Northern Graphite Corporation(NGC:TSXV, NGPHF:OTCQX)The New Strategic Mineral
Forward Looking StatementsThis Presentation may contain “forward-looking information” which may include, but is not limitedto, statements with respect to: timing of the receipt of governmental approvals and/oracceptances; targets, estimates and assumptions in respect of production and prices; amount andtype of future capital expenditures and capital resources; mineral reserves and mineral resources;anticipated grades; recovery rates; future financial or operating performance; costs and timing ofthe development of new deposits; costs, timing and location of future drilling; productiondecisions; costs and timing of construction; operating expenditures; costs and timing of futureexploration; and environmental and reclamation expenses. There can be no assurance that futurerequired regulatory approvals will be obtained or that anticipated transactions or proposed workand construction programmes will be completed satisfactorily. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “is expected”,“budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes” or variations(including negative variations) of such words and phrases, or state that certain actions, events orresults “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-lookingstatements involve known and unknown risks, uncertainties and other factors which may causethe actual results, performance or achievements of the Company and/or its subsidiaries and/or itsaffiliated companies to be materially different from any future results, performance orachievements expressed or implied by the forward-looking statements. Although the Company hasattempted to identify important factors that could cause actual actions, events or results to differmaterially from those described in forward-looking statements, there may be other factors thatcause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking statements contained herein are made as of the date of the applicable public recorddocument which the information is derived from and the Company has disclaimed any obligationto update any forward-looking statements, whether as a result of new information, future eventsor results or otherwise. There can be no assurance that forward-looking statements will prove tobe accurate, as actual results and future events could differ materially from those anticipated insuch statements. Accordingly, readers should not place undue reliance on forward-lookingstatements due to the inherent uncertainty therein.Unless indicated otherwise, all dollar figures are in U.S. dollars.
CAUTIONARY STATEMENT REGARDING MINERAL RESOURCESThis presentation and other information released by the Company uses the terms “resources”,“measured resources”, “indicated resources” and “inferred resources”. United States investors areadvised that, while such terms are recognized and required by Canadian securities laws, the SECdoes not recognize them. Under United States standards, mineralization may not be classified as a“reserve” unless the determination has been made that the mineralization could be economicallyand legally produced or extracted at the time the reserve determination is made. Mineralresources that are not mineral reserves do not have demonstrated economic viability. UnitedStates investors are cautioned not to assume that all or any part of measured or indicatedresources will ever be converted into reserves. Inferred resources are in addition to measured andindicated resources. Further, inferred resources have a great amount of uncertainty as to theirexistence and as to whether they can be mined legally or economically. It cannot be assumed thatall or any part of the inferred resources will ever be upgraded to a higher category. Therefore,United States investors are also cautioned not to assume that all or any part of the inferredresources exist, or that they can be mined legally or economically. National Instrument 43-101Standards of Disclosure for Mineral Projects (“NI 43-101”) is a rule developed by the CanadianSecurities Administrators, which established standards for all public disclosure an issuer makes ofscientific and technical information concerning mineral projects. Unless otherwise indicated, allresource estimates contained herein or in other information released by the Company in the pastand in the future, have been or will be prepared in accordance with NI 43-101 and the CanadianInstitute of Mining, Metallurgy and Petroleum Classification System. The requirements of NI 43-101 are not the same as those of the SEC.
The Newest Strategic Mineral• Growing industrial demand from emerging economies• Prices have tripled• Demand growth from new applications - Li ion batteries, fuel cells, nuclear power• Chinese supply concerns (70% of world production)• EU and USA have named graphite a supply critical mineral• Leading undeveloped deposit with NI 43-101 resource• Located in Canada, close to infrastructure• Simple mining & metallurgy 1
Graphite 101• One of two natural carbon polymers (diamonds)• Highest natural strength/stiffness of any material• Corrosion and heat resistant• Excellent conductor of heat and electricity• High lubricity• Lightest weight of all reinforcements 1
What is Graphite Used For?• 5% annual growth rate this decade – Driven by Asian steel and auto markets• Major end uses – Steel & refractories (41%) – Carbon brushes and batteries (21%) – Automotive parts (14%) – Lubricants (14%) – Other (10%) 1
Green Energy Technologies• Three emerging technologies with potential to use multiples of current annual production• All have operating versions now – Lithium ion batteries – Fuel cells – Pebble bed nuclear reactors 1
Lithium Ion Batteries• Graphite is the anode material - no substitutes• It takes 20-30 times more graphite than Li (by weight) to make Li ion batteries• Current Li ion battery demand 30,000 tpy and growing 20-30% annually - Power tools, motor scooters, etc.• Li ion batteries in cars will lead to rapid demand growth (2kg of graphite in HEV, 25-50kg in EV) 1
Required Annual Flake Graphite Production (000 tonnes) 2020 EV Market Penetration 1% 5% 10% 15% 20% 5% 286 637 1,082 1,520 1,965 10% 479 836 1,274 1,719 2,1632020 HEVMarket 15% 678 1,029 1,473 1,918 2,356Penetration 20% 877 1,228 1,672 2,111 2,555 25% 1,070 1,310 1,865 2,310 2,748 Current annual flake graphite production is 400,000 tonnes -one tonne of Li carbonate equals 0.1879 tonnes of Li metal -one tonne of Li metal requires 10.375 tonnes of graphite -3 tonnes of graphite flake required to make 1 tonne of spherical graphite for Li ion batteries 1
Li Ion Batteries in the News..Congressional stimulus bill includes tens of billions of dollars in loans,grants, and tax incentives for battery and HEV research andmanufacturing to jump-start US industry…..Michigan awards $544 MM in tax credits to four companies with plans toinvest more than $1.7 billion in Li ion battery manufacturing in the state…..National Alliance for Advanced Transportation Batteries has selected aKentucky site to build a $600M automotive Li ion battery plant…..Li battery manufacturer EnterDel plans to invest $237M in newIndianapolis plant….."My administrations intent is to make our state the advanced batterycapital of the world," Michigan Gov. Jennifer M. Granholm….. Samsung predicts global lithium ion battery market will swell to $32billion in 2015 from $ 11billion last year, plans to spend$359 million on battery production this year 1
Fuel Cell Demand• “Large-scale fuel-cell applications are being developed that could consume as much graphite as all other uses combined” – USGS, 2009• All major car companies are working on fuel cell vehicles• “Toyota sees a clear path to commercial introduction of fuel cell vehicles by 2015”• Honeywell, Siemens, Ballard Power and many others targeting fuel cell markets for non-transportation uses• 80kg of graphite in fuel cell vehicle 1
Pebble Bed Nuclear Reactors• Smaller, safer, less costly to permit, build and operate• Fuel is uranium embedded in graphite balls -3,000t of graphite to start, 600-1,000 tpy per 1,000MW• China has operating prototype, and state-owned Huaneg Group is building two pebble-bed reactors of 200MW each -One of top 16 priorities in 2006-2020 Plan -30 planned by 2020 1
Chinese Supply Concerns• 70% of global production from China• Mainly low carbon, low value powder or small flake• Declining production and increasing costs forecast – decreasing quality and deeper operations – increasing labor & environmental standards – modernization and consolidation of industry• Emphasis on value added processing• Export taxes, VAT and export licenses imposed• Production/exports expected to decline• Currency appreciation will increase costs/prices 1
Graphite Market Summary• Growing demand from traditional uses• Growing demand from new industrial applications• Growing demand from green energy technologies• Market dependence on Chinese• Chinese supply issues• Lack of exploration, investment and new projects 1
Graphite Prices on the Rise Price Range for +80 mesh, 94-97%C graphite (US$/tonne) $3,250 $3,000 Demand growth combined with supply concerns have $2,750 led to 78% price increase over the past 4 years $2,500 $2,250 $2,000 $1,750 $1,500 $1,250 $1,000 $750 $500 $250 $0 2000 2000 2001 2002 2003 2003 2004 2005 2006 2006 2007 2008 2009 2009 2010 2011 Low HighSource: Industrial Minerals Magazine 1
Premium Pricing for Size and Purity $/tonne Bissett CreekSize/Purity 80-85% C 90% C 94-97% C +48 Extra Large - - +$3,000 55% -48 +80 Large - $1,250-1,450 $2,500-3,000 35% -80 +100 Medium $1,500-1,900 $1,300-1,450 $2,200-2,500 10% -100 Fine - $1,400-1,800 $2,000-2,400 30% powder Amorphous $600-800 - - 70% ChinaSource: Industrial Minerals Magazine Prices, Roskill Industry Report 1
Bissett Creek Project• 100km east of North Bay, Ontario• Easily accessible, 17km from Trans-Canada hwy, close to infrastructure• Close proximity to major North American steel and automotive markets• Freight cost advantage 100 km 1
Mineral Tenure • Large, 100% owned land position • 18 claims and 1 mining lease totaling 3,000ha • No major community/aboriginal issues • $20/tonne royalty on concentrate produced 1
Large Scalable Graphite Resource •Full feasibility study in 1989 (including P&P reserve*) •2010 NI 43-101 Preliminary Assessment Report 2011 Updated Mineral Resources (Diluted) Indicated Inferred %Cg Tonnage* Cg(%) In Situ Graphite** Tonnage* Cg(%) In Situ Graphite** Cut-off (metric tons) by LECO (metric tons) (metric tons) by LECO (metric tons) 0.986 25,983,000 1.81 470,300 55,038,000 1.57 864,100 1.227 24,588,000 1.85 454,900 50,472,000 1.62 817,600 1.50 19,954,000 1.99 397,100 33,672,000 1.81 609,500 1.75 16,031,000 2.34 375,100 21,417,000 2.21 473,300 2.0 11,921,000 2.50 298,000 14,584,000 2.37 345,600*Historical information is presented for information purposes only. The Feasibility Study and Reserve estimateswere not completed in accordance with NI 43-101 and therefore should not be relied upon.** Mineral resources are not mineral reserves and do not have demonstrated economic viability.***The 43-101 Preliminary Assessment includes inferred mineral resources which are considered too speculativegeologically to have economic considerations applied to them that would enable them to be categorized as mineralreserves. Furthermore, there is no certainty that the results projected in the Preliminary Assessmentwill be realized and actual results may vary substantially. 1
Simple Mining• Deposit at surface, no overburden• Continuously mineralized throughout• Low waste-to-ore ratio• Conventional open pit mining• Operating costs of $1,000/t (contract mining) Typical cross-section of Bissett Creek orebody 1
Simple Metallurgy• Bulk sampling, pilot plant testing, and extensive lab work previously completed by Cominco/Kilborn/BD• Conventional flotation processing (92-95% recoveries)• Confirmed by independent tests in 2007 and 2011• Additional pilot plant testing 4Q 2011 1
Large Flake, High Purity Deposit • 50% +48 mesh jumbo flake 98%C • 30% +80 mesh large flake 94%C • 7% +100 mesh medium flake 94%C • 13% +200 mesh small flake 94%C• Even if some mines increase their production, this will not solve the persisting supply problem for large flake crystalline graphite . Technographit, Feb/2009• Consumption of flake graphite is growing at the expense of amorphous graphite and there is a potential mismatch between supply and demand for flake graphite .Roskill Aug/2009• Inventories are now running so low for certain grades that we are seeing a shortage, especially for 94-97%C, +80 mesh….Timcal Oct. 2009• Presently, large flake graphite supply is very tight due to decreased production capacity of Chinese mines … Technographit, Mar. 2010• The days of cheap, abundant graphite from China are over…. Industrial Minerals Magazine May, 2011 1
Project Parameters • C$70-80 MM capital cost • 2,500 tpd processing rate • 19,000 tonnes of graphite produced per year • <0.50 waste-to-ore ratio • Cash cost of $1,000 per tonne • 40 year life-of-mine with expansion potentialThe 43-101 Preliminary Assessment includes inferred mineral resources which are considered toospeculative geologically to have economic considerations applied to them that would enable them to becategorized as mineral reserves. Furthermore, there is no certainty that the results projected in thePreliminary Assessment will be realized and actual results may vary substantially. 1
Timeline to Production 2010 2011 2012 2013 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2Exploration & expansion drillingConfirm metallurgyPilot plantBankable feasibilityPermittingConstructionFirst production 1
High Price Leverage Conservative 43-101* Current($CDN/tonne)Average price $1,300 $1,700 $2,500Costs 1,000 1,000 1,000Margin $300 $700 $1,500($CDN)Net cash flow ($M) $108.3 $371.5 $937.0NPV ($M @10%) $3.9 $75.6 $180.4IRR (%) 10.6 24.0 42.0Annual cash flow $3.9 $9.3 $28.7*The 43-101 Preliminary Assessment includes inferred mineral resources which are considered toospeculative geologically to have economic considerations applied to them that would enable them to becategorized as mineral reserves. Furthermore, there is no certainty that the results projected in thePreliminary Assessment will be realized and actual results may vary substantially. 1
Northern Graphite Share Structure Shares Outstanding Mindesta Inc. (OTC-BB) 9,750,000 Other shareholders 27,249,054 Total 36,999,054 Warrants 5,653,442 Options 2,950,000 Fully-Diluted 45,602,496 1
Experienced Management & BoardGregory Bowes B.Sc (geology), MBA CEO and DirectorFormerly Senior VP, Orezone Gold CorporationDon Baxter P. Eng PresidentFormerly President, Ontario Graphite CorporationStephen Thompson CA CPA (Illinois) Chief Financial OfficerFormerly Vice President Finance, Ottawa Hydro LimitedRon Little P. Eng DirectorPresident and CEO, Orezone Gold Corporation (ORE:TSX)Iain Scarr B.Sc (geology), MBA DirectorFormer Commercial Director, Rio Tinto industrial minerals division, VP Corporate Development, Lithium OneJay Chmelauskas MBA DirectorPresident/Director, Westerm Lithium Corp.K. Sethu Raman PhD DirectorIndependent Mining ConsultantDon Christie CA DirectorFormer CFO, Continental GoldGeorge Hawley Technical Advisor40 years of experience in industrial minerals R&D, market analysis and development 1
Summary Large, growing industrial market Demand growth from emerging applications Supply concerns with China Large flake, high purity, advanced graphite deposit Good infrastructure and close to markets Experienced management team and board 1
Next Steps• Pilot plant results (1-2 months)• Test production of spherical graphite (1-2 months)• Complete bankable feasibility study (3 months)• Negotiate financing/offtake with strategic partner• Initiate detailed engineering, site preparation, order long lead time equipment (subject to FS results)• Complete permitting in 1Q 2012• Construction of mine – 1 year 1
Northern Graphite Corporation (NGC:TSXV, NGPHF:OTCBB)The Newest Strategic Mineral
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