Lac Guéret Graphite Project
Developing a world-class flake
graphite deposit in Quebec
Corporate Presentation - May 2014
Forward Looking Information: This Presentation may contain “forward-looking information” which may include, but is not limited to, statements with respect to: anticipated timing of the receipt of governmental approvals and/or acceptances; targets, estimates and assumptions in respect of production and prices; estimates regarding amount and type of future capital expenditures and capital resources; mineral reserves and mineral resources; anticipated grades; expected recovery rates; future financial or operating performance; costs and timing of the development of new deposits; costs, timing and location of future drilling; production decisions; costs and timing of construction; estimates regarding operating expenditures; costs and timing of future exploration; and environmental and reclamation expenses. Generally, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes” or variations (including negative variations) of such words and phrases, or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company and/or its subsidiaries and/or its affiliated companies to be materially different from those anticipated in such statements. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking statements contained herein are made as of the date of this presentation of which the information is derived from and the Company has disclaimed any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise, except in accordance with applicable securities law. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements due to the inherent uncertainty therein.
Unless indicated otherwise, all dollar figures are in Canadian dollars.
Cautionary Notes related to the PEA: A preliminary economic assessment (PEA) is preliminary in nature and includes Inferred Mineral Resources, which are considered too geologically speculative to have mining and economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the reserves development, production, and economic forecasts on which the PEA is based will be realized. Full technical details and notes for the PEA can be found in the technical report entitled “NI 43-101 Technical Report on the Preliminary Economic Assessment, Lac Guéret Graphite Project, Quebec, Canada” dated June 6, 2013 and effective April 22, 2013, which is available under Mason Graphite’s profile on SEDAR at www.sedar.com and on Mason Graphite’s website at www.masongraphite.com.
Cautionary Statement regarding Mason Graphite’s estimated timeline for production: Mason Graphite has not made a production decision. A decision to proceed with production will be based the results of a feasibility study demonstrating economic and technical viability. The production timeline in this presentation assumes that Mason Graphite will complete a feasibility study and that the results of such feasibility study will be positive. The timing and results of such study are not guaranteed and no inference should be made in this regard.There is no certainty that the events outlined in the timeline will be realized.
Cautionary Statements Regarding Mineral Resource Estimate: Mineral resources, which are not mineral reserves, do not have demonstrated economic viability. Environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues may materially affect the estimate of Mineral Resources. In addition, there can be no assurance that Mineral Resources in a lower category may be converted to a higher category, or that Mineral Resources may be converted to Mineral Reserves.
Quality Control and Assurance: The scientific and technical content of this presentation was reviewed and approved by Mason Graphite’s Executive Vice President of
Process Development, Jean L’Heureux, P.Eng., who is a Qualified Person within the meaning of National Instrument 43-101. M
TSX.V: LLG OTCQX: MGPHF
3
Solid Fundamentals for Success
* Please refer to the press release dated February 22, 2013 for details on metallurgical test results.
** Please refer to the PEA technical report entitled “NI 43-101 Technical Report on the Preliminary Economic Assessment, Lac Guéret Graphite Project,
Long mine life at high grade
Annual production of 50,000 tonnes for 22 yrs 27.4% Cgr
Low capital intensity project; excellent economics
Direct capital cost requirement of $89.9 million
Production costs of $390/tonne
Internal Rate of Return of 33.7%
Excellent recovery of high quality graphite
Only flake graphite (29% large flake graphite: +50, +80 mesh)
Graphite recovery in excess of 96%
Purity of 99.9% Cg achieved in preliminary purification trials
Located in excellent mining jurisdiction of Quebec, Canada
High Quality Project
Graphite is an essential and highly desirable
product with increasing consumption and demand
Necessary Product
The Value of High Grade Graphite
Company
Market Cap
(April 30, 2014)
Grade (Cg)
Cut-off Grade
Recovery
Northern Graphite Corp. (TSX: NGC)
$36.4M
1.81%
0.98%
97%
Focus Graphite Inc. (TSX: FMS)
$56.7M
15.76%
5%
92.5%
Energizer Resources (TSX: EGZ)
$36.3M
6.36%
2%
96.2%
Syrah Resources (ASX:SYR)
$600.6M
19.9%
13%
87%
Zenyatta (TSX: ZEN)
$181.7M
3.89%
0.6%
n/a
Flinders Resources Ltd. (TSX: FDR)
$42.5M
10.50%
7%
96%
Mason Graphite (TSX: LLG.V)
$44.9M
15.6%
5%
+96%
If you can meet the customer's specifications via good
metallurgy
(particle size, recovery and carbon content)
, then its all about grade;
as a higher grade typically results in lower costs of production.
M&I Mineral Resources include:
6.7 Mt grading 32.4% Cg
PEA Results
(April 2013)
:
First 22 yrs of production at 27.4% Cg
Graphite, along with diamonds and Coal, are crystalline forms of Carbon
Graphite 101
Graphene - Individual layers -
Graphite - Combined layers
Graphite is an essential but often unrecognized material for modern life
It has broad range of industrial applications due to its unique properties:
Properties of both metals and non-metals (ideal for industrial applications)
Highest natural strength and stiffness of any material
Lightest weight of all reinforcement materials
Very high melting (sublimation) point; low thermal expansion/shrinkage
High electrical and thermal conductivity
Low frictional resistance (excellent lubricant) and hydrophobic behaviour
Non-toxic, chemically inert and high resistance to corrosion
Properties vary
depending on the
purity and size of the
graphite crystals;
this directly affects
the price of the
resource
Details of Mason Graphite’s investment in NanoXplore can be found on slide 30.
Flake
Graphite:
Graphite – Over 180 End Products
Flake Amorphous Vein/Lump Synthetic
Metallurgy (40%)
Refractories
■
■
■
Crucibles
■
■
■
Carbon Raisers
■
■
■
Moulds & Castings
■
■
Molten Metal Protection
■
■
High Temperature Lubricants
■
■
Powder Metallurgy & Alloys
■
■
Electrical Applications (25%)
Alkaline & Lithium Batteries
■
■
Li-ion Batteries
■
■
Fuel Cells
■
■
Carbon Brushes
■
■
■
Technical Applications
Expanded Graphite & Foils
■
Thermal Management
■
Flame Retardants
■
Brake Linings & Clutch Facings
■
■
■
■
Insulation
■
■
Nuclear Reactors
■
Plastics, Resins & Rubbers
■
■
Catalysts
■
■
Cloth & Fibers
■
■
Others
Pencils
■
■
■
■
Lubricants
■
■
■
■
Oil Drilling Additives
■
■
■
Widest range of end uses
Increasing demand for
high purity flake graphite
No substitute:
Synthetic graphite has high
purity but is 4x the cost
Synthetic graphite (USD $7,000-20,000/t)
Natural flake (USD $2,000-3,000/t)
Flake graphite used in
3 Forms of Graphite
Flake
Highest Price, Lowest Supply
High Purity: 85%-99%+ carbon
Amorphous
Least graphitic of the three
Lower Purity: 60%-90% carbon
Vein/Lump
Uncommon & highly localized;
<1% of world production;
Marginal applications
45% 55%
Global
Production
Graphite is not a homogenous commodity; it occurs naturally in 3 forms:
Flake size and purity directly affects the price
Natural medium/large flake graphite forecasted
between USD$1,750 and USD$2,500/t
August 2013 ($USD): Amorphous: $525 /t Small Flake:$1,050 /t Medium Flake: $1,200 /t Amorphous Large Flake Medium Flake Small Flake
China represents +70% of world production
China has experienced a significant increase in domestic demand
Export tariffs and new safety and environmental regulations have resulted
in a reduction of export supply and an increase in prices.
China is experiencing a reduction of large and medium flake production
Graphite – Investment Opportunity
Global consumption of natural graphite has doubled from 2000 to 2010
Urbanization of China and India is driving the demand of graphite
For graphite used in the battery application alone,
demand is expected to increase from 125,000 tons in 2010
to 320,000-640,000 tons in 2020;
a growth rate of 10-18%
*
European Union declared graphite as one of 14 critical raw materials
0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000
2000
2010
Graphite Global Consumption
Ton
n
e
s
Restricted and Unstable Supply in China = Opportunity
Flake graphite production outside of China:
How is graphite sold?
Graphite is not an openly traded mineral
Prices are negotiated between end-users and
producers for annual or multi-year contracts
Prices for graphite vary based on parameters
such as purity, size, impurities and shape
Continuous contact with customers is fundamental
There is a market for 100% of mined
graphite material (from large to fine flakes)
Market Study is underway to identify
all end-users in all market segments
Graphite Mine
Inventory of different sizes for different uses and end users
End-Users
Typical one-year supply contracts establishing
prices, specifications, volume, timing and delivery
The finished graphite product of a mine must be adapted to the buyers
Requires the right finished product
Requires strong relationships with clients
Management with over 5 decades of experience
Management: P
roven Track Record
Benoît Gascon,
CPA, CA
Luc Veilleux,
CPA, CA
Jean L’Heureux,
Eng.
20 years of executive
positions at Timcal
20 years in mining and
graphite, Timcal and Imerys
8 years in graphite at
Timcal
Previous Roles:
Senior Vice-president, Business
Development and Strategy, Sales and
Deputy General Manager (11 yrs)
President of Stratmin Graphite Inc.
from 1993 to 1999; renamed Timcal
Canada in 1999 (7 yrs)
Vice-president and CFO (4 yrs)
Previous Roles:
Senior Vice-president, Finance
COO North America
Vice-president, Finance North America
Financial Controller
Previous Roles:
Product Manager (Marketing)
Graphite Sourcing Manager
Production Manager
Plant Metallurgist & Lab Supervisor
Major Accomplishments:
Creation of a whole customer
base for Stratmin in the 1990’s
Acquisition and integration of
a private company in China
Supervision of nine sites in seven countries
Operational merger of Stratmin and Timcal
Major Accomplishments:
Implementation of a new production
organizational structure
Operational merger of
Stratmin and Timcal
Reorganization and improvement of
North American customer support
Major Accomplishments:
Optimization of the graphite flow sheet
Sales growth through technical support
to production & customers
Development of customers’
specifications management system
Development of production
planning system
Management Team
Benoît Gascon
, President & CEO
Over 20 yrs of experience in the Graphite & Carbon industries. He was the CEO of
Stratmin Graphite
which operates the Lac-des-Iles deposit;
one of North America's only producing graphite mines. He was responsible for negotiating the complete take-over of Stratmin Graphite by
Imerys
SA
, a world leader in Industrial Minerals, to form
Timcal Graphite & Carbon
. Mr. Gascon, CPA, CA, holds a bachelor’s degree in Business
Administration from Haute Etudes Commerciales (HEC, Montreal).
Luc Veilleux
, Executive Vice-President & CFO
Luc Veilleux, CPA, CA, holds a Bachelor’s degree in Business Administration from Hautes Études Commerciales (HEC, Montreal) and has over
20 years of experience in the mining and manufacturing industries including eight years at
Timcal
in the roles of Chief Financial Officer (based in
Switzerland), COO and Vice-President of Finance (North America), and Controller for the Lac-des-Iles graphite mine.
Jean L’Heureux
, Executive Vice-President, Process Development
Mr. L’Heureux is a professional metallurgical engineer who has been involved in the mining and processing of graphite for over 20 years with the
Imerys SA
in Quebec and in Europe. Since 2000, he has been the Product Manager, Refractory and Metallurgy for
Timcal
. Mr.
L’Heureux
obtained his Bachelor of Engineering degree at Laval University in Quebec City and is currently enrolled in a
Master’s Degree in Engineering
Management at Sherbrooke University. Mr. L’Heureux is a member of the Ordre des Ingénieurs du Québec.
Simon Marcotte
, Vice-President Corporate Development
Over 15 years of capital market experience. He was a partner of Cormark Securities for 4 years (institutional equity sales) and was also a member
of their Board. Previously, Mr. Marcotte was a Director for CIBC World Markets in Montreal for 8 years and also acted as an officer for
Alderon
Iron Ore
. He is currently an officer of
Belo Sun Mining
and a board member of
Copper One
and
Arena Minerals
. Mr. Marcotte holds a B.A.A.
from Sherbrooke University and is a Chartered Financial Analyst (CFA).
Yves Caron, P. Geo., M.Sc.
,
Director of Geology and Exploration
Mr. Caron brings over 20 years of geological experience and an extensive knowledge in mining exploration and the minerals industry. Most
recently, Mr. Caron was Exploration Vice-President for
Nemaska Lithium Inc.
where he participated to their Whabouchi project development. He
also had previously worked as senior project manager at
North American Palladium Ltd.
Member of the association of professional geologists of
Quebec (OGQ), Mr. Caron holds a Master’s in Earth Sciences from INRS and a bachelor’s degree in economic geology from UQAM.
Lac Guéret - Location & Access
288 km from Baie-Comeau
service centre, + 660 km to Montreal
All-weather access from
Hwy 389 and main logging
roads throughout property
Good accessibility to labour
Excellent mining jurisdiction
Extensive logging road system throughout the
Lac Quéret property and to Baie Comeau
Only zone
drilled to date
Mason Graphite Claims Map
Mason Graphite’s
properties consist of 215
claims covering 11,630 ha
(116 km
2
) in northeastern
Québec
Two main graphite zones have
been identified to date
Two Major Graphite Zones
km
GC Graphite Zone
1.2 km strike, up to 240 m wide
New mineral resource issued in
December 2013 shows +600%
increase in M&I resources
Excellent resource growth potential
GR Graphite Zone
1 km strike, up to 110 m wide
2,321 m of drilling completed in 2012
Further drilling planned and expected
to contribute to mineral resource
GC Zone
GR Zone
GC Zone Mineral Resource
(Dec 2013)
Categories
Unit
Tonnes
Grade
( Cgr)
Measured (M)
U1/U2 (5 to 25 % Cg)
U3 (> 25 % Cg)
4,052,000
465,000
13.4%
33.8%
All units
4,517,000
15.5
%
Indicated (I)
U1/U2 (5 to 25 % Cg)
U3 (> 25 % Cg)
39,300,000
6,207,000
13.0%
32.3%
All units
45,507,000
15.6
%
M & I
U1/U2 (5 to 25 % Cg)
U3 (> 25 % Cg)
43,352,000
6,672,000
13.0%
32.4%
All units
50,024,000
15.6%
Inferred
U1/U2 (5 to 25 % Cg)
U3 (> 25 % Cg)
9,224,000
2,637,000
13.3%
30.5%
All units
11,861,000
17.1%
Mineral Resource
July 2012
7,595,900 tonnes
Mineral Resource
Dec 2013
50,024,000 tonnes
Based on about
26,500 metres
of drilling
GC Zone Resource
Metal Equivalence
Source: TD Securities research department (Craig Miller) 2012
Graphite
(@ $1,750)
20.40%
=
Gold
(@ $1,250)
9.1 g/t
Silver
(@ $14)
800 g/t
Copper
(@ $2.75)
6%
=
=
Dec 2013 mineral resource:
M&I = 50Mt grading 15.6% Cg, including 6.7Mt grading 32.4% Cg
*PEA indicates 22 years of production at 27.4% Cgr
Mineral Resource Comparison
Million Tonnes (Measured & Indicated Mineral Resources)
Gr a d e % C g Mineral growth expected based on future prospective exploration targets
Rapid Resource Growth
Only 170 holes
(about 26,500 metres)
Have been drilled on the
Lac Guéret property to date.
The new mineral resource estimate is based
on drill data from the GC Zone (at left), which
represents only one of two mineralized zones
identified on the Lac Guéret property to date.
Excellent Metallurgy
Graphite recoveries in excess of 96%
Concentrate purity of 96.3% for the +150 mesh cumulative
29% of +80 mesh cumulative, including 16% of +50 mesh
Flake Size
Distribution
(%)
Carbon Content
(% Cg)
+50 mesh (Large Flake)
16%
96.3%
+80 mesh (Large Flake)
13%
96.4%
+150 mesh
14%
96.2%
-150 mesh
57%
91.7%
Total / Average
100%
93.7%
TSX.V: LLG OTCQX: MGPHF
22 years of production at 27.4 % Cg
Direct capital costs of $89.9M
Production costs of $390/tonne
$364M pre-tax NPV @ 8 % ($283M @ 10 %)
33.7 % pre-tax Internal Rate of Return
Payback period of 2.5 years
Only flake graphite (29% large flake)
Conservative average sales price of $1,525/t
Low capital intensity and low operating costs
PEA Financial Results
April 2013
23
Cautionary Notes related to the PEA: A preliminary economic assessment (PEA) is preliminary in nature and includes Inferred Mineral Resources, which are considered too geologically speculative to have mining and economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the reserves development, production, and economic forecasts on which the PEA is based will be realized. Full technical details and notes for the PEA can be found in the technical report entitled “NI 43-101 Technical Report on the Preliminary Economic Assessment, Lac Guéret Graphite Project,
Updated Mineral
Resource Estimate
announced
December 5, 2013
is expected to
positively affect the
50 000 tonnes per year of production
27.4 % Cg in mineralization over LOM
Graphite Recovery above 96 %
Up to 96.4 % Cg of finished product purity
Stripping ratio of 0.76:1
Process resulting in +96% recoveries
PEA Operational Results
TSX.V: LLG OTCQX: MGPHF
Preliminary Purification Test Results
September 2013
25
Flake Size
Graphite (Cg)
+48 mesh
99.6%
+80 mesh
99.7%
+150 mesh
99.9%
Purity of 99.9% Cg achieved in
preliminary purification trials
6. Sieving
1. Mining
2. Crushing
3. Milling & Flotation
4. Dewatering
Flow Sheet
PEA Technical Report - April 2013
Simple process
TSX.V: LLG OTCQX: MGPHF
2012
2013
2014
2015
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Completion of 26,500 m Drilling Program
Completed Metallurgical Test Work
Completed PEA
Purification Testing
NI 43-101 Mineral Resource Update
15,000 m Drilling Program
Further Metallurgical Testing
Piloting and Bulk Sample Testing
Completion of Feasibility Study
Environmental Baseline Studies
Construction Financing
Expected Construction Start
Expected Production Start
Recent & Expected Upcoming Milestones
27
Mason Graphite has not made a production decision. A decision to proceed with production will be based on the results of a feasibility study demonstrating economic and technical viability. All reference herein with respect to production and anticipated timelines for production assume that Mason Graphite will complete a feasibility study and that the results of such
Corporate Structure
Corporate Structure
(As at April 30, 2014)Shares Outstanding
Options
Warrants
Fully Diluted
85,786,034
6,410,000
30,106,187
122,302,221
Analyst Coverage
Daniel Greenspan
Cash Position
Last reported quarter
(Fiscal Q2 ending Dec. 31, 2013)
$2.7M
Bought Deal Private Placement
(Including $3.0M from Ressources Québec; Closed April 28, 2014)
$11.5M
Sodémex; Fonds de solidarité FTQ;
Fonds regional de solidarité FTQ
Côte-Nord
(Agreement for additional financing through convertible debentures announced April 28, 2014*)$4.15M
Trading Symbols
TSX.V:
LLG
(Listed since Oct. 30, 2012)
OTCQX:
MGPHF
(Listed since Nov. 12, 2013)
Mason Graphite is
recognized as one of
the top ten performing
mining companies on
the TSX Venture in 2013
40% interest in NanoXplore Inc.
Private R&D company focused on developing low cost,
large-scale production of graphene from natural flake graphite.
NanoXplore's proprietary technique is a low cost, low energy, safe and scalable
electrochemical conversion method which turns natural flake graphite into graphene.
Mason Graphite owns 40% interest in NanoXplore Inc.
(First tranche completed Feb 18, 2014; second tranche completed April 30, 2014)
Mason Graphite acting as the sole NanoXplore sales, marketing and distribution agent
Benoit Gascon appointed Chairman of NanoXplore’s Board
Board of Directors
Tayfun Eldem
, Chairman
Mr. Tayfun Eldem currently serves as the President and CEO of
Alderon Iron Ore Corp.
He has worked for the Iron Ore Company of
Canada
(“IOC”), a Rio Tinto subsidiary, for more than 20 years, including three years as a Director on the joint-venture Board. Mr. Eldem
holds a Bachelor of Engineering degree from Dalhousie University along with Operations & Strategic Management Certificates from Richard
Ivey School of Business and London Business School.
Tyrone Docherty
, Vice-Chairman
Mr. Docherty has over 25 years of experience in the resource industry. He was previously CEO of
Quinto Mining Corporation
and
President, CEO and Director of
Deer Horn Metals
. Mr. Docherty is an active board member of a number of other public and private mining
companies.
Scott Moore
, Director
Mr. Moore is a finance executive with over 20 years of experience in the resource sector. He presently serves as Chairman & CEO of
Copper
One
and COO of
Forbes & Manhattan, Inc.
and previously acted as President for
Dacha Strategic Metals Inc.
and VP of Corporate
Development for
Sulliden Gold Corp. Ltd.
He holds a Bachelor of Arts degree from the University of Toronto and an MBA from the Kellogg
School of Management.
François Laurin
, Director
Former CFO of
Consolidated Thompson Iron Mines Ltd. (CLM)
. He is currently the CFO of
Alderon Iron Ore Corp
.; and formerly acted
as President and CEO of
Cap-Ex Ventures Inc.
and CFO of
Copper One Inc.
, two exploration mining companies listed on the TSXV.
Alastair Neill
, Director
Mr. Neill is currently an executive VP of
Dacha Strategic Minerals Inc.
who holds a Master of Business Administration from York University
and a Bachelor of Engineering in Material Science from the University of Western Ontario. He is the former VP sales, Rare Earth Division and
VP Business Development for AMR.
Backed by the Forbes&Manhattan Group
*Excellent track record of success in the Labrador Trough*
Stan Bharti
Founder & Executive Chairman
Over 50 engineers
Over 50 geologists
Expertise in all mining,
energy and agriculture
products
8 full-time
securities lawyers
and support staff
Over 30 people
with expertise in
M&A Investment banking Corporate Finance Corporate Development Investor Relations
Over 20 accounting
and administration
staff
Advisory
Board
Technical
Team
Legal
Team
Financial
Team
Admin /
Accounting