Northern Graphite Announces Update of Expansion Case PEA

Northern Graphite Announces Update of Expansion Case PEA 
Project shows robust economics despite low graphite price environment 
OTTAWA, ONTARIO -- (Marketwired) -- 06/24/14 --   Northern Graphite
Corporation (TSX VENTURE: NGC)(OTCQX: NGPHF) announces that it has
updated the Preliminary Economic Assessment (the "PEA") on its 100%
owned Bissett Creek graphite project to assess the economics of
building a process plant with twice the capacity of the plant
contemplated in the Company's Feasibility Study ("FS"). The larger
process plant was evaluated due to recent developments in the lithium
ion battery industry and strong buyer interest in the extra large
flake, high purity concentrates that will be produced using
Northern's proprietary purification technology. 
The updated PEA indicates that the Bissett Creek Project has very
attractive economics even at or below current depressed graphite
price levels. The pre-tax internal rate of return ("IRR") is 31.7%
(26.7% after tax) and the pre-tax net present value ("NPV") is $264.7
million ($178.9 million after tax) in the base case which is based on
an 8% discount rate and a weighted average price of US$1,800/tonne of
concentrate which reflects current market conditions. 
Development capital costs in the updated PEA have been estimated at
$134.1 million (including a 10% contingency) for an operation that
will produce an average of approximately 44,200 tonnes of graphite
concentrate annually over the first 10 full years of operation.
Almost 90% of production will consist of large and extra large flake
and battery grade graphite which is by far the highest ratio in the
industry. There are also 27.3 million tonnes of Measured and
Indicated resources and 24 million tonnes of Inferred resources that
are not part of the PEA mine plan and the deposit has not yet been
closed off by drilling, all of which indicates that further
production expansions are possible. 
Gregory Bowes, CEO, commented that: "It has been reported that
multiple new graphite mines will be required to supply proposed
lithium ion battery manufacturing plants because graphite deposits
typically produce a high percentage of non battery grade material,
and two thirds of the material that is battery grade is lost in the
manufacturing process. However, Bissett Creek may be the only mine
that is required to meet market demand due to its very high
percentage of battery grade material, lower manufacturing losses and
future expansion potential." 


 
 
Summary of updated PEA Results                                             
 
Potential Economically Extractable Resources (million                      
 tonnes)(i)                                                       40.5Mt(i)
Feed Grade (% graphitic carbon)                                    1.83%(i)
Waste to ore ratio                                                   0.25:1
Annual processing rate (tonnes per year)                          2,000,000
Processing rate (tonnes per day - 92% availability)                   5,480
Project life (based on 2.0 Mtpa)                                   21 years
Mill recovery                                                         94.7%
Average annual concentrate production (tonnes - first 10                   
 years)                                                              44,200
Capital cost ($ millions - including 10% contingency)                $134.1
Sustaining capital ($ millions)                                       $55.1
Cash operating costs ($/tonne of concentrate)                          $736
Mining costs ($/tonne of process feed material)                       $3.74
Processing costs ($/tonne of process feed material)                   $7.78
General and administrative costs ($/tonne of process feed                  
 material)                                                            $1.45
Concentrate transportation to Montreal ($/tonne of process                 
 feed material)                                                       $0.55
CDN/US dollar exchange rate                                $0.95US = $1 CDN

(i) The PEA production plan is based on 24 million tonnes ("Mt")
grading 2.20% Cg (as estimated in the FS) being processed first
followed by the processing of 16.1 million tonnes of Measured and
Indicated resources grading 1.26 % Cg from a low grade stockpile. All
grades are diluted. Mineral resources that are not mineral reserves
do not have demonstrated economic viability. 


 
 
                                                    PEA Update            
                                      ------------------------------------
                                                   (base case)            
Average graphite price (US$ per tonne)      $2,100      $1,800      $1,500
Pre tax Net Present Value @8% (CDN$                                       
 millions)                                  $380.9      $264.7      $148.4
Pre tax IRR (%)                              40.7%       31.7%       22.2%
After tax Net Present Value @8% (CDN$                                     
 millions)                                  $257.9      $178.9       $99.0
After tax IRR (%)                            33.9%       26.7%       18.9%

The PEA was originally undertaken to demonstrate the ability to meet
expected future growth in graphite demand by substantially increasing
production from the Bissett Creek deposit after three years of
operation based on Measured and Indicated resources only. The PEA
built on the Feasibility Study completed by G Mining in August, 2012
and the expanded resource model, mine plan and updated FS economics
completed by AGP Mining Consultants ("AGP") in September, 2013. P&E
Mining Consultants Inc. ("P&E") reviewed the AGP mine plan and
modified it to commence production at the expanded 2.0 Mtpa
production rate in Year 1 rather than ramping up in Year 3 and to
more aggressively backfill the open pit with waste. WorleyParsons
Canada updated the capital and operating costs for the process plant
which represents a portion of the total capital and operating costs
for the project. Consistent with industry practice, the estimates
have been prepared with an engineering accuracy of +15/- 20%. 
Graphite Markets and Pricing 
Graphite prices have fallen 50% or more from their 2012 peak due to
the economic 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 30% as uneconomic and polluting mines are being
closed. Current prices are at the marginal cost of production for
many producers which 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 which
is the highest in the industry because approximately 50% of
production will be +50 mesh extra large flake and another 40% is +80
mesh large flake. Current graphite pricing is approximately $2,100/t
for +50 mesh XL flake concentrates, $1,300/t for +80 mesh large
flake, $1,100/t and $900/t for +100 mesh and +150 mesh medium and
small flake respectively, and less than $500/t for -150 mesh fines.
Typical graphite deposits only have about 15% XL flake and over one
third -150 mesh fines, and would realize average prices in the range
of $1,000-1,200 per tonne of concentrate under current conditions,
assuming a market for the fines. 
Qualified Persons 
Ken Kuchling, P.Eng., Senior Mining Associate of P&E Mining
Consultants Inc. prepared the revised mine plan for the PEA update.
Dan Peldiak, P.Eng., Principal Process Engineer WorleyParsons Canada
prepared the revised capital and operating costs for the process
plant. Andrew Bradfield, P.Eng., of P&E, who is independent of the
Company, approved and authorized the disclosure of the technical
information contained in this press release. Readers should refer to
the NI 43-101 technical reports relating to the FS and the PEA for
further details with respect to the Bissett Creek Project. 
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. The Company expects graphite prices to outperform those of
other commodities in an economic recovery because of Chinese supply
problems and the continued rapid growth in new uses such as lithium
ion batteries. Bissett Creek is the only true large flake deposit and
the only one with a bankable Feasibility Study and its major
environmental permit. It also has the best infrastructure of any new
graphite project, the lowest capital costs and the highest operating
margin. A copy of this press release which includes detailed cash
flows for the updated PEA economics, as well as additional
information on Northern, can be found at www.sedar.com and
www.northerngraphite.com. 
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. 
Contacts:
Northern Graphite Corporation
Gregory Bowes
CEO
(613) 241-9959 
Northern Graphite Corporation
Stephen Thompson
CFO
(613) 241-9959
 
 
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