Alabama Graphite closes $1.06-million private placement

Sep 21, 2016

ALABAMA GRAPHITE CORP. COMPLETES OVERSUBSCRIBED NON-BROKERED PRIVATE PLACEMENT WITH SIGNIFICANT INSIDER PARTICIPATION

Alabama Graphite Corp., further to its Sept. 15, 2016, announcement, has closed its private placement consisting of approximately 7,124,000 units at a price of 15 cents per unit for aggregate gross proceeds of approximately $1,068,000. The private placement remains subject to the final approval of the TSX Venture Exchange.

Each Unit is comprised of one common share in the capital of the Company (each, a “Common Share”) and one Common Share purchase warrant (each, a “Warrant”). Each Warrant entitles the holder to purchase one additional Common Share at an exercise price of $0.20 for a period of 24 months following the date of issue, subject to customary adjustment provisions.

No agent or broker commissions or finders’ fees were paid in connection with the Private Placement.

This Private Placement brings the Company’s total investment raised to more than $2.3 million in the last four months (see the Company’s May 20, 2016 announcement, ‘Alabama Graphite Corp. Completes Oversubscribed Non-Brokered Private Placement with Insider Participation; Announces Granting of Options’ and September 6, 2016 announcement, ‘Alabama Graphite Corp. Completes Oversubscribed Non-Brokered Private Placement with Insider Participation; Announces Granting of Options’).

AGC intends to use the net proceeds of the Private Placement for working capital and further advancing the Company’s development of its metallurgical process for producing coated spherical graphite (“CSPG”) for use in Lithium-ion batteries.

Pursuant to applicable Canadian securities laws, all securities issued pursuant to the Private Placement are subject to a hold period of four months and one day, which expires on January 22, 2017.

The President and Chief Executive Officer of the Company, Donald K. D. Baxter, participated in the Private Placement as an insider, along with the Chief Financial Officer, an Independent Director and other deemed insiders of AGC. Such participation represents a related-party transaction under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”), but is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 as neither the fair market value of the subject matter of the transaction, nor the consideration paid, exceed 25% of the Company’s market capitalization.

The Private Placement was approved by all of the independent directors of the Company. The number of Common Shares potentially issuable to insiders of the Company pursuant to the Private Placement (including any Common Shares issuable upon the exercise of the Warrants) represents not more than 10% of the Company’s currently issued and outstanding Common Shares on a non-diluted basis.

Mr. Baxter commented, “Aside from multiple insiders of the Company investing, the overwhelming majority of participants in this Private Placement were existing Alabama Graphite Corp. shareholders. Personally speaking, I am very pleased to report that, in less than 15 months since I joined Alabama Graphite Corp., I have made investments to acquire more than 2% ownership in the Company. I have tremendous faith in the potential of AGC, its stellar management and technical talent, and its unique strategic business model.

“I share my fellow shareholders’ enthusiasm as we continue to advance AGC as a leading American graphite downstream development company, intending to become a green-energy supply-chain producer,” said Mr. Baxter.

Prior to the closing of the Private Placement, Mr. Baxter owned 770,000 Common Shares of the Company and stock options entitling Mr. Baxter to purchase 1,750,000 Common Shares of the Company, in addition to Warrants entitling Mr. Baxter to purchase 720,000 Common Shares of the Company.

Immediately following the closing of the Private Placement, Mr. Baxter directly and indirectly owns the following securities of the Company:

2,800,000 Common Shares, representing more than 2.1% of the issued and outstanding Common Shares of the Company;

Warrants entitling Mr. Baxter to purchase 2,750,000 Common Shares of the Company; and

Stock options entitling Mr. Baxter to purchase 1,750,000 Common Shares of the Company.

Assuming the exercise of all Warrants and stock options held by Mr. Baxter, he would own 7,300,000 Common Shares, representing more than 5.4% of the issued and outstanding Common Shares of the Company.

QUALIFIED PERSON

Donald K. D. Baxter, P.Eng., President, Chief Executive Officer and Executive Director of Alabama Graphite Corp., is a Qualified Person as defined by National Instrument 43-101 guidelines, and has reviewed and approved the content of this news release.

ABOUT ALABAMA GRAPHITE CORP.

Alabama Graphite Corp. is a Canadian-based flake graphite exploration and development company as well as an aspiring battery materials production and technology company. The Company operates through its wholly owned subsidiary, Alabama Graphite Company Inc. (a company registered in the state of Alabama). With an advancing flake graphite project in the United States of America, Alabama Graphite Corp intends to become a reliable, long-term U.S. supplier of specialty high-purity graphite products. A highly experienced team leads the Company with more than 100 years of combined graphite mining, graphite processing, specialty graphite products and applications, and graphite sales experience. Alabama Graphite Corp. is focused on the exploration and development of its flagship Coosa Graphite Project in Coosa County, Alabama, and its Bama Mine Project in Chilton County, Alabama as well the research and development of its proprietary manufacturing and technological processing process of battery materials.

Alabama Graphite Corp. holds a 100% interest in the mineral rights for these two U.S.-based graphite projects, which are both located on private land. The two projects encompass more than 43,000 acres and are located in a geopolitically stable, mining-friendly jurisdiction with significant historical production of crystalline flake graphite in the flake graphite belt of central Alabama, also known as the Alabama Graphite Belt (source: U.S. Bureau of Mines). A significant portion of the Alabama deposits are characterized by graphite-bearing material that is oxidized and has been weathered into extremely soft rock. Both projects have infrastructure in place, are within close proximity to major highways, rail, power and water, and are approximately three hours (by truck or train) to the Port of Mobile, the Alabama Port Authority’s deep-seawater port and the ninth largest port by tonnage in the United States (source: U.S. Army Corps of Engineers/USACE). The state of Alabama’s hospitable climate allows for year-round mining operations and the world’s largest marble quarry (which operates 24 hours a day, 365 days a year in Sylacauga, Alabama), is located within a 30-minute drive of the Coosa Graphite Project.

On November 30, 2015, Alabama Graphite Corp. announced the results of PEA for the Coosa Graphite Project, indicating a potentially low-cost project with potential positive economics. Please refer to the Company’s technical report titled “Alabama Graphite Corp. Preliminary Economic Assessment (PEA) on the Coosa graphite Project, Alabama, USA” dated November 27, 2015, prepared by independent engineering firms AGP Mining Consultants Inc. and Metal Mining Consultants Inc., and filed on SEDAR at www.sedar.com.