Focus and Lara Sign Agreement for the Caninde Graphite Project, Ciera
OTTAWA, ONTARIO -- (Marketwire) -- 06/04/12 -- Focus Graphite Inc.
(TSX VENTURE:FMS)(OTCQX:FCSMF)(FRANKFURT:FKC) ("Focus" or the
"Corporation") is pleased to announce that it has signed a Letter of
Intent (the "Agreement") with Lara Exploration Ltd. ("Lara") for
Lara's wholly-owned Caninde graphite project located in Ceara State,
The Caninde project comprises 11 registered exploration licenses and
an additional six exploration licenses pending approval by the
Brazilian Department of Mines ("DNPM"). The project covers a total
surface area of 15,615 hectares and hosts 22 surface graphite
occurrences discovered by Lara in mid-2011.
The occurrences define a 16 km long, north-northwest trending
graphitic corridor in high-grade metamorphic rocks within the Project
area. Individual graphite occurrences range in width from less than 1
m to maximum of 10 m and host from 1-2%, disseminated graphite in
paragneiss and schist (mostly flakes) to over 50% graphite in narrow
lenses in gneiss, schist, pegmatitic migmatites and in brecciated
horizons in gneiss. Graphitic carbon contents for surface grab
samples from 15 of the occurrences range from less than 1% to a high
of 42.04 %. The project is accessible by road.
Gary Economo, President & CEO of Focus Graphite said the move into
Brazil, the world's third leading producer of graphite, is intended
to expand the Corporation's operations and holdings internationally.
"Consolidation in the graphite mining sector is one of the pillars of
our global business strategy," Mr. Economo said. "Caninde's potential
opens the door for us to develop a new graphite district in Brazil.
"While our primary focus and priority continues to be Lac Knife's
development, the Caninde project has the potential to add overall
value from a second high quality graphite source," he said.
Mr. Economo added that the vast majority of Focus Graphite's
financial and human capital will continue to be devoted to the
construction of its Lac Knife, Quebec mine and facilities.
A map of the Caninde project together with photographs of selected
graphite occurrences are available on the Corporation's website at
Under the terms of the Agreement, Lara has granted Focus two separate
options to acquire a total 60% undivided interest in the Caninde
project in consideration of a staged exploration expenditure
commitment over 5 years and by issuing 500,000 common shares to Lara
on or before the third anniversary of the Agreement and by
reimbursing Lara for claims acquisition costs. Focus will act as the
Operator of the Caninde project exploration program throughout the
duration of the Agreement.
Focus can exercise the First Option and earn a 51% interest in the
Project by (i) issuing 500,000 common shares to Lara (100,000 shares
upon signing of the agreement and 400,000 shares by the third
anniversary thereof) and (ii) carrying out, as operator, exploration
on the Property (including 2,000m of drilling and an electromagnetic
survey of the entire Property) totaling $2.5 million by the third
anniversary of the Agreement based on the following schedule:
$500,000 each in years 1 and 2; and $1.5 million in year 3.
Focus can exercise the Second Option and earn an additional 9%
interest in the Project (total: 60%) by carrying out, as operator,
exploration on the Property (including a further 5,000 m of drilling)
and completing a favorable Preliminary Economic Assessment in
accordance with National Instrument 43-101, an expenditure totaling
at least $4.5 million by the fifth anniversary of the Agreement.
If Focus elects not to exercise the Second Option, or elects but
fails to exercise the Second Option, Lara and Focus will enter into
the Joint Venture with Focus holding a 51% interest and Lara holding
a 49% interest in the Project. If Focus exercises the Second Option,
Lara and Focus will enter into the Joint Venture with Focus holding
60% interest and Lara holding 40%. Upon the execution of the Joint
Venture both Parties will proportionately fund the exploration
program and the party holding majority interest will be deemed the
operator of the Joint Venture. If a Party's interest is reduced to
less than 10%, its interest in the Joint Venture shall be converted
into a 2% production royalty.
The Caninde project is subject to a 1% royalty payable to a third
party on gross revenue from sales to a maximum of R$ 750,000
(approximately $369,000) as well as a one-time payment of R$ 200,000
(approximately $99,000) payable to said third party upon the delivery
of an Economic Graphite Reserve estimate (non NI 43-101 compliant) as
defined and approved by the DNPM.
The Agreement is subject to certain conditions precedent and
covenants that must be satisfied in connection with the transaction.
The parties intend to execute, on or before August 31, 2012, a
Definitive Option agreement (to which will be attached a Joint
Venture agreement to be entered into upon exercise of the First
Option or, if applicable, the Second Option) and other documents
necessary to complete the transactions contemplated hereby.
The Agreement is also subject to Board and regulatory approval by the
TSX Venture Exchange (the "TSX-V").
Mr. Tony Brisson, P. Geo., a Qualified Person as defined by NI 43-101
is responsible for the technical information contained in this
About Focus Graphite
Focus Graphite Inc. is an emerging mid-tier junior mining company, a
technology solution supplier and a business innovator. It is the
owner of the highest-grade (16%) technology graphite resources in the
world. The company's goal is to assume a dominant industry leadership
position by becoming the lowest-cost producer of technology-grade
graphite. As a technology-orientated enterprise with a view to
building long-term, sustainable shareholder value, Focus Graphite is
invested in the development of graphene applications and patents
through Grafoid Inc.
Forward Looking Statements - Disclaimer
This news release may contain forward looking statements, being
statements which are not historical facts, and discussions of future
plans and objectives. There can be no assurance that such statements
will prove accurate. Such statements are necessarily based upon a
number of estimates and assumptions that are subject to numerous
risks and uncertainties that could cause actual results and future
events to differ materially from those anticipated or projected.
Important factors that could cause actual results to differ
materially from the Company's expectations are in our documents filed
from time to time with the TSX Venture Exchange and provincial
securities regulators, most of which are available at www.sedar.com
Focus Graphite disclaims any intention or obligation to revise or
update such statements.
Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.
President and Chief Executive Officer
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