Northern Graphite Announces Results of Expansion Case PEA

Northern Graphite Announces Results of Expansion Case PEA 
Project shows robust economics despite low graphite price environment 
OTTAWA, ONTARIO -- (Marketwired) -- 10/23/13 -- Northern Graphite
Corporation (TSX VENTURE:NGC)(OTCQX:NGPHF) announces the results of a
Preliminary Economic Assessment (the "PEA") on an expansion case for
its 100% owned Bissett Creek graphite project. The PEA was undertaken
to demonstrate the ability to meet expected future growth in graphite
demand by substantially increasing production from the Bissett Creek
deposit based on measured and indicated resources only. The PEA
builds on the Feasibility Study (the "FS") completed by G Mining in
August, 2012 and the expanded resource model and updated FS economics
(the "FS Update") subsequently completed by AGP Mining Consultants
("AGP"). The PEA was authored by Marc Leduc P. Eng. AGP completed the
resource and reserve estimates and mine plan. A NI 43-101 Technical
Report will be filed on within 45 days hereof. 
The PEA estimates the economics of doubling mill throughput after
three years of operation and demonstrates that Bissett Creek has very
attractive economics even at or below current depressed graphite
price levels. The pre-tax internal rate of return ("IRR") is 26.3%
(22.0% after tax) and the pre-tax net present value ("NPV") is $231.1
million ($150.0 million after tax) in the base case which uses an 8%
discount rate and a weighted average price of US$1,800/tonne of
concentrate. The PEA notes that the deposit was extensively
investigated in the 1980s and this work was essentially redone over
the last three years with consistent results and brought up to NI
43-101 standards. In addition, resources have been infill drilled and
significantly expanded. Consequently, the project has been
substantially de-risked in terms of resources, metallurgy and
Gregory Bowes, CEO, commented that: "The current graphite supply
chain is heavily dependent on China and is characterized by many
inefficient producers with poor environmental and labor practices and
inconsistent product quality, delivery and reliability. Bissett Creek
will produce the highest quality concentrates in the industry and
will provide a stable, secure source of supply at very competitive
costs a
nd prices." 

Summary of PEA Results                                                     
                                                             PEA  FS Update
Reserves/resources (million tonnes)(i)                  39.4Mt(i)  28.3Mt(i)
Feed Grade (% graphitic carbon)                          1.85%(i)   2.06%(i)
Waste to ore ratio                                          0.24       0.79
Processing rate (tonnes per day - 92% availability)  2,670-5,340      2,670
Mine life                                               22 years   28 years
Mill recovery                                              94.7%      94.7%
Average annual production                                33,183t    20,800t
Initial capital cost ($ millions - including 10%                           
 contingency)                                            $101.6M    $101.6M
Expansion capital                                         $45.2M         NA
Sustaining capital                                        $58.7M      $43.0
Cash operating costs ($/tonne of concentrate)             $695/t     $795/t
Mining costs ($/tonne of ore)                              $4.05      $5.63
Processing costs ($/tonne of ore)                          $7.35      $8.44
General and administrative costs ($/tonne of ore)          $1.45      $2.50
CDN/US dollar exchange rate                                 0.95       0.95
(i) The probable reserve in the FS update consists of 24 million tonnes
    ("Mt") grading 2.20% Cg and 4.0 Mt of low grade stockpile ("LGS")
    grading 1.26% Cg. The PEA accelerates the processing of the probable
    reserve and processes an additional 11.1 million tonnes of measured and
    indicated resources from the LGS at the end of the mine life. All
    grades are diluted.
                                          FS Update    PEA Expansion Case  
Graphite prices (US$ per tonne)              $1,800  $2,100  $1,800  $1,500
Pre-tax Net Present Value @8% (CDN$                                        
 millions)                                   $129.9  $335.6  $231.0  $126.6
Pre-tax IRR (%)                               19.8%   33.0%   26.3%   18.8%
After tax Net Present Value @8% (CDN$                                      
 millions)                                    $89.3  $221.9  $150.0   $77.3
After tax IRR (%)                             17.3%   27.7%   22.0%   15.7%

The proposed development of the Bissett Creek graphite deposit
consists of an open pit mine and a processing plant with conventional
crushing, grinding and flotation circuits followed by concentrate
drying and screening. The PEA assumes that the processing plant is
twinned after three years of operation, except for the crusher which
has excess capacity, and that the capacity of the plant is
effectively doubled. Corresponding adjustments were made to the power
plant, mine fleet and tailings storage facilities and other
infrastructure to account for the increased throughput. 
Measured and indicated resources for the Bissett Creek deposit
consist of 69.8 million tonnes ("Mt") grading 1.74% graphitic carbon
("Cg") based on a 1.02% Cg cutoff grade ("COG"). The final mine plan
in the FS update only contemplated a 25 to 30 year operation and
resulted in probable reserves of 28.3 Mt of ore grading 2.06%
graphitic carbon based on a COG of 0.96% Cg. Probable reserves
include 24.3 Mt grading 2.20% Cg that will be processed first and 4.0
Mt grading 1.26% Cg from a low grade stockpile ("LGS") that will be
processed at the end of the mine life. In order to increase head
grades in the initial years of production while maintaining a
reasonable stripping ratio, measured and indicated resources grading
between 0.96% Cg and 1.5% Cg were stockpiled, largely within mined
out areas of the pit. The total LGS will be 16.5 Mt grading 1.26% Cg. 
The PEA uses the same mine plan but accelerates the mining of the
high grade ore and processes all of the LGS thereafter. There are an
additional 27.3 million tonnes of measured and indicated resources
grading 1.62% Cg which are not included in the mine plan and 24
million tonnes of inferred resources grading 1.65% Cg which are
treated as waste. Also, resources have not yet been closed off by
drilling and therefore further expansions are possible. Over the
first ten years of operation almost 38,000 tonnes of graphite
concentrate will be produced yearly and an average of 33,100 tonnes
will be produced over the project life. 
Cash mine operating costs will average CDN$695 per tonne of
concentrate over the mine life. Due to the flat lying nature of the
deposit, production can be expanded without any capital investment
required for additional stripping or pushbacks of the pit walls. The
waste to ore ratio actually declines in the PEA expansion scenario
and contributes to lower operating costs. The initial capital cost
estimate to construct the processing plant, power plant and all
associated mine infrastructure remains at $101.6 milli
on including a
$9.3 million contingency. Under the PEA, an additional $45.2 million
in expansion capital has been added in year three for the parallel
mill circuits and sustaining capital over the mine life was increased
by $15.7M for additional mining equipment, tailings facilities and
other infrastructure. 

Sensitivities (pre-tax)                                                    
                                 $2,100          $1,800          $1,500    
                              NPV(i)    IRR   NPV(i)    IRR   NPV(i)    IRR
Base Case                    $335.6   33.0%  $231.1   26.3%  $126.6   18.8%
Grade +10%                   $408.3   37.4%  $293.3   30.4%  $178.3   22.6%
Grade -10%                   $263.0   28.4%  $168.9   21.9%   $74.9   14.8%
Operating costs -10%         $358.7   34.5%  $254.2   27.8%  $149.7   20.6%
Operating costs +10%         $312.6   31.5%  $208.1   24.7%  $103.6   17.1%
Capex -10%                   $351.2   36.2%  $246.7   29.0%  $142.2   21.1%
Capex +10%                   $320.1   30.3%  $215.6   23.9%  $111.1   16.9%
(i) $ millions @ 8%                                                         

Graphite Markets and Pricing 
After more than tripling from 2005 to 2012, graphite prices have
fallen back 50% or more due to the slowdown in China and a lack of
growth in the US, Europe and Japan. Recently it has been reported
that Chinese flake production has fallen 27% and that the only North
American producer has suspended operations which indicates that
current prices are close to the marginal cost of production for many
producers. These shutdowns have helped stabilize prices for the last
six months and should limit further price declines. The weighted
average price that would be realized by Bissett Creek concentrates in
the current market is estimated at US$1,800/t based on +50 mesh
prices of approximately $2,100/t, $1,350 for +80 mesh, $1,100 for
-100 to +80 mesh and $900 for -100 mesh, all at 94% C or better.
Sensitivities are presented at US$2,100/t and at US$1,500/t. 
Qualified Persons 
Pierre Desautels, P.Geo., Principal Resource Geologist, and Gordon
Zurowski, P.Eng., Principal Mining Engineer, both of AGP Mining
Consultants and Qualified Persons under NI 43-101 who are independent
of the Company, prepared the mineral resource estimates in the PEA.
Gordon Zurowski, P.Eng., prepared the reserve estimate and the
updated Feasibility Study economics. Marc Leduc, P.Eng., who is
independent of the Company, prepared the PEA and approved and
authorized the release of the information contained herein. 
Northern Graphite Corporation 
Northern Graphite Corporation is a Canadian company that has a 100%
interest in the Bissett Creek graphite deposit located in eastern
Ontario. Graphite demand is expected to rapidly increase in the
future due to strengthening economies and the growth in new
technologies such as lithium ion batteries, particularly due to their
use in hybrid and all electric vehicles. Northern Graphite is well
positioned to benefit from this compelling supply/demand dynamic with
a high purity, large flake, scalable deposit that is located close to
infrastructure. Additional information on Northern can be found at and 
This press release contains forward-looking statements, which can be
identified by the use of statements that include words such as
"could", "potential", "believe", "expect", "anticipate", "intend",
"plan", "likely", "will" or other similar words or phrases. These
statements are only current predictions and are subject to known and
unknown risks, uncertainties and other factors that may cause our or
our industry's actual results, levels of activity, performance or
achievements to be materially different from those anticipated by the
forward-looking statements. The Company does not intend, and does not
assume any obligation, to update forward-looking statements, whether
as a result of new information, future events or otherwise, unless
otherwise required by applicable securities laws. Readers should not
place undue reliance on forward-looking 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.
Northern Graphite Corporation
Gregory Bowes
(613) 241-9959 
Northern Graphite Corporation
Stephen Thompson
(613) 241-9959
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