Focus Graphite potential financier to review Lac Knife

Feb 24, 2015

FOCUS GRAPHITE ANNOUNCES ADDITIONAL DEBT FINANCING INTEREST IN LAC KNIFE

FLSmidth (FLS) has expressed its formal interest to further evaluate Focus Graphite Inc.’s Lac Knife project in order to provide Focus with a one-source solution of engineering and technical services, and supply of mineral processing equipment.

The initial set of Lac Knife mineral processing equipment being proposed by FLS bears a feasibility-study-level cost estimate of $12-million. The project scope may include a second component at a later date associated with dewatering, filtration and conveyance equipment used for the dewatering and dry stacking of tailings.

Focus included this revised tailings management system in the environmental and social impact assessment report filed in November, 2014, in order to reduce the environmental footprint of Lac Knife’s general site layout.

FLSmidth is a Danish multinational global corporation with annual revenues in excess of 3.6 billion euros, is a leading supplier of mineral processing equipment and mining services, and is specialized in dry-stacked tailings management.

“FLS’s letter of interest represents another significant potential financing option, as the company develops the Lac Knife structured project financing,” said Don Baxter, Focus Graphite president and chief operating officer.

FLS has introduced the Lac Knife project to the Danish Export Credit Agency (EKF), and the project may be eligible for EKF credit support. An EKF guarantee is backed by the Danish state, and as such, the EKF loan guarantee can be considered as AAA rated. “Both parties are discussing this financing option with a view to achieving a mutually satisfactory conclusion.

“This potential debt facility represents 7 per cent of Lac Knife’s total project financing requirements, raising the total of potential vendor financing to approximately 20 per cent. Terms of a debt facility are to be negotiated, and a comprehensive disclosure will be released at a later date.”

This announcement follows the Caterpillar structured finance announcement on Jan. 6, 2015. Focus is continuing project financing discussions with various stakeholders, investors and institutional funds in both the public and private sectors with the objective of minimizing shareholder dilution through a mix of debt and equity financing.

On Aug. 8, 2014, Focus Graphite published its Lac Knife project feasibility study that included a mine and concentrator operation with a capital expenditure requirement of $165.6-million including a $17.1-million contingency.

Qualified person

The technical information in this news release was prepared, reviewed and approved by Don Baxter, PEng, Focus president and chief operating officer, and a qualified person as defined by National Instrument 43-101 guidelines.

About FLSmidth

Established in Denmark in 1882, FLSmidth supplies the mineral and cement industries globally with engineering, single machines and complete processing plants, maintenance, support services, and operation of processing facilities. Its core strengths are reflected in its market-leading product range, its ability to implement, manage and maintain projects, and its operation of mineral and cement processing plants worldwide. FLSmidth employs approximately 15,000 in more than 50 countries, including Canada.

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