Alabama Graphite ships CSPG samples to two parties

Sep 7, 2016

ALABAMA GRAPHITE CORP. ANNOUNCES SHIPMENT OF AMERICAN SOURCED AND MANUFACTURED CSPG SAMPLES TO U.S. DEPARTMENT OF DEFENSE LITHIUM-ION BATTERY SOLUTIONS PROVIDER AND TO SUBSIDIARY OF TOTAL S.A.

Alabama Graphite Corp. has manufactured and shipped samples of two specifications of its coated spherical graphite (CSPG) to a long-established, U.S.-based leader in lithium-ion battery production for numerous and varied military applications for the U.S. Department of Defense (DoD). Additionally, Alabama Graphite has shipped a CSPG sample to a subsidiary of Paris-based multinational energy conglomerate, Total SA. The names of the DoD battery manufacturer and Total subsidiary are not being disclosed due to reasons of commercial confidentiality.

The Company conveyed fine- and coarse-sized CSPG made from its Coosa Graphite Project material – located in Coosa County, Alabama, USA – to the DoD contractor, which is located within a day’s drive from AGC’s offices in Sylacauga, Alabama. The fine CSPG has been designed with the intent of eventually being used for power-based applications, namely rechargeable batteries for soldiers. The coarse CSPG has been designed with the intent of eventually being utilized for energy-based applications, such as micro-grid energy storage for forward deployed soldiers. All requisite downstream secondary processing to manufacture these test samples of AGC’s Coosa CSPG was conducted in the United States of America.

This large-scale, specialty advanced Li-ion battery manufacturer was awarded a USD$22,000,000 DoD contract to manufacture Li-ion batteries – including battery cells, which are a critical element in energy-dependent weaponry – in the United States. For years, the U.S. government has relied on other countries for the production of its Li-ion cells. The DoD has demonstrated its intent to address security of supply as it pertains to American Li-ion battery and cell production by investing to guarantee domestic Li-ion capacity, and specifically sourcing American input materials. The DoD’s significant investment is meant to ensure the affordable production of critical items deemed essential for national defense and was funded under the DoD’s Lithium-ion Battery for Military Applications (“LIMA”) project.

This brings the current number of DoD battery manufacturers that have received AGC’s American-sourced and manufactured battery graphite samples to three (please refer to the Company’s June 23, 2016 and August 15, 2016 announcements, (‘Alabama Graphite Corp. Announces Shipment of American Sourced and Manufactured CSPG Samples to United States Department of Defense (DoD) Lithium-ion Battery Solutions Provider’ and ‘Alabama Graphite Corp. Announces Multi-Kilogram Shipment of American Sourced and Manufactured Samples to United States Department of Defense (DoD) Lithium-ion Battery Manufacturer’ respectively.). Per the Company’s July 18, 2016 announcement (‘Alabama Graphite Corp. Announces the Execution of Six Non-Disclosure Agreements with U.S Department of Defense Lithium-ion Battery Solution Providers for Coated Spherical Graphite (CSPG) Samples’), multiple other DoD lithium battery manufacturers have requested secondary-processed battery graphite evaluation samples and AGC is diligently working to produce the requested specifications.

The Total subsidiary company is located in France and will evaluate AGC’s 20-micron CSPG for Li-ion batteries.

AGC President, Chief Executive Officer, and Executive Director, Donald Baxter stated, “AGC is very pleased to have again manufactured CSPG samples to end users’ requested specifications. We have shipped CSPG samples to another major DoD Li-ion battery manufacturer, as well as to a multi-billion-dollar global subsidiary of energy giant Total.

“We believe that our DoD-focussed business strategy addresses an issue critical to U.S. national defense – manufacturing Li-ion battery cells in the United States with American-sourced and manufactured input materials,” said Mr. Baxter. “The DoD battery manufacturers that we are in discussions with certainly appreciate that our CSPG is made in America, but they seem far more interested in the fact that our battery graphite is sourced in the United States. It is our intent that one day in the not-too-distant future, our graphite from the great state of Alabama will help power the critical-application batteries that will save lives and protect American soldiers.”

The DoD, DoE and other U.S. Federal government departments and agencies encourage their contractors and suppliers to source their input materials from within the USA, whenever and wherever possible. Additionally, provisions of the Buy American Act (the “Act”) and other legislation may afford AGC a potential competitive advantage when engaging with these entities. With certain exceptions, such legislation requires that all goods for public use – articles, materials, or supplies – must be produced in the USA, and manufactured items must be manufactured in the USA from U.S. materials. Many states and municipalities include similar geographic production requirements in their procurement legislation. Note, in certain government procurements, the Act’s requirement purchase may be waived if the domestic product is 50% or more expensive than an identical foreign-sourced product, if the product is not available domestically in sufficient quantity or quality, or if doing so is in the public interest. However, it is important to be aware that any legislation may be subject to change over time. For example, potential changes to the North American Free Trade Agreement (NAFTA) or the Act itself, could level the playing field for non-U.S. government/DoD procurements, and the Company and its business plan and prospects are always at risk of adverse changes in any applicable legislation. Given the foregoing, if, following the completion of a Feasibility Study (which has not yet been commenced), AGC is able to advance the Coosa Graphite Project into production, the resulting graphite would be sourced from within the contiguous United States and the Company may have a potential competitive advantage over other producers of value-added graphite materials sourced from other countries, regardless of whether said materials were processed and/or manufactured in the U.S.

Note: AGC completed its Preliminary Economic Assessment (“PEA”) for the Coosa Graphite Project on November 27, 2015. A PEA is not a Feasibility Study. The PEA is preliminary in nature, that it includes Inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA based on these mineral resources will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

At this time, no further deal terms have been reached, nor has AGC entered into any letters of intent, offtake agreements, supply or customer agreements or any other form of definitive agreements with these battery manufacturers. As the Company’s discussions remain at a preliminary stage only, there can be no assurance or guarantee that the Company will enter into a binding agreement.

AGC will continue to update shareholders and the market in a timely fashion of further material developments with respect to this and other potential American-based end users, as we are able to disclose. Please note, certain potential end users preclude the Company from announcing any aspect of its relationship and activities, ranging from the execution of an NDA to the shipment(s) of sample material(s).

For more information about AGC’s secondary processing to produce its CSPG, please refer to the independent report, “Alabama Graphite’s Coated Spherical Purified Graphite for the Lithium-ion Battery Industry,” prepared by Dr. Gareth P. Hatch, CEng, FIMMM, FIET, Founding Principal of Technology Metals Research, LLC, and Independent Director 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

Alabama Graphite 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 holds a 100-per-cent 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).