Graphite One Purchases Net Smelter Production Royalty

Rhea-AI Summary

Graphite One Inc. has announced the acquisition of a 2% net smelter production royalty linked to its Graphite Creek Project in Alaska, through an agreement dated October 13, 2020. The Company will issue 2,500,000 common shares at CA$0.40 each and 2,500,000 share purchase warrants at CA$0.50. This transaction is subject to TSX Venture Exchange approval and includes an accelerated exercise clause for the warrants. CEO Anthony Huston noted this acquisition is expected to positively influence the internal rate of return (IRR) and net present value (NPV) of their Pre-Feasibility Study, set for completion in early 2021.

Positive

• Acquisition of a 2% NSR expected to enhance IRR and NPV.
• Transaction involves share issuance, potentially improving liquidity and investor interest.
• PFS completion anticipated in the first half of 2021.

Negative

• Warrants have an exercise clause dependent on stock performance, introducing volatility.
• Acquisition may dilute existing shareholders due to new share issuance.

VANCOUVER, BC / ACCESSWIRE / October 15, 2020 / Graphite One Inc. (TSXV:GPH)(OTCQB:GPHOF) ("Graphite One" or the "Company") announces the purchase of a net smelter production royalty.

PURCHASE OF NET SMELTER PRODUCTION ROYALTY

On October 13, 2020, the Company entered into an agreement (the "NSR Purchase Agreement") to acquire a 2% net smelter production royalty (NSR) against certain claims that are held by the Company, and which make up a part of the Company's Graphite Creek Project in Alaska. Under terms of the NSR Purchase Agreement, the Company will issue 2,500,000 common shares at a price of CA$0.40 and 2,500,000 common share purchase warrants, with an exercise price of CA$0.50 and a term of five years, all subject to TSX Venture Exchange ("TSXV") approval. The warrants include an accelerated exercise clause whereby, in the event the Company's common shares trade at a volume of CA$0.65 or more on the TSXV or the Toronto Stock Exchange (if so listed at such time) for 10 consecutive trading days, the Company may, at its option, issue a press release and a notice to the warrant holder for the expiry of the warrants on the date that is 45 days from the press release and notice and the warrant holder may exercise the warrants during this 45 day period but no later than the expiry date. The NSR applied to future production from 28 Alaska state claims owned by the Company. The Company's option to purchase the NSR expires January 24, 2021.

"We anticipate that our purchase of the Net Smelter Royalty will have a positive impact on our IRR and NPV, which will be reflected in the financial projections of our Pre-Feasibility Study (PFS)," said Anthony Huston, CEO of Graphite One, "and we appreciate the vote of confidence sent by making this purchase a share-based transaction." The Company anticipates completion of the PFS during the first half of 2021.

About Graphite One Inc.

GRAPHITE ONE INC. (GPH: TSX-V; GPHOF: OTCQB) continues to develop its Graphite One Project (the "Project"), whereby the Company could potentially become an American producer of high grade Coated Spherical Graphite ("CSG") that is integrated with a domestic graphite resource. The Project is proposed as a vertically integrated enterprise to mine, process and manufacture high grade CSG primarily for the lithium-ion electric vehicle battery market. As set forth in the Company's Preliminary Economic Assessment, potential graphite mineralization mined from the Company's Graphite Creek Property, is expected to be processed into concentrate at a graphite processing plant. The proposed processing plant would be located on the Graphite Creek Property situated on the Seward Peninsula about 60 kilometers north of Nome, Alaska. CSG and other value-added graphite products, would likely be manufactured from the concentrate at the Company's proposed graphite product manufacturing facility, the location of which is the subject of further study and analysis. The Company intends to make a production decision on the Project once a feasibility study is completed.

ON BEHALF OF THE BOARD OF DIRECTORS

"Anthony Huston" (signed)

For more information on Graphite One Inc. please visit the Company's website, www.GraphiteOneInc.com or contact:

Anthony Huston
CEO, President & Director
Tel: (604) 889-4251
Email: AHuston@GraphiteOneInc.com

Investor Relations Contact
1-604-684-6730
GPH@kincommunications.com

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.

Cautionary Note Regarding Forward-Looking Statements

This release includes certain statements that may be deemed to be forward-looking statements. All statements in this release, other than statements of historical facts, are forward-looking statements.

Generally, forward-looking information can be identified by the use of forward-looking terminology such as "proposes", "expects", or "is expected", "scheduled", "estimates", "projects", "intends", "assumes", "believes", "anticipates", "indicates" or variations of such words and phrases that state that certain actions, events or results "may", "could", "would", "might" or "will have", "occur" or "be achieved".

Forward-looking information in this release includes, but is not limited to, statements regarding approval of the TSXV of the issuance of the securities as consideration for the purchase of the NSR, the stage and progress of development of the Graphite Creek Project including the ability to actually produce spherical graphite, results from the 2019 field program, the ability to produce a Prefeasibility Study in the first half of 2021, ultimate further and final results of additional test-work, estimated capital and sustaining costs and the availability of equipment, labour and resources required, the anticipated applications of graphite in high-tech, clean tech, energy storage and national security applications and all other anticipated applications, international demand and ability to transport and enter into such markets, are all forward-looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include: (i) volatile stock price, (ii) the results of the product development test work may not be indicative of the advancement of the project as anticipated, or at all, (iii) market prices, (iv) exploitation and exploration successes, (v) continuity of mineralization, (vi) uncertainties related to the ability to obtain necessary permits, licenses and title and delays due to third party opposition, (vii) changes in government policies regarding mining and natural resource exploration and exploitation, (viii) competition faced in securing experienced personnel, access to adequate infrastructure to support mining, processing, development and exploration activities and continued availability of capital and financing, and (ix) general economic, market or business conditions. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date it is expressed in this press release, and the Company undertakes no obligation to update publicly or revise any forward-looking information, except as required by applicable securities laws. For more information on the Company, investors should review the Company's continuous disclosure filings that are available at www.sedar.com.

SOURCE: Graphite One Inc.

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https://www.accesswire.com/610642/Graphite-One-Purchases-Net-Smelter-Production-Royalty

FAQ

What is the significance of the net smelter production royalty purchased by Graphite One (GPHOF)?

The 2% net smelter production royalty is expected to enhance the internal rate of return (IRR) and net present value (NPV) of Graphite One's Graphite Creek Project.

When will Graphite One's Pre-Feasibility Study be completed?

Graphite One anticipates completion of the Pre-Feasibility Study in the first half of 2021.

How many shares and warrants will Graphite One issue for the NSR purchase?

Graphite One will issue 2,500,000 common shares at CA$0.40 and 2,500,000 share purchase warrants at CA$0.50.

What conditions are attached to the share purchase warrants in the NSR agreement?

The warrants have an accelerated exercise clause if the Company's shares trade at CA$0.65 or more for 10 consecutive trading days.

What are the potential impacts of this royalty acquisition on Graphite One (GPHOF)?

The acquisition could improve financial projections and investor confidence, but may also lead to shareholder dilution.