NOVEMBER 14, 2011 NORTHERN GRAPHITE CORPORATION – SPEC.BUYNGC - TSX V $0.90 NGC Warrant Exercise UpdateTARGET: $2.10PROJ. RETURN: 133% EVENT – Update on Warrant Exercise, and Other DevelopmentsVALUATION: 1.0x NAVPS NGC provided an update this morning on several fronts. To date, 6.2 million of its outstanding warrants have been exercised early resulting in proceeds to theShare Data Company of approximately $2 million.Basic Shares O/S (mm) 37.1Fully Diluted 45.6 IMPACT – Transactions to Provide Trading Liquidity, FinancingMarket Cap ($mm) 33.4Enterprise Value (mm) 32.8 The early exercise of the 6.2 million warrants is an important development for NGCNet Debt - WC ($mm) (0.7) as the funds provided will take the Company through completion of FeasibilityDividend N/A Study (FS), and receipt of its Mine Closure Plan permit. Both events are expected toYield N/A occur in Q1/2012. Following these events, the Company intends to proceed with aNext Reporting Date November financing to allow for the start of construction at the Bissett Creek large flake graphite mine. The timing of the FS completion has been pushed out to January, $1.40 2012 from the end of this year due to delays in commissioning the pilot plant. NGC’s $1.10 independent engineer, SGS, is working through an unusually high backlog of $0.80 projects from other mining clients. Early next week, the pilot plant is expected to $0.50 commence continuous operations, and approximately 130 tonnes of ore are to be Apr-11 Jun-11 Jul-11 Aug-11 Oct-11 processed over a one week period. Data will also be collected for the FS. Mindesta owns 9.75 million common shares of NGC of which 7.3 million remain subject to an escrow agreement as part of NGC’s initial public offering. The terms ofShort-term Technical Target the escrow provide for early release of the shares to permit their distribution to$1.40, next resistance. NGC is technically Mindesta shareholders, subject to TSX Venture approval. Mindesta has applied forneutral in the short-term with $0.90 support. the early release of the shares from escrow to facilitate this distribution. We believe this approval may take place within the next few weeks.Corporate ProfileNorthern Graphite Corporation is an ACTION – NGC Continues to Offer Premier Exposure to Graphitedevelopment-stage company. The Company We regard today’s announcements as key positives in the advancement of Northernholds a 100% interest in the Bissett Creek Graphite Corp., and its flagship Bissett Creek large flake graphite deposit. Thegraphite project. Primary focus is thedevelopment of this asset with an objective to actions should help alleviate a key concern regarding NGC’s limited tradingbecome one of the world’s largest producers of liquidity. Greater liquidity should lower the cost of capital in future financings. Thelarge flake graphite. proceeds realized in the warrant exercise should help fund Bissett Creek to the start of construction. Bissett Creek is one of the most highly prized graphite development projects in theUpcoming Events world due to its unique metallurgy. The large flake content will allow it to realizeCommencement of 100 tonne pilot plant by premium pricing. Because of this NGC should be able to sign an off-take agreementend of November. Test results due within ~4- in the near future, and emerge as a leading supplier of graphite into the battery5 weeks thereafter. manufacturing industry.BFS in Q1/ 2012.FYE Dec 31 Q1/10A Q2/10A Q3/10A Q4/10A 2010A Q1/11A Q2/11A Q3/11E Q4/11E 2011E 2012EProduct Revenue $ 000 - - - - - - - - - - -EBITDA $ 000 (484.2) (125.3) (1,547.9) (1,547.9) (1,547.9) (4,768.9) (6,677.1)Earnings Q1/10A Q2/10A Q3/10A Q4/10A 2010A Q1/11A Q2/11A Q3/11E Q4/11E 2011E 2012EEPS $/sh $0.00 ($0.05) $0.00 $0.00 ($0.05) ($0.00) ($0.04) ($0.04) ($0.03) ($0.11) ($0.15)P/EPS n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/aCFPS $/sh $0.00 $0.00 $0.00 $0.00 ($0.03) ($0.00) ($0.01) ($0.03) ($0.03) ($0.08) ($0.14)P/CFPS n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Matt Gowing, CFA 416.860.8675, firstname.lastname@example.org Raveel Afzaal, Associate 416.860.7666, email@example.com This report has been created by Analysts that are employed by Mackie Research Capital Corporation, a Canadian Investment Dealer. For further disclosures, please see last page of this report.
www.mackieresearch.com intra-day RESEARCH ALERT – NORTHERN GRAPHITE CORPORATION Page 2 RISKS TO TARGET Risks include events that lead to graphite price cyclicality such as actions by Chinese producers who supply up to 80% of the world’s graphite and have dumped product onto the markets in the past and pressured prices. Furthermore, 9.75mm of NGC shares are owned by Industrial Minerals Inc, a bulletin board listed Company whose value is entirely comprised of this ownership stake. RELEVANT DISCLOSURES APPLICABLE TO: NORTHERN GRAPHITE CORPORATION None Applicable. ANALYST CERTIFICATION Each analyst of Mackie Research Capital Corporation whose name appears in this report hereby certifies that (i) the recommendations and opinions expressed in this research report accurately reflect the analyst’s personal views and (ii) no part of the research analyst’s compensation was or will be directly or indirectly related to the specific conclusions or recommendations expressed in this research report.Information about Mackie Research Capital Corporation’s Rating System, the distribution of our research to clients and the percentage of recommendationswhich are in each of our rating categories is available on our web site at www.mackieresearch.com.The information contained in this report has been drawn from sources believed to be reliable but its accuracy or completeness is not guaranteed, nor inproviding it does Mackie Research Capital Corporation assume any responsibility or liability. Mackie Research Capital Corporation, its directors, officers andother employees may, from time to time, have positions in the securities mentioned herein. Contents of this report cannot be reproduced in whole or in partwithout the express permission of Mackie Research Capital Corporation. (US Institutional Clients - Mackie Research USA Inc., a wholly owned subsidiary ofMackie Research Capital Corporation, accepts responsibility for the contents of this report subject to the terms and limitations set out above. US firms orinstitutions receiving this report should effect transactions in securities discussed in the report through Mackie Research USA Inc., a Broker-Dealer registeredwith the Financial Industry Regulatory Authority (FINRA)). Toronto 416.860.7600 - Montreal 514.399.1500 - Vancouver 604.662.1800 - Calgary 403.218.6375 - Regina 306.566.7550 - St. Albert 780.460.6460