enable the company to significantly expand production to meet rapidly growing demand from the EV/battery markets.

Qualified person

Mr. Bowes, BSc, MBA, PGeo, is a qualified person as defined under National Instrument 43-101, and has reviewed and approved the content of this news release, including data disclosed with respect to the Mousseau West property.

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