Focus Graphite closes $1.93-million first tranche

Sep 24, 2014

FOCUS GRAPHITE LAUNCHES PROJECT FINANCING PHASE OF LAC KNIFE WITH FIRST CLOSING OF A $6.5 MILLION PRIVATE PLACEMENT

Focus Graphite Inc. has launched the project financing phase of the Lac Knife development project, with the closing of the first tranche of a non-brokered private placement offering of up to 13 million units at a price of 50 cents per unit for gross proceeds of $6.5-million. In total, Focus issued 3,861,000 units for gross proceeds of $1,930,500. Each unit consists of one common share and one warrant. Each warrant entitles the holder to acquire one additional common share of the company at a price of 60 cents until Sept. 23, 2018.

In connection with the Offering, the Company paid finder’s fees totalling $71,470 and issued 142,940 non-transferable warrants with each warrant entitling the holder to acquire one (1) common share of the Company at a price of $0.60 per common share for a period of twenty-four (24) months expiring on September 23, 2016. Furthermore, insiders of the Company have participated in this first tranche for a total proceeds of $202,000. The securities issued under the Offering are subject to a four-month hold period expiring on January 24th, 2015. Focus may raise up to $6,500,000 under the current Offering and expects to proceed with a second closing shortly. The Offering is subject to the final approval of the TSX Venture Exchange.

The net proceeds from the Offering will be used to work towards several milestones associated with the development of the Company’s Lac Knife natural flake graphite project, in particular work related to the Detailed Engineering Phase of the project including the Environmental Impact Study, Hydro-Quebec’s detailed engineering study to connect power to the mine site, upgrading of the existing main access road to the mine site, geotechnical studies and for general corporate working capital purposes.

Management’s emphasis during this development phase is placed on deploying best efforts to advance the potential mine start-up to 2016 from the scheduled 2017 start-up, as forecast in the Lac Knife project Feasibility Study announced on August 8th, 2014 (see news release of the Company for more details).

The Feasibility Study base case financial results show a pre-tax Internal Rate of Return of 30.1% (24.1% post tax), an NPV of $383 million at an 8% Discounted Cash Flow, and a payback period of three years, with a required CAPEX of $166 Million, inclusive of a $17 Million contingency, for mine and concentrator plant construction (for more details, please consult the complete Lac Knife Feasibility Study as well as the news release summaries dated June 25th and August 8th, 2014, both available on the Company’s website or on SEDAR at www.sedar.com). The potential of valued added products, including spherical graphite for batteries, is not included in the Feasibility Study, please see the news release dated May 27th, 2014 for spherical graphite test results.

Graphite concentrate prices are largely based on flake size and carbon content. As shown in the Company’s Feasibility Study, Lac Knife’s concentrates grade 98% carbon content for all size categories coarser than +200 mesh (75 microns) allowing for even the finer concentrate products to produce very competitive, high quality value added spherical graphite products for the lithium ion battery market.

Don Baxter, Focus President and COO said, “This private placement officially launches the project financing phase of Lac Knife’s project development following the feasibility study results announced in August. The Company is actively working today with several interested parties to complete a total project financing structure.”

Qualified Person

Mr. Don Baxter, P. Eng., President & Chief Operating Officer of the Company, a Qualified Person under National Instrument 43-101 – Standards of Disclosure for Mineral Projects, has reviewed and approved the technical content of this news release.

http://www.focusgraphite.com/category/news-releases/