VANCOUVER, BRITISH COLUMBIA--(Marketwired - Jan. 30, 2017) - Graphite One Resources Inc. (TSX VENTURE:GPH)(OTCQX:GPHOF) ("Graphite One", "GPH" or the "Company") presents the post-tax financial results from its Preliminary Economic Assessment ("PEA") that the Company announced on January 25, 2017 for the development of its 100%-owned Graphite One integrated, manufacturing project (the "Project").
At the request of IIROC the Company is clarifying the following disclosure from its news release disseminated on January 25, 2017.
The PEA projects a Net Present Value ("NPV") for the Project on a pre-tax basis of US$1,037 million using a 10% discount rate, with an Internal Rate of Return ("IRR") of 27%. On a post-tax basis, the NPV is projected at US$616 million using a 10% discount rate, with an Internal Rate of Return ("IRR") of 22%. Annual production of CSG and other graphite specialty materials is projected at 55,350 metric tonnes when full production is reached in Year 6. A minimum of 40 years of indicated and inferred resources grading 7% Cg (graphite) have been identified in the target exploitation zone to sustain full scale operations, notwithstanding additional potential resources immediately outside the target zone or the broader Graphite Creek property.
| Summary of the Project's Pre-Tax Financial Results (US$ Million) | |||
| NPVof Net Cash Flowat 10% Discount Rate | $ | 1,037 | |
| IRR | 27 | % | |
| Payback Period in Production Year | 4 | ||
| Summary of the Project's Post-Tax Financial Results (US$ Million) | |||
| NPV of Net Cash Flow at 10% Discount Rate | $ | 616 | |
| IRR | 22 | % | |
| Payback Period in Production Year | 4 | ||
The Project is conceived as a vertically integrated manufacturer of high grade Coated Spherical Graphite ("CSG") with mining and processing facilities near Nome, Alaska and advanced material processing done at a dedicated graphite product manufacturing facility. Washington State is a potential site for the product manufacturing facility due to its established maritime links with Alaska, the availability of low-cost power, developed industrial sites and proximity to markets. The PEA was prepared by the independent engineering firm, TRU Group Inc. of Toronto, Ontario, under Canadian Securities Administrators' National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101").
The post-tax analysis assumes the Project is based on 100% equity financing and its ownership and locations make US federal and Alaska and Washington state taxes applicable. As the Project advances and the graphite mining, processing and manufacturing plans are optimized, the Company will commission an accounting, legal and tax study to determine the optimal corporate structure and economics.
The financial analysis used a 10% discount rate for the NPV and IRR analysis in the PEA and considers it the appropriate rate that reflects the measure of risk at this stage of the Project. In an effort to provide comparative results with others in the industry with similar stage projects, the Company also presented a NPV and IRR using an 8% discount rate in the press release of January 25th, 2017. The Company emphasizes that the 10% rate be used in evaluating the PEA.
QUALIFIED PERSONS
The independent qualified persons responsible for preparing the Graphite One PEA are R. James Robinson, P.Geo., Ioannis (John) Roumeliotis, Ing., and Maureen Paterson, P. Eng. of TRU Group Inc. They have reviewed and approved the contents of this press release.
David R. Hembree, C. P. Geo., the General Manager of Operations for Graphite One Alaska Inc., is the company's designated qualified person for this press release within the meaning of NI 43-101 and has reviewed and validated that the information contained in the release is consistent with that provided by the independent qualified persons responsible for the PEA.
About TRU Group
TRU Group Inc are engineers, managers, planners and integrators focused on technology intensive industry. The firm has a long standing strong capability in battery materials from resource through to end-products and have completed numerous assignments for several clients. More information is available on the TRU Group website www.trugroup.com.
About Graphite One Resources Inc.
GRAPHITE ONE RESOURCES INC. (TSX VENTURE:GPH)(OTCQX:GPHOF) continues to develop its Graphite One Project (the "Project"), whereby the Company could potentially become the dominant American producer of high grade Coated Spherical Graphite ("CSG") that is integrated with a domestic graphite resource. The Project is proposed as a vertically integrated enterprise to mine, process and manufacture high grade CSG primarily for the lithium-ion electric vehicle battery market. Graphite mineralization mined from the Company's Graphite Creek Property would be processed into concentrate at a graphite processing plant. The processing plant would be located on the Graphite Creek Property situated on the Seward Peninsula about 60 kilometers north of Nome, Alaska. CSG and other value-added graphite products, would be manufactured from the concentrate at the Company's proposed graphite product manufacturing facility, the location of which is the subject of further study and analysis.
The Graphite Creek Property contains America's largest known large flake graphite deposit. Resources identified to date include 10.32 million tonnes of indicated resources grading 7.2 percent graphitic carbon ("Cg") and 71.24 million tonnes of inferred resources at 7.0 percent Cg identified, using a 6% Cg mining cut-off grade. Work on the Graphite Creek Property is progressing through the evaluation phase with environmental baseline sampling programs and engineering studies in progress. Mineral beneficiation testing, mine, infrastructure and processing plant design work, and a resource development drilling program are expected to be undertaken in the months ahead.
