OTTAWA (January 8, 2014) — On December 20, 2013, Focus Graphite made graphite mining history by securing a 10-year offtake agreement with a Chinese industrial conglomerate for the purchase of up to 40,000 tonnes per year of Lac Knife’s concentrate production.

Markets will understand this agreement introduces a new level of stability to our Lac Knife Project just as China announces a halt to graphite production in Shandong Province effectively putting 20% of China’s flake graphite production on hold.

That stability is founded on two key elements, namely: our goal of becoming one of the lowest cost producers of high purity flake graphite in the world, and; our mine-to-technology markets business strategy for value-added products.

The agreement propels Focus into a potentially advantageous position – both commercially and operationally.

Commercially, our toehold in the Chinese market endorses Focus Graphite’s ability to compete in any market. It bodes well for the company’s future global market positioning but especially for our shareholders who supported us during this long commodities market downturn.

Operationally, the offtake agreement leaves Focus management in the enviable position of confidently moving forward with our development timetable. Lac Knife – as evidenced by our 2012 Preliminary Economic Assessment and our subsequent 2013 PEA update -indicates a, long-term economic potential. As always, maximizing shareholder value remains a cornerstone of our corporate objectives.

Mine and Plant Financing is a priority and we aim to complete and close the financing discussions for Lac Knife as soon as possible.

As CEO Gary Economo and I have indicated, the timing and discussions of our financing plans are not dependent on the outcome of a feasibility study.

Our two-track development approach – the operational aspects of Lac Knife under my direction and, the marketing and financing aspects, under Gary’s direction – have been designed to move in parallel. They will come together this year.

As we move forward, my intention is to build upon 2013’s mining development activities in four major operational areas:

• A revised NI 43-101 resource estimate is currently underway; assays from our 2013 infill drilling program are in hand and our updated resource will be included in our Feasibility Study to calculate a mineral reserve. The Mine Closure Plan is also underway for an expected submission during summer 2014.

Our Feasibility Study will reveal our revised mining and concentrate production capabilities and it will bring further certainty to the economic values we attach to our mining project.

Our Environmental and Social Impact Assessment efforts are well underway, including our consultative process with the community of Fermont and the Uashat Mak Mani-Utenam community.

Our continuing exploration activities include the Lac Knife property. It holds a number of potentially high-grade graphite targets worthy of further investigation. Our 2014 exploration drilling programs are in the planning stages now for Lac Knife, Lac Tetepisca Lac Guinecourt and a number of other graphite properties.

Looking back to 2013, Focus Graphite’s accomplishments were noteworthy. They underscored the depth and potential of our company, not only through our graphite enterprise, but also, our Kwyjibo rare earths and copper project. They are worth highlighting again:


Lac Knife

The publication of our updated Preliminary Economic Assessment revised our project economics. Our revised PEA included: an IRR of 36.4%(28.6% after tax); NPV of $317 million or $185 million after-tax on an 8% discounted cash flow basis; operating costs reduced by $367 per ton milled due to the elimination of the need to purify the concentrate by a third party. Operating costs are now estimated at $458 per tonne of concentrate with a $28 million reduction in working capital.

The announcement of our pilot plant test results showing:

• The average grade of the coarse size fraction (+ 80 mesh) was 98.3% Total Carbon* (“Ct”) compared with 97.4% Ct in the Phase 2 Locked Cycle Tests (“LCTs”) conducted in early 2013
• The average grade of the medium size fraction, less than 80 mesh and greater than 150 mesh in size, was 98.2% Ct compared with 97.4% Ct in the Phase 2 LCTs
• The average grade of the size fraction greater than 200 mesh was 98.0% Ct compared with 97.2% Ct in the Phase 2 LCTs



• Focus and our partner SOQUEM confirmed grades, thicknesses and continuity of the REE mineralization at Josette horizon on the Kwyjibo property. Our 2013 exploration program at Kwyjibo included additional drilling to further map the limits of the Fe-REE-Cu mineralization and tested new ground geophysical anomalies in the western sector of the property.

• A NI 43-101 resource calculation for Kwyjibo’s light and heavy rare earths and copper is expected to be released during the first half of 2014.


In Summary

2013 saw Focus management meet its operational and corporate objectives. Significant progress was made in Lac Knife’s development culminating with an historic, precedent-setting offtake agreement with China. It underscored our leading position in global markets by:

• Reaffirming our status. Lac Knife holds a world-class graphite resource. It is one of only a few high-grade, high-purity resources with the potential to supply into value added technology markets.

• Strengthening our path to production by providing a new level of security that further de-risks financing for potential institutional and strategic investors interesting in participating in Lac Knife’s financing. And, it bolsters the investment opportunity for individual investors by introducing an added layer of confidence in our stock.

• Positioning us globally. We foresaw a changing graphite market and we moved in lockstep with those change dynamics. The green technology revolution and demand from China will propel the technology-grade graphite sector to sustainable profitability. Focus is among the very few graphite companies that can successfully compete in a global market.

The market is coming now to more fully appreciate Focus Graphite’s underlying long-term value. This is evidenced not only by the offtake agreement, but also by the recent rise in share price and continued interest from potential strategic partners.

Our aim for 2014 and beyond is to build upon recent gains by focusing on achieving those fundamental milestones leading to permitting and production.

Paving the way, as we have, leaves us with the potential to help lead the graphite mining sector out of the market doldrums as the timing of production plans coincide with the anticipated growth in graphite demand from the technology sectors.

We wish all of Focus shareholders and stakeholders a prosperous and Happy New Year.


Donald Baxter, P.Eng.
President and Chief Operating Officer
Focus Graphite Inc.