Executive Summary Presentation         Summer 2012
This presentation includes certain statements that may be deemed ʺforward‐looking statementsʺ. All statements in thisdiscu...
 Vision - Mega will become the leading supplier of high grade graphite products for  emerging technology applications by ...
Corporate: Private - TSX Listing Q3 2012                Founded: 2009              Employees: 20>               Revenues: ...
 Business Model – Mega Graphite Inc. (MEGA) is in the pre-production phase of mining, processing and  purifying of natura...
Canada                                                Australia P1 – Bedford , Kingston, ON (NI 43-101)                 P5...
Uley Graphite – Ready to produce
Uley Existing Plant is Ready
Uley Crushing Circuit
Uley Crushing Circuit and Inventory
 Graphite is mined around the world by both open pit and underground methods. While flake graphite and  amorphous graphit...
MEGA has signed a letter of intent with Chotanagpur Graphite Industries (CGI) to create anew joint venture to mine, mill, ...
 Industry Pricing - pricing within the graphite sector is typically described as being “fully  negotiated”. As such, supp...
 Graphite is composed of carbon atoms arranged in hexagonal groups that form “sheets”.  These sheets, which have a weak b...
Country             2004        2008        2012        2014  Supply and           Demand China             678,230     7...
World Graphite Production 2010                      World Graphite Production 2014             1,165,000 tonnes           ...
Mobile        Engineering       Carbon          Hot Metal    Refractories  Energy         Materials      Additives for    ...
   Majority of the automotive growth is expected to be from the EV and PHEV (plug-in hybrid)    segment   The 2020 EV an...
 Implications     Today Li-ion battery technology is relatively big, heavy and expensive; making       pure electric veh...
Open Pit Mining    Liberation and Concentration          through Flotation Classification by Screening / Sieving          ...
Milling: Jet, Attrition, Ball Mill      Shaping: Mechanical Fusion  Product Distribution Screening Thermal-Chemical Purifi...
• Annual Production –20,000 tonnes                         • Base Price: $2,000 per Tonne / HP Price: $7,200 per Tonne    ...
ANNUAL                                                                                        GRAPHITE               GRAPH...
The projected demand for natural graphite provides a solid basis for Mega Graphites business plans. The versatilechemical ...
MEGA has assembled a strong group of mining and management professionals that is confident will achieve itsgoals at every ...
 Security of Supply – ownership of high quality graphite flake properties in stable political environments such  as Canad...
Mr. Paul Gorman                       President        MM               pgorman@megagraphite.com                         M...
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Exec pres july 2012

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Exec pres july 2012

  1. 1. Executive Summary Presentation Summer 2012
  2. 2. This presentation includes certain statements that may be deemed ʺforward‐looking statementsʺ. All statements in thisdiscussion, other than statements of historical facts, which address future production, reserve potential, explorationactivities and events or developments that the Company expects, are forward‐looking statements. Such forward-lookingstatements include, without limitation: (i) estimates of future graphite prices, supply, demand and/or production; (ii)estimates of future cash costs; (iii) estimates of future capital expenditures; (iv) estimates regarding timing of futuredevelopment, construction, production or closure activities; (v) statements regarding future exploration results; (vi)statements regarding cost structure, project economics, or competitive position, and; (vii) statements comparing theCompany’s properties to other mines, projects or metals. Although the Company believes the expectations expressed insuch forward‐looking statements are based on reasonable assumptions, such statements are not guarantees of futureperformance and actual results or developments may differ materially from those in the forward‐looking statements.Factors that could cause actual results to differ materially from those in forward‐looking statements include market prices,exploitation and exploration successes, continued availability of capital and financing, and general economic, market orbusiness conditions. Investors are cautioned that any such statements are not guarantees of future performance, that theCompany expressly disclaims any responsibility for revising or expanding the forward‐looking statements to reflect actualresults or developments, and that actual results or developments may differ materially from those projected, in the forward‐looking statements.Forward Looking Statement
  3. 3.  Vision - Mega will become the leading supplier of high grade graphite products for emerging technology applications by milling and processing its own natural flake supply and selling directly to end-users. Strategy – Mega will utilize its assets to complete a vertically integrated multi-plant production and purification facilities by having mining operations in Australia , Canada & India and by leveraging its licensing agreement with Hydro Quebec Capital Budget – capital expenditures budget (capex) projected at approximately $35 million for Uley graphite mine re-start and base purification plant operation in Adelaide Market Opportunity – capitalize on a growing supply / demand gap for natural graphite as a strategic material both in traditional and emerging market applications Competitive Advantage – Mega will own the advantageous “reliability of supply” position; enhanced with delivery and price stability; offer a suite of high-purity products; work directly with end-use customers. Mega currently has LOI’s with 5 companies representing 26,000 tonnes of finished product. Key Strengths - **access to multiple high-grade natural graphite properties **experienced mining and mineral processing team **proprietary licence technology for battery grade graphite **graphite sales/marketing management teamInvestment Summary
  4. 4. Corporate: Private - TSX Listing Q3 2012 Founded: 2009 Employees: 20> Revenues: $35 Million (projected 2013) Capex Required: $6 million first phase / $29 million for upgrade Products: Natural flake graphite, Purified graphite up 99.9% Facilities and Offices: North America, Australia and India 29.6 Million (basic) Shares O/S: 30.8 Million (fully diluted) Shares O/S Post Uley approx 60.0 Million Acquisition from SER: Share Value $N/A (upon listing)MEGA At a Glance
  5. 5.  Business Model – Mega Graphite Inc. (MEGA) is in the pre-production phase of mining, processing and purifying of natural graphite . Mega is currently purchasing 100% of the Uley Graphite Mine in the South of Australia from Strategic Energy Resources. A previous producer, Mega plans to have Uley back into full production in 2013. The deal will close in June, 2012 The Company’s primary target markets include high purity graphite applications in lithium-ion batteries, graphene-based flat panel displays, and expandable graphite used in fire retardants, high performance gaskets, conductive fillers, and electromagnetic pulse and radiation shielding History – privately held Ontario corporation established in September 2009. Acts as the main holding company for current and planned graphite property acquisitions in North America. Founded by the key shareholders most of whom are active in the development of the Company’s business. Currently there are 40 shareholders Capital Investment - to date approximately $5.8Million on property development, operations and setup costs MEGA Properties  Uley Graphite Mine, Port Lincoln, Australia  North Burgess, Kingston, Ontario  Bedford Graphite Mine, Kingston, Ontario  Treelined Lake Graphite Mine, Kenora, Ontario  Separation Lake Rare Elements Mine, Kenora, Ontario Capex Requirements - $35 million - completion of acquisitions and commencement of plant construction Restart of Uley mill. Building upgrade facility in Adelaide, Australia Executive Summary
  6. 6. Canada Australia P1 – Bedford , Kingston, ON (NI 43-101) P5 -Uley Graphite, Port Lincoln, Adelaide P2 – Burgess, Kingston, ON (NI 43-101) -Location of the mine has existing roads, P3 – Treelined Lake, Kenora, ON. close to shipping and required infrastructure P4 – Separation Lake, Kenora, ON (NI 43-101) -All permits are in place to start production AUSTRALIA Rare element property P4 P3 P5 P2 P1Mega Properties
  7. 7. Uley Graphite – Ready to produce
  8. 8. Uley Existing Plant is Ready
  9. 9. Uley Crushing Circuit
  10. 10. Uley Crushing Circuit and Inventory
  11. 11.  Graphite is mined around the world by both open pit and underground methods. While flake graphite and amorphous graphite are both mined open pit and underground, lump (vein) graphite is only mined underground in Sri Lanka. Open pit mines employ heavy equipment (i.e. front end loaders, bulldozers) to scoop up the ore, which is usually put in trucks (Euclids) and moved to the plant. Underground graphite mines employ drilling and blasting to break up the hard rock (ore), which is then moved by mine cars pulled by a locomotive, or moved by automotive vehicles, to the surface and then to the plant. In less-developed areas of the world such as China, the ore is often mined by pick and shovel and transported by mine cars pushed by labourers. The great majority of world flake graphite production is crushed and ground and then beneficiated by flotation. Treating graphite by flotation typically requires a series of flotation cells to obtain a purer concentrate. In the milling process, the incoming graphite products and concentrates can be ground before being classified (sized or screened), with the coarser flake size fractions (below 8 mesh, 8-20 mesh, 20-50 mesh) carefully preserved, and then the carbon contents are determined. Air classification using winnowers is also used to capture coarser flake and increase the head grade of feed to be subsequently concentrated. Following beneficiation, standard blends can be screened from the different fractions, each with a certain flake size distribution and carbon content. Custom blends can also be made for individual customers who want specific flake size distributions and carbon content. Rough graphite is typically classified, ground, and packaged at a graphite mill; more complex or high-purity formulations are treated, mixed and packaged at an upgrade facility. Environmental impacts from graphite mills consist of air pollution including fine particulate exposure of workers and also limited soil contamination from powder spillages. Dust masks are normally worn by workers during the production process to avoid worker exposure to the fine airborne graphite. Graphite Mining and Milling
  12. 12. MEGA has signed a letter of intent with Chotanagpur Graphite Industries (CGI) to create anew joint venture to mine, mill, and produce purified graphite from CGI’s properties,located in Eastern India in the Jharkhand Region. CGI has been supplying high qualitynatural flake graphite to Europe and Asia since 1976 and has selected Mega as a partnerto increase production, purification efficiency and global reachThe properties are divided into two geographical locations, located in the Northwest districtof Palamau in the State of Jharkhand.P1 – Bishrampur Project (Stage 1: Q1 – 2012)The Bishrampur Property consists of 3 contiguousclaims totaling approximately 125 acres of area. Themines are known for high fraction of large flakematerial and being easy to mill due to the soft rockstructures.P2 – Satbarwa Project (Stage 2: Q1 – 2013)The Satbarwa properties consists of 4 contiguousproperties with a combined area of around 120 acres.The property is adequately connected to major citiesthrough roadways. Water supplies in the area are P1abundant. P2 India Joint Venture with CGI
  13. 13.  Industry Pricing - pricing within the graphite sector is typically described as being “fully negotiated”. As such, suppliers and customers establish prices based on meeting particular specifications and needs Price Drivers –The principal drivers of price are reliability of supply, quality, and the ability to meet customer specifications Grade Low HighPrice Increases – projected price 99% to 99.9% C, +400increases will be driven by: $3,500 $35,000 mesh  Supply constraints from China as 94% to 97% C, +80 $1,900 $2,500 mesh their internal demand grows. 90% C, +80 mesh $1,250 $1,375  Growth in traditional applications 94% to 97% C, -80 $1,650 $1,795 such as automotive parts. +100 mesh 90% C, -80 +100 $1,070 $1,150  Rapid increases in new battery mesh applications & new materials 85% to 87% C, -80 $989 $1,020 +100 mesh such as graphene, both of which 94% to 97% C, +100 require specialized processing $1,425 $1,489 mesh such as that planned by MEGA 90% C, -100 mesh $975 $1,050 Amorphous powder $730 $850 80% to 85CGraphite Pricing Synthetic 99.95% C2 $6,200 $19,000
  14. 14.  Graphite is composed of carbon atoms arranged in hexagonal groups that form “sheets”. These sheets, which have a weak bond between them, form the graphite crystals, and allow other atoms to enter regions between the layers causing them to slide over one another The delocalized electrons (pi orbital electrons) between the hexagonal atomic carbon sheets add to the element’s essential properties such as conduction of electricity and the application as a dry lubricant. The following are the main properties of graphite that make it suitable for a variety of applications: highly resistive to chemical corrosion, highly conductive, electrically and thermally, resistant to heat (melting temperature of 3,527 degrees C), resistant to thermal shock, chemically inert and highly refractory Properties of Graphite
  15. 15. Country 2004 2008 2012 2014  Supply and Demand China 678,230 799,554 924,283 967,805 Balance India 116,268 137,066 182,828 220,348 There is widespread market Brazil 73,958 87,188 113,575 141,075 consensus that internal North Korea 29,067 34,267 40,707 43,707 consumption within China as Canada 27,129 31,982 40,493 87,710 well as demands from new Madagascar 14,534 17,134 20,354 22,376 applications, may create a Mexico 14,310 16,870 20,041 22,031 significant gap in the supply and demand balance by Czech Republic 9,689 11,422 16,069 22,308 2014 .This gap could be as Ukraine 7,267 8,567 10,177 16,145 much as 200,000 tonnes of Zimbabwe 9,948 11,728 13,932 15,315 high purity product per year Others 7,879 9,288 13,046 14,342 unless new capacity is Total 988,279 1,165,066 1,395,505 1,573,162 developed*tonnes per year Industry Conditions- *systematic price increases for large flake *new product development, particularly in high purity applications such as lithium-ion batteries, solar panels, and semiconductors *constrained supply from major suppliers; only one current North American supplierGraphite Production
  16. 16. World Graphite Production 2010 World Graphite Production 2014 1,165,000 tonnes 1,573,000 tonnes 4% 18% Steelmaking 17% 21% Steelmaking 32% Refractories 20% Refractories3% Automotive Parts Automotive Parts 12% Lubricants 25% New Materials Other applications 11% Other applications 31% Batteries Batteries 6% Graphite Industry
  17. 17. Mobile Engineering Carbon Hot Metal Refractories Energy Materials Additives for Forming & Metallurgy Polymers Alkaline Solar Lubricants Refractories Conductive Batteries Technologies for Seamless Plastics Crucibles Zinc-C Semiconductor Conductive Tubes Hot Metal Batteries Coatings & Coatings & Descaling Toppings Paints PaintsLithium-Ion Agents Powder Carbon Fibers Batteries Forging Metallurgy FlameFuel Cells Graphite Foils RetardantsTraditional and Emerging Market Applications
  18. 18.  Majority of the automotive growth is expected to be from the EV and PHEV (plug-in hybrid) segment The 2020 EV and PHEV propulsion market is $46 billion of 71% of the total market About $400 per vehicle for battery anode materials – most Li-ion technologies will use high purity graphite based anode materials About 8.2m large format batteries per year for Evs and PHEVs by 2020 71% Energy storage for smart grid and other applications like “cut the cord” appliances and consumer electronics will be about equal to the automotive segment Source: Electric Transport Advisors LLC studyEnormous Growth from Electric Batteries
  19. 19.  Implications  Today Li-ion battery technology is relatively big, heavy and expensive; making pure electric vehicles challenging without significant subsidies  Hybrid and plug-in hybrid offerings are getting scale up and cost down for automotive Li-ion in next 3-4 years  By 2015, pure EVs will become viable in more automotive segments 2011 2015 Est. 2020 Est. Energy 24 kWh 22 kWh 20 kWh Capacity Cost $14,500 $10,145 $7,154 Range 130 100 miles 170 miles miles Weight 268 kg 203 kg 136 kgElectric Drive Transition Moving Quickly Source: Electric Transport Advisors LLC study
  20. 20. Open Pit Mining Liberation and Concentration through Flotation Classification by Screening / Sieving • Open pit mining of graphite reduces capital expendituresPurification, Intercalation, Exfoliation, • Liberation & concentration is Communition accomplished through grinding circuits and a series of float cells • Purities up to 98.5% can be achieved Delivery either thermally and/or chemicallyBase Plant: Mining and Milling
  21. 21. Milling: Jet, Attrition, Ball Mill Shaping: Mechanical Fusion Product Distribution Screening Thermal-Chemical Purification Drying Carbon Coating Thermal Vapour DecompositionUpgrade Plant Milling & Coating
  22. 22. • Annual Production –20,000 tonnes • Base Price: $2,000 per Tonne / HP Price: $7,200 per Tonne • Base COGS: $700 per Tonne / HP COGS: $3,600 per Tonne • Base EBIDTA: $1300 per Tonne / HP EBITDA: $3,600 per Tonne GOALS • Reliable Canadian and Australian •Superior customer-service, reliable supplier delivery, stable domestic operations• Competitively priced high purity flake with hands-on management VALUE PRODUCT PROPOSITION CORE MARKET ACTIVITIES FOCUS • Emerging Markets - lithium ion batteries, •Graphite Mining, Concentrating. Upgrading . graphene Business Development - marketing / product applications, expandable graphite sales. • Traditional Markets - refractories, brake linings, • Research & Development - internal capability; lubricants external strategic partnering Corporate Strategy
  23. 23. ANNUAL GRAPHITE GRAPHITE PLANNED PLANT PROJECTED DEVELOPMENT PROJECT LOCATION STATUS ORE TONNAGE 1 GRAPHITE HEAD GRADE TONNAGE 1 CAPACITY MINE LIFE 1 TIMELINE PRODUCTION (tonnes) (tonnes) (tonnes ore / % (tonnes / year) (years) (years) (Non-Compliant) (Non-Compliant) day) Former Uley, Uley Graphite Producing 6,600,000 8.70% 490,941 1,000 20,000 18 0.5 Australia Mine Bedford Kingston, Mine 3,870,800 3.46% 114,487 Graphite 3 Ontario Development 1,500 22,960 20 4 Burgess Kingston, Mine 5,000,000 8.00% 342,000 Graphite 3 Ontario DevelopmentTreelined Lake Kenora, Mine 5,000,000 5.00% 213,750 1,200 21,600 12 5.0 Graphite Ontario Development LiCO3 HEAD ANNUAL RARE RARE METAL PLANNED PLANT PROJECTED DEVELOPMENT PROJECT LOCATION STATUS ORE TONNAGE 5 METALS GRADE TONNAGE CAPACITY MINE LIFE TIMELINE PRODUCTION (tonnes) (tonnes) (tonnes ore / % (tonnes / year) (years) (years) (Non-Compliant) (Non-Compliant) day)Separation Lake Kenora, Mine 1,800,000 1.20% 21,600 4,000 17,280 104 4.0 Rare Metals 4 Ontario Development TOTAL PROJECTED GRAPHITE AND RARE METAL NET PRESENT VALUES ANNUAL PRODUCTION PROJECTED DEVELOPMENT PROJECT LOCATION STATUS FEED TONNAGE FEED GRADE OPERATING DAYS GRAPHITE YIELD PLANT LIFE TIMELINE PRODUCTION (tonnes / year) % % (tonnes / year) (years) (years) High Purity Graphite TBD Planned 15,000 85-95% 360 99.0% 14,850 20 3.0 Production Facility Project Summary NOTES: 1) Ore Reserves, Graphite Tonnages and Projected Mine Life are all based on resource estimates done to date. It is believed that additional drilling and exploration will confirm additional reserves. 2) The planned capex for Uley consists of initial expenditures, the lesser amount shown, to restart the existing plant. The larger capex will be used to construct a new, larger plant on the property. 3) For this model it is assumed that the Bedford and Burgess properties will operate as separate mines but will ship their ore to a central processing facility. 4) The figures shown for the Separation Lake rare metals property are preliminary estimates only. Additional exploration and development work is required to confirm the figures. 5) The estimated head grade for Separation Lake is 1.5%. The figure of 1.2% shown is after allowing for a 20% ore dilution factor.
  24. 24. The projected demand for natural graphite provides a solid basis for Mega Graphites business plans. The versatilechemical and electrical properties of graphite also means that product applications cover a wide range of marketopportunities. At the same time, however, the Company understands that a number of additional key successfactors must form an integral part of its business plan. These are as follows: Marketing - as an industrial mineral, one of the defining characteristics of the graphite sector is the need to develop a strong marketing capability. Products must be tailored to fit end user needs, brands must be developed to stand out with customers, and fully negotiated prices require a competitive cost structure. Research & Development - natural graphite companies must develop a robust and sustainable R&D capability in order to meet the changing needs of end users. Apart from a strong internal operation, the company will also develop key relationships with research facilities, universities and private labs around the world to stay on top of new products and applications. This financial model allocates a significant portion of the annual G&A cost structure to R&D. Strategic Partners and Relationships - the global natural graphite sector consists of large established companies with comprehensive internal operations. Partnering with these companies in one or more areas will be an effective way to build customer relationships, reduce costs and improve product capabilities. Planning, Execution, Management - the hyper-competitive nature of business today, as well as the expectations of customers, shareholders and financiers dictates that any successful company must incorporate fundamental planning protocols, develop a clear ability to consistently execute, and above all maintain and attract sound management and talent to manage these processes. Mega Graphite has begun this process by gathering experienced mining, production, planning and marketing personnel to carry out this plan. Key Success Factors
  25. 25. MEGA has assembled a strong group of mining and management professionals that is confident will achieve itsgoals at every stage of development. The group operates on a team-based and individual initiative-drivenphilosophy that is grounded in intelligent planning and continuous execution. Nothing will serve the Companybetter than the commitment of its management team in carrying out all of its business strategies.Paul Gorman, President & DirectorPaul Cooper, Chief Operating OfficerChristopher Darby, Managing Director and General CounselDavid Salari, Uley Project Manager & EngineerCarmelo Marrelli, CFOMichael Hastings, DirectorGreg Cameron, DirectorChris Whiteley, Executive VP Sales and MarketingVictor Evele, Uley Mine Manager Management & Directorship
  26. 26.  Security of Supply – ownership of high quality graphite flake properties in stable political environments such as Canada and Australia hold significant appeal to global customers seeking a safe, secure and reliable supplier. Standard and Proprietary Processing Operations – the Company utilizes both traditional graphite processing methodologies and proprietary cutting edge technologies to achieve high yields and purities, while also permitting cost-effective operations, all of which will further improve profitability and IRRs. Licensed Rights to Patented Technology – the Company has licensed, patented leading edge purification technologies from Hydro Quebecto produce high purity battery grade graphite. Competitive Production Costs – the Mega management team has used production experience to quantify base operating costs of approximately $640 per tonne and high purity upgrade costs of approximately $3,800 per tonne. First Mover Advantage – by assembling properties capable of producing long-term reliable supply the Company has achieved first mover advantage in becoming an alternate supplier to leading exporters such as China. Experienced Management – Mega has a proven, driven and focused management team with direct industry experience and a passion for success.Competitive Advantage
  27. 27. Mr. Paul Gorman President MM pgorman@megagraphite.com MM (905) 339-8888 86 Wilson Street, Suite 100A Oakville ON Canada L6K 3G5 www.megagraphite.comContact Info

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