NGC.V · 2018-12-12 12:00:00

Northern Graphite Provides Project Update

Corporate Updates

Ottawa, Ontario--(Newsfile Corp. - December 12, 2018) - Northern Graphite Corporation

(TSXV: NGC)

(OTCQX: NGPHF

)

(the

"Company") announces that G Mining Services Inc. has completed a review of the economics of the Company's Bissett Creek

graphite project (the "Project" or "Bissett Creek") in order to evaluate the effect of some modifications to the flow sheet as well

as changes in commodity prices, exchange rates, equipment and labor costs, and other project inputs.

The review indicates an

improvement in the Project's estimated net present value ("NPV") and internal rate of return ("IRR") as cost inflation has been

offset by very favorable movements in the CDN/US dollar exchange rate and savings from some simplification of the flowsheet.

The Company intends to develop Bissett Creek in two phases.

Phase 1 will consist of building a mine and plant capable of

producing over 20,000 tonnes of graphite concentrate per annum

A full Feasibility Study ("FS") was filed with respect to Phase 1

in 2012 and it was updated in 2013.

Phase 2 involves doubling the plant throughput after three years of operation and increasing

average annual production to 38,400 tonnes over the first 15 years of operation in order to meet the expected future growth in

graphite demand.

A Preliminary Economic Assessment ("PEA") encompassing both Phase 1 and Phase 2 was filed in late

2013 and is the current NI 43-101 report on the Project.

It included an initial capital cost estimate of CDN$101.6 million for

Phase 1 (US$81.2 million at current exchange rates).

The recent review indicates that the capital cost of Phase 1 has increased by approximately five per cent.

While the cost of

some equipment has declined and costs have been reduced through flow sheet modifications, other items such as the power

plant have increased and civil, mechanical and electrical costs have all increased due to inflation.

Operating costs are expected

to be up to 20 per cent higher than the original estimate.

A comprehensive metallurgical test program is currently underway at

SGS Lakefield to confirm graphite recoveries, concentrate purity and flake size yield under the new flow sheet and to bring

testing up to feasibility level standards.

Once these results are available, the Company will determine if it would be necessary or

beneficial to prepare and file a new NI 43-101 report.

For the purposes of quantifying the potential effects of the recent review, the Company is providing the following sensitivity

analysis with respect to the current NI 43-101 PEA Report.

The sensitivity analysis is based on a five per cent increase in capital

and a 20 per cent increase in operating costs, current exchange rates and commodity prices, and no change in resources or the

mine plan.

Sensitivity

NI 43-101 PEA

Analysis

CDN/US dollar exchange rate

1.05

1.30

Graphite price (US$/t)

$1,800

$1,750

Graphite price (CDN$/t)

$1,890

$2,276

Initial capital cost (CDN$ millions)

$101.6

$106.6

Initial capital cost (US$ millions)

$96.8

$81.3

Expansion capital (CDN$ millions)

$45.2

$47.5

Sustaining capital (CDN$ millions)

$58.7

$61.5

Total capital costs (CDN$ millions)

$205.5

$215.6

Average annual production (tonnes)*

38,400

Total cash operating costs (CDN$ millions)

$507.2

$608.7

Cash operating costs (CDN$/tonne)

$695

$834

Cash operating costs (US$/tonne)

$662

$642

Pre-tax NPV (@8% - CDN$ millions)

$231.0

$304.9

After -tax NPV (@8% - CDN$ millions)

$150.0

$198.2

Pre-tax IRR (%)

26.3%

30.1%

After-tax IRR (%)

22.0%

25.0%

* Average over first 15 years

The PEA

is based on Measured

and Indicated resources only

Mineral

resources that are not miner

al reserves do not have

demonstrated economic viability

The

PEA

is preliminary in nature

and there is no certainty that the

results of the

preliminary

economic assessment will be realize

Gregory Bowes, CEO, provided the following commentary on the review of Project economics, the Company's corporate

strategy and current market conditions.

"We are very pleased that there has not been a substantial increase in capital and operating costs since the NI 43-101 reports

were prepared and that the Project still has robust economics at current prices.

The Company's strategy has always been to

start with a smaller project that has a reasonable capital cost to reduce financial risk, and a realistic production level which

minimizes market risk.

We are fortunate to have a Project that has a very good flake size distribution and location which enables

us to take this approach.

Production will then be expanded as the market grows.

"The large/XL flake nature of the deposit will allow the Company to focus on high value, high margin industrial markets, mainly in

the US and Europe.

While most of the attention on graphite is being generated by potential lithium ion battery and electric

vehicle demand, these markets are supplied by small flake production from China and there is substantial excess capacity.

Growing demand will eventually overtake supply and new western sources are needed, but in the interim it remains a very

competitive market."

More information with respect to the Project is available in the technical report entitled "Northern Graphite Corporation, Bissett

Creek Project, Preliminary Economic Assessment" and the technical report entitled "NI 43-101 Technical Report - Bankable

Feasibility Study of the Bissett Creek Project", both of which are available under the Company's profile on SEDAR at

www.sedar.com

and on the Company's website.

Quali

fied Person

Gregory Bowes, B.Sc. MBA, P. Geo., a Qualified Person as defined under National Instrument 43-101, has reviewed and is

responsible for the technical information in this news release.

About Northern Graphite

Northern Graphite is a Canadian development company with a 100% interest in the Bissett Creek graphite deposit, which is

located in the southern part of Canada and relatively close to all required infrastructure.

The Company has completed a full FS, a

PEA which includes a Phase 2 expansion, and has secured its major mining permit. The Bissett Creek Project has a relatively

low initial capital cost, a high profit margin and low marketing risk resulting from its extremely good flake size distribution and a

realistic production level that can easily be expanded when market conditions warrant.

For

additional information, please contact:

Gregory Bowes, CEO

(613) 241-9959

This

news release contains certain "forward-looking statements" within the meaning of applicable Canadian securities laws.

Forward-looking statements and forward-looking informa

tion are frequently characterized by words such as "plan", "expect",

"project", "in

tend", "believe", "anticipate", "estimate", "potential", "possible" and other similar words, or statements that certai

events or conditions "may", "will", "could", or "shou

ld" occur. Forward-looking statements in this release include statements

regarding,

among others; the

FS, the PEA, graphite prices, project economics, permitting, the development timeline and the

graph

ite market

All such forward-looking statements are ba

sed on certain assumptions and analyses made by management in light of their

experi

ence and perception of historical trends, current conditions and expected future developments, as well as other factor

management believe are appropriate in the circumstanc

es. These statements, however, are subject to a variety of risks and

uncertainties

and other factors that could cause actual events or results to differ materially from those projected in the

forward-l

ooking statements including, but not limited to, unexpe

cted changes in laws, rules or regulations, or their

enforcement by applicable auth

orities; the failure of

other parties

to perform as agreed; social or labour unrest; changes in

commodity prices; unex

pected failure or inadequacy of infrastructure, the fai

lure of exploration programs, including drilling

programs, to deliver anticipated r

esults and the failure of ongoing and contemplated studies to deliver anticipated results or

results that would justif

y and support continued studies, development or operati

ons. Readers are cautioned not to place

undue reliance on forward-looking informati

on or statements.

Although the forward-looking statements contained in this news release are based upon what manageme

nt of the Company

believes are reasonable assumptions,

the Company cannot assure investors that actual results will be consistent with the

forward-looking statements. These forward-looking statements are made as of the date of this news release and are e

xpressly

qualified in their entirety by this cautionary

statement. Subject to applicable securities laws, the Company does not assume

any

obligation to update or revise the forward-looking statements contained herein to reflect events or circumstances

occu

rring after the date of this news release.

Neither the

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.

← Back to feed