THE MOST ADVANCED BATTERY-GRADE GRAPHITE PROJECT IN NORTH AMERICA
Corporate Presentation — March 2015
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THE MOST ADVANCED BATTERY-GRADE GRAPHITE PROJECT IN NORTH AMERICA Corporate Presentation March 2015 DISCLAIMER This presentation contains forward-looking information within the meaning of Canadian securities legislation. All
Corporate Presentation — March 2015
This presentation contains “forward-looking information” within the meaning of Canadian securities legislation. All information contained herein that is not clearly historical in nature may constitute forward-looking information. Generally, such forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking information 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 Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: (i) volatile stock price; (ii) the general global markets and economic conditions; (iii) the possibility of write-downs and impairments; (iv) the risk associated with exploration, development and operations of mineral deposits; (v) the risk associated with establishing title to mineral properties and assets; (vi)the risks associated with entering into joint ventures; (vii) fluctuations in commodity prices; (viii) the risks associated with uninsurable risks arising during the course of exploration, development and production; (ix) competition faced by the resulting issuer in securing experienced personnel and financing; (x) access to adequate infrastructure to support mining, processing, development and exploration activities; (xi) the risks associated with changes in the mining regulatory regime governing the resulting issuer; (xii) the risks associated with the various environmental regulations the resulting issuer is subject to; (xiii) risks related to regulatory and permitting delays; (xiv) risks related to potential conflicts of interest; (xv) the reliance on key personnel; (xvi) liquidity risks; (xvii) the risk of potential dilution through the issue of common shares; (xviii) the Company does not anticipate declaring dividends in the near term; (xix) the risk of litigation; and (xx) risk management. Forward-looking information is based on assumptions management believes to be reasonable at the time such statements are made, including but not limited to, continued exploration activities, no material adverse change in metal prices, exploration and development plans proceeding in accordance with plans and such plans achieving their stated expected outcomes, receipt of required regulatory approvals, and such other assumptions and factors as set out herein. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking information, there may be other factors that cause results not to be as anticipated, estimated
differ materially from those anticipated in such forward-looking information. Such forward-looking information has been provided for the purpose
Accordingly, readers should not place undue reliance on forward-looking information. Forward-looking information is made as of the date of this press release, and the Company does not undertake to update such forward-looking information except in accordance with applicable securities laws.
Trades: TSX.V: FMS | OTCQX: FCSMF | FSE:FKC
Lac Knife Graphite Deposit
mining area
FMS is the leader in the graphite space, with no other company having reached this level of development
Lac Knife, Québec, Canada
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Lac Knife
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Lac Knife
Lac Knife, Québec, Canada
LABRADOR TROUGH RAILWAY HYDRO ELECTRICAL STATION POWERLINE ROAD
Fermont
N F L
Churchill Falls Fermont
Wabush Labrador City
Manic 5
Q U E B E C O N T A R I O L A B R A D O R
Schefferville
LAC KNIFE
Sept-Iles Port-Cartier Gaspé
LABRADOR TROUGH
PLAN NORD
Lac Knife, Québec, Canada
The Canadian province of Québec is one
rated mining jurisdictions in the world. Electricity costs — a key input in mining
are among the lowest in North America.
Graphite Occurs in 3 Natural Forms
Amorphous: 60 - 85% C (Low purity, low price, low growth) Flake: > 85% C (Most desirable, greatest demand) Vein: > 90% C (Very niche applications, small market, fmat growth)
Graphite is predominantly used in refractory applications when refining steel; also used in automotive brakes, clutches, gaskets, and lubricants…
and tomorrow
Electronics, Construction Materials, Nuclear and the Graphene Revolution
2020 Annual Demand
Flake Graphite Demand in Tonnes (2013)
Total: 375,000 tpa Other 10,000 Industrials 80,000 Batteries 82,000 Refractories, Foundries, Crucibles 185,000
Source: Industrial Minerals Data (2014)
6,500+ tonnes of graphite was used by these 5 companies in 2013
Brand Battery Graphite Used 16.5 Volt kWh 18kg 19 i3 kWh 21kg 24 Leaf kWh 27kg 4.4 Prius kWh 5kg 41.8 RAV4 kWh 48kg 85 Model S kWh 96kg Gigafactory 96 kg Launch per unit 2017
70,000 CARS SOLD 11,000 CARS SOLD 94,500 CARS SOLD 48,600 CARS SOLD 1,107 CARS SOLD 25,000 CARS SOLD 500,000 UNITS ESTIMATED 40,000 ORDERS (2014) 1,260 TONNES 231 TONNES 2,552 TONNES 243 TONNES 2,600 ORDERS (2014) 53 TONNES 125 TONNES 48,000 TONNES PROJECTED 2,400 TONNES 3,800 TONNES (PROJECTED 2014)
Source: Industrial Minerals Data (2014)
(Battery-Ready Product)
Focus Graphite has successfully produced and tested Spherical Graphite for Li-ion batteries
benchmark commercial SPG
Feasibility Study Cash Flow Model
Natural Flake Graphite vs. Synthetic Graphite
Focus Graphite Coin Cell Test Results Reversible Capacity Irreversible Capacity Loss Surface Area
Large Carbon coated SPG Grade (D90=42µm) 362.1 6.80 0.64 Medium Carbon coated SPG Grade (D50=24µm) 363.7 1.44 0.48 Fine Carbon coated SPG Grade (D50=17µm) 365.1 1.01 1.14
US and EU Governments classified Graphite as a “Critical Material” for industrial and national security purposes
supply and consolidating production
USA — No Graphite Mines
Graphite Supply Squeeze
China 76% South America 11% Asia 6% Europe 3% North America 2% Other 1% Source: Industrial Minerals
Large Flake Graphite — 94%–97% Cg, +80 mesh (CIF, Europe) $3,000 $2,500 $2,000 $1,500 $1,000 $500
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Expected Production
Focus Graphite Cost: $441/t Current Price Average USD$/tonne
Source: Industrial Minerals Data (2014)
fjled August 8, 2014
southwest of Fermont
camp and home to billion-dollar mining projects — ArcelorMittal, RioTinto’s IOC, Cliffs Natural Resources’ Bloom Lake and Wabush Mines
ha/7,500 acres
all-season Highway 389
Port-Cartier and the Port of Sept-Iles
Lac Knife, Québec, Canada
Low Production Costs
Market Prices
“The days
abundant graphite from China are over” – Industrial Minerals Magazine, (May 2011)
Mineral resources which are not mineral reserves have not demonstrated economic viability
Total 197 drill holes = 18,320 metres
Lac Knife Open Pit Mine
700 metres Long 400 metres Wide 100 metres Deep
Lac Knife Mineral Resource Estimate @ 3% Graphitic Carbon (Cg) Cut-off Grade
Categories
Tonnage (tonnes) Graphitic Carbon In Situ Graphite (tonnes) Measured 432,000 22.66 % 102,000 Indicated 9,144,000 14.35 % 1,312,000 Measured and Indicated 9,576,000 14.77 % 1,414,000 Inferred 3,102,000 13.25 % 411,000
Lac Knife Open Pit Mineral Reserves
@ 3% Graphitic Carbon (Cg) Cut-off Grade
Categories
Tonnage (tonnes) Graphitic Carbon In Situ Graphite (tonnes) Proven 429,000 23.61 % 101,000 Probable 7,428,000 14.64 % 1,088,000 Proven and Probable 7,857,000 15.13 % 1,189,000
Flake Size & Purity
SGS Lakefjeld Pilot Plant Tests
high-margin product
very cost-effective purification processes
Size Distribution Total Carbon Grade
Coarse (+80 mesh) 33.5% 98.3% Medium and fjne (-80 to +150 mesh) 29.8% 98.2%
16.6% 98.0% Average of all sizes (+200 mesh) 98.1%
20% 91.1%
Flotation Concentrate 96% Cg Crystalline Flake Graphite Concentrate after polishing 98.3% Cg Continuous Thermal Purification 99.98% Cg
ROM Product $441/t
Synthetic Graphite Facts
Graphitizing an Oil byproduct
Natural Graphite SPG Facts
Performs 10-20% better than Synthetic
Synthetic Graphite Conclusion
Synthetic vs. Natural
Graphite Leaderboard
Company Feasibility Study Completed Offtake Agreement
Price (USD$) Production Costs (CAD$) Head Grade Flake Distribution Yes Yes $1,713 $441 15.13% Cg 34% (+80) at 98% Cg 30% (+150) at 98% Cg 16% (+200) at 98% Cg 20% (-200) at 91% Cg Northern Graphite Yes No $1,800 $795 1.89% Cg 76% (+80) at 95% Cg 5% (+100) at 97% Cg 19% (-100) at 95% Cg Flinders Resources No Yes $1,199 $662 10.3% Cg 40% (+80) at 95% Cg 28% (+140) at 92% Cg 32% (-140) at 88% Cg Mason Graphite No No $1,525 $390 17.8% Cg 29% (+80) at 96% Cg 14% (+150) at 92% Cg 57% (-150) at 91% Cg Energizer Resources Yes No $1,689 $535 7.04% Cg 46% (+80) at 97% Cg 22% (+150) at 97% Cg 10% (+200) at 98% Cg 22% (-200) at 97% Cg
Revenue Estimates
Annual Milling Capacity 323,670 tpy Concentrate Production 44,300 tpy Cost Per Tonne of Concentrate $441/tonne Annual Operating Costs $20M Annual Operating Margin $56M Selling Price Average USD$1,713/tonne Strip Ratio First 5 years 1.26:1 Life-of-Mine (LOM) average 1.7:1
Revenue Breakdown
Large Flake $26M Medium Flake $9M Fine Flake $41M Total: $76M
Financial Results
Initial Capital Cost $166M* *Includes $17M contingency Net Present Value 8% discount rate $383M 10% discount rate $291M Pre-Tax IRR 30.1% Post-Tax IRR 24.1% Payback Period 3 years
Filed August 8, 2014
2011
Q2 Closed $15m Bought Deal Closed $20m Bought Deal Q4 NI 43-101 Mineral Resource Estimate
2012
Q1 Closed $10m Bought Deal Q2 Infjll Drilling and Exploratory Drilling Program at Lac Knife: Total: 5,638 m Q4 Preliminary Economic Assessment Federal and Provincial Environmental Permitting Begins
2013
Q2 Infjll Drilling Program at Lac Knife Commission Pilot Purification Plant Q3 Infjll Drilling Program at Lac Knife Pilot Plant Results Q4 Updated NI 43-101 Preliminary Economic Assessment Industry-fjrst Offtake Agreement
2014
Q1 Updated NI 43-101 Mineral Resource Estimate Q2 Successfully Produced and Tested Coated SPG Graphite for Li-ion Batteries Q3 NI 43-101 Feasibility Study Filed Q4 Pre-Development Agreement with the Uashat Mak Mani-Utenam First Nation ESIA (Environmental and Social Impact Assessment) Filed
2015
engineering (FEED)
Graphite’s value-added graphite plant and further refjning and optimization of its spherical graphite process
engineering and build-out to the Lac Knife mine site
mining leases
Tickers: TSX-V:FMS OTCQX:FCSMF FSE: FKC
As of February 4, 2015 Recent Share Price $0.44 Market Capitalization $49.4M Shares (Issued & Outstanding) 110,942,839 Options 9,205,000 Warrants 4,201,941 Shares (Fully Diluted) 124,349,780 Management & Insider Ownership ~10% Cash (no debt; as of September 30, 2014) ~$2.2M *Currency is Canadian dollars (CAD$)
metallurgical fmow sheet optimization
two decades of experience in mineral exploration, mining, management, and corporate finance
as a mining project developer
experience in the environmental aspects of the mining industry including, mine closures
12 years of experience in mineral exploration, scientifjc research and geological survey
Developer and co-developer of a number of U.S., European and Canadian patents related to carbon processing methodologies and processing equipment
expert, specializing in the development and marketing of graphite and value-added graphite products
More than 100 years of combined Graphite Mining, Processing and Value-Added Product Experience
Jeffrey York Chairman of the Board Chief Executive Offjcer of Farm Boy Inc. A graduate of Princeton University, Mr. York is the former President and Chief Executive Offjcer of Giant Tiger Stores Limited. Gary Economo Chief Executive Officer and Director Distinguished business leadership career, serving as Chief Executive Offjcer for a number of public and private high technology companies during the last 30 years. Chester Burtt Director President of Chester Burtt & Associates Ltd. (CBAL), a corporate and public affairs advisory fjrm, specializing in connecting private and public companies with domestic and international opportunities. Francis Pomerleau Director Serves as Senior Vice President of Ontario & Western Canada at Pomerleau Inc. as well as President of Pomerleau Ontario. He served as Vice President of Construction of Pomerleau Inc. Marc-André Bernier Director
development initiatives. Mr. Bernier has directed or managed mining development projects in Canada, the Caribbean, Africa, and South America.
Upcoming Milestones
electricity connection
Current Developments
Probable Mineral Reserves grading 15%Cg
$458/t of concentrate to $441/t
updated January 2014
spherical graphite product for Lithium ion battery market
The Most Advanced Battery-Grade Graphite Project in North America
tied to strategic partnerships based on an offtake agreement
Financial Services Corporation
Donald Baxter, P.Eng. President and Chief Operating Offjcer T +1 705-787-5942 E dbaxter@focusgraphite.com Focus Graphite Inc. 130 Albert Street Suite 912 Ottawa, Ontario K1P 5G4 CANADA T +1 613-241-4040 E info@focusgraphite.com W focusgraphite.com
focusgraphite.com