2. This presentation includes certain statements that may be deemed ʺforward‐looking statementsʺ. All statements in this
discussion, other than statements of historical facts, which address future production, reserve potential, exploration
activities and events or developments that the Company expects, are forward‐looking statements. Such forward-looking
statements include, without limitation: (i) estimates of future graphite prices, supply, demand and/or production; (ii)
estimates of future cash costs; (iii) estimates of future capital expenditures; (iv) estimates regarding timing of future
development, construction, production or closure activities; (v) statements regarding future exploration results; (vi)
statements regarding cost structure, project economics, or competitive position, and; (vii) statements comparing the
Company’s properties to other mines, projects or metals. 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 market prices,
exploitation and exploration successes, continued availability of capital and financing, and general economic, market or
business conditions. Investors are cautioned that any such statements are not guarantees of future performance, that the
Company expressly disclaims any responsibility for revising or expanding the forward‐looking statements to reflect actual
results or developments, and that actual results or developments may differ materially from those projected, in the forward‐
looking statements.
Forward Looking Statement
3. Vision - Mega will become the leading supplier of high grade graphite products for
emerging technology applications by milling and processing its own natural flake supply
and selling directly to end-users.
Strategy – Mega will utilize its assets to complete a vertically integrated multi-plant
production and purification facilities by having mining operations in Australia , Canada &
India and by leveraging its licensing agreement with Hydro Quebec
Capital Budget – capital expenditures budget (capex) projected at approximately $35
million for Uley graphite mine re-start and base purification plant operation in Adelaide
Market Opportunity – capitalize on a growing supply / demand gap for natural graphite
as a strategic material both in traditional and emerging market applications
Competitive Advantage – Mega will own the advantageous “reliability of supply”
position; enhanced with delivery and price stability; offer a suite of high-purity products;
work directly with end-use customers. Mega currently has LOI’s with 5 companies
representing 26,000 tonnes of finished product.
Key Strengths - **access to multiple high-grade natural graphite properties
**experienced mining and mineral processing team **proprietary licence technology for
battery grade graphite **graphite sales/marketing management team
Investment Summary
4. Corporate: Private - TSX Listing Q3 2012
Founded: 2009
Employees: 20>
Revenues: $35 Million (projected 2013)
Capex Required: $6 million first phase / $29 million for upgrade
Products: Natural flake graphite, Purified graphite up 99.9%
Facilities and Offices: North America, Australia and India
29.6 Million (basic)
Shares O/S:
30.8 Million (fully diluted)
Shares O/S Post Uley
approx 60.0 Million
Acquisition from SER:
Share Value $N/A (upon listing)
MEGA At a Glance
5. Business Model – Mega Graphite Inc. (MEGA) is in the pre-production phase of mining, processing and
purifying of natural graphite . Mega is currently purchasing 100% of the Uley Graphite Mine in the South of
Australia from Strategic Energy Resources. A previous producer, Mega plans to have Uley back into full
production in 2013. The deal will close in June, 2012 The Company’s primary target markets include high purity
graphite applications in lithium-ion batteries, graphene-based flat panel displays, and expandable graphite used
in fire retardants, high performance gaskets, conductive fillers, and electromagnetic pulse and radiation shielding
History – privately held Ontario corporation established in September 2009. Acts as the main holding company
for current and planned graphite property acquisitions in North America. Founded by the key shareholders most
of whom are active in the development of the Company’s business. Currently there are 40 shareholders
Capital Investment - to date approximately $5.8Million on property development, operations and setup costs
MEGA Properties
Uley Graphite Mine, Port Lincoln, Australia
North Burgess, Kingston, Ontario
Bedford Graphite Mine, Kingston, Ontario
Treelined Lake Graphite Mine, Kenora, Ontario
Separation Lake Rare Elements Mine, Kenora, Ontario
Capex Requirements - $35 million - completion of acquisitions and commencement of plant construction
Restart of Uley mill. Building upgrade facility in Adelaide, Australia
Executive Summary
6. Canada Australia
P1 – Bedford , Kingston, ON (NI 43-101) P5 -Uley Graphite, Port Lincoln, Adelaide
P2 – Burgess, Kingston, ON (NI 43-101) -Location of the mine has existing roads,
P3 – Treelined Lake, Kenora, ON. close to shipping and required infrastructure
P4 – Separation Lake, Kenora, ON (NI 43-101) -All permits are in place to start production
AUSTRALIA
Rare element property
P4
P3
P5
P2
P1
Mega Properties
11. Graphite is mined around the world by both open pit and underground methods. While flake graphite and
amorphous graphite are both mined open pit and underground, lump (vein) graphite is only mined underground in
Sri Lanka. Open pit mines employ heavy equipment (i.e. front end loaders, bulldozers) to scoop up the ore, which
is usually put in trucks (Euclids) and moved to the plant. Underground graphite mines employ drilling and blasting
to break up the hard rock (ore), which is then moved by mine cars pulled by a locomotive, or moved by automotive
vehicles, to the surface and then to the plant. In less-developed areas of the world such as China, the ore is often
mined by pick and shovel and transported by mine cars pushed by labourers.
The great majority of world flake graphite production is crushed and ground and then beneficiated by flotation.
Treating graphite by flotation typically requires a series of flotation cells to obtain a purer concentrate. In the milling
process, the incoming graphite products and concentrates can be ground before being classified (sized or
screened), with the coarser flake size fractions (below 8 mesh, 8-20 mesh, 20-50 mesh) carefully preserved, and
then the carbon contents are determined. Air classification using winnowers is also used to capture coarser flake
and increase the head grade of feed to be subsequently concentrated.
Following beneficiation, standard blends can be screened from the different fractions, each with a certain flake
size distribution and carbon content. Custom blends can also be made for individual customers who want specific
flake size distributions and carbon content. Rough graphite is typically classified, ground, and packaged at a
graphite mill; more complex or high-purity formulations are treated, mixed and packaged at an upgrade facility.
Environmental impacts from graphite mills consist of air pollution including fine particulate exposure of workers
and also limited soil contamination from powder spillages. Dust masks are normally worn by workers during the
production process to avoid worker exposure to the fine airborne graphite.
Graphite Mining and Milling
12. MEGA has signed a letter of intent with Chotanagpur Graphite Industries (CGI) to create a
new joint venture to mine, mill, and produce purified graphite from CGI’s properties,
located in Eastern India in the Jharkhand Region. CGI has been supplying high quality
natural flake graphite to Europe and Asia since 1976 and has selected Mega as a partner
to increase production, purification efficiency and global reach
The properties are divided into two geographical locations, located in the Northwest district
of Palamau in the State of Jharkhand.
P1 – Bishrampur Project (Stage 1: Q1 – 2012)
The Bishrampur Property consists of 3 contiguous
claims totaling approximately 125 acres of area. The
mines are known for high fraction of large flake
material and being easy to mill due to the soft rock
structures.
P2 – Satbarwa Project (Stage 2: Q1 – 2013)
The Satbarwa properties consists of 4 contiguous
properties with a combined area of around 120 acres.
The property is adequately connected to major cities
through roadways. Water supplies in the area are P1
abundant.
P2
India Joint Venture with CGI
13. Industry Pricing - pricing within the graphite sector is typically described as being “fully
negotiated”. As such, suppliers and customers establish prices based on meeting
particular specifications and needs
Price Drivers –The principal drivers of price are reliability of supply, quality, and the ability
to meet customer specifications
Grade Low High
Price Increases – projected price
99% to 99.9% C, +400
increases will be driven by: $3,500 $35,000
mesh
Supply constraints from China as 94% to 97% C, +80
$1,900 $2,500
mesh
their internal demand grows.
90% C, +80 mesh $1,250 $1,375
Growth in traditional applications 94% to 97% C, -80
$1,650 $1,795
such as automotive parts. +100 mesh
90% C, -80 +100
$1,070 $1,150
Rapid increases in new battery mesh
applications & new materials 85% to 87% C, -80
$989 $1,020
+100 mesh
such as graphene, both of which
94% to 97% C, +100
require specialized processing $1,425 $1,489
mesh
such as that planned by MEGA 90% C, -100 mesh $975 $1,050
Amorphous powder
$730 $850
80% to 85C
Graphite Pricing Synthetic 99.95% C2 $6,200 $19,000
14. Graphite is composed of carbon atoms arranged in hexagonal groups that form “sheets”.
These sheets, which have a weak bond between them, form the graphite crystals, and allow
other atoms to enter regions between the layers causing them to slide over one another
The delocalized electrons (pi orbital electrons)
between the hexagonal atomic carbon sheets add
to the element’s essential properties such as
conduction of electricity and the application as a dry
lubricant.
The following are the main properties of graphite
that make it suitable for a variety of applications:
highly resistive to chemical corrosion,
highly conductive, electrically and thermally,
resistant to heat (melting temperature of 3,527
degrees C),
resistant to thermal shock,
chemically inert and highly refractory
Properties of Graphite
15. Country 2004 2008 2012 2014 Supply and Demand
China 678,230 799,554 924,283 967,805 Balance
India 116,268 137,066 182,828 220,348 There is widespread market
Brazil 73,958 87,188 113,575 141,075 consensus that internal
North Korea 29,067 34,267 40,707 43,707 consumption within China as
Canada 27,129 31,982 40,493 87,710 well as demands from new
Madagascar 14,534 17,134 20,354 22,376 applications, may create a
Mexico 14,310 16,870 20,041 22,031
significant gap in the supply
and demand balance by
Czech Republic 9,689 11,422 16,069 22,308
2014 .This gap could be as
Ukraine 7,267 8,567 10,177 16,145
much as 200,000 tonnes of
Zimbabwe 9,948 11,728 13,932 15,315
high purity product per year
Others 7,879 9,288 13,046 14,342 unless new capacity is
Total 988,279 1,165,066 1,395,505 1,573,162 developed
*tonnes per year
Industry Conditions- *systematic price increases for large flake *new product development,
particularly in high purity applications such as lithium-ion batteries, solar panels, and
semiconductors *constrained supply from major suppliers; only one current North American
supplier
Graphite Production
16. World Graphite Production 2010 World Graphite Production 2014
1,165,000 tonnes 1,573,000 tonnes
4%
18%
Steelmaking 17% 21% Steelmaking
32% Refractories 20% Refractories
3% Automotive Parts Automotive Parts
12% Lubricants 25% New Materials
Other applications 11% Other applications
31% Batteries Batteries
6%
Graphite Industry
17. Mobile Engineering Carbon Hot Metal Refractories
Energy Materials Additives for Forming & Metallurgy
Polymers
Alkaline Solar Lubricants Refractories
Conductive
Batteries Technologies for Seamless
Plastics Crucibles
Zinc-C Semiconductor
Conductive Tubes Hot Metal
Batteries Coatings & Coatings & Descaling Toppings
Paints Paints
Lithium-Ion Agents
Powder Carbon Fibers
Batteries Forging
Metallurgy Flame
Fuel Cells
Graphite Foils Retardants
Traditional and Emerging Market Applications
18. Majority of the automotive growth is expected to be from the EV and PHEV (plug-in hybrid)
segment
The 2020 EV and PHEV propulsion market is $46 billion of 71% of the total market
About $400 per vehicle for battery
anode materials – most Li-ion
technologies will use high purity
graphite based anode materials
About 8.2m large format batteries
per year for Evs and PHEVs by
2020
71%
Energy storage for smart grid and
other applications like “cut the
cord” appliances and consumer
electronics will be about equal to
the automotive segment Source: Electric Transport Advisors LLC study
Enormous Growth from Electric Batteries
19. Implications
Today Li-ion battery technology is relatively big, heavy and expensive; making
pure electric vehicles challenging without significant subsidies
Hybrid and plug-in hybrid offerings are getting scale up and cost down for
automotive Li-ion in next 3-4 years
By 2015, pure EVs will become viable in more automotive segments
2011 2015 Est. 2020 Est.
Energy
24 kWh 22 kWh 20 kWh
Capacity
Cost $14,500 $10,145 $7,154
Range 130
100 miles 170 miles
miles
Weight 268 kg 203 kg 136 kg
Electric Drive Transition Moving Quickly
Source: Electric Transport Advisors LLC study
20. Open Pit Mining
Liberation and Concentration
through Flotation
Classification by Screening / Sieving
• Open pit mining of graphite reduces
capital expenditures
Purification, Intercalation, Exfoliation,
• Liberation & concentration is
Communition
accomplished through grinding circuits
and a series of float cells
• Purities up to 98.5% can be achieved
Delivery either thermally and/or chemically
Base Plant: Mining and Milling
22. • Annual Production –20,000 tonnes
• Base Price: $2,000 per Tonne / HP Price: $7,200 per Tonne
• Base COGS: $700 per Tonne / HP COGS: $3,600 per Tonne
• Base EBIDTA: $1300 per Tonne / HP EBITDA: $3,600 per Tonne
GOALS
• Reliable Canadian and Australian •Superior customer-service, reliable
supplier delivery, stable domestic operations
• Competitively priced high purity flake with hands-on management
VALUE
PRODUCT PROPOSITION CORE
MARKET ACTIVITIES
FOCUS
• Emerging Markets - lithium ion batteries, •Graphite Mining, Concentrating. Upgrading .
graphene Business Development - marketing / product
applications, expandable graphite sales.
• Traditional Markets - refractories, brake linings, • Research & Development - internal capability;
lubricants external strategic partnering
Corporate Strategy
23. ANNUAL
GRAPHITE GRAPHITE PLANNED PLANT PROJECTED DEVELOPMENT
PROJECT LOCATION STATUS ORE TONNAGE 1 GRAPHITE
HEAD GRADE TONNAGE 1 CAPACITY MINE LIFE 1 TIMELINE
PRODUCTION
(tonnes) (tonnes) (tonnes ore /
% (tonnes / year) (years) (years)
(Non-Compliant) (Non-Compliant) day)
Former
Uley,
Uley Graphite Producing 6,600,000 8.70% 490,941 1,000 20,000 18 0.5
Australia
Mine
Bedford Kingston, Mine
3,870,800 3.46% 114,487
Graphite 3 Ontario Development
1,500 22,960 20 4
Burgess Kingston, Mine
5,000,000 8.00% 342,000
Graphite 3 Ontario Development
Treelined Lake Kenora, Mine
5,000,000 5.00% 213,750 1,200 21,600 12 5.0
Graphite Ontario Development
LiCO3 HEAD ANNUAL RARE
RARE METAL PLANNED PLANT PROJECTED DEVELOPMENT
PROJECT LOCATION STATUS ORE TONNAGE 5 METALS
GRADE TONNAGE CAPACITY MINE LIFE TIMELINE
PRODUCTION
(tonnes) (tonnes)
(tonnes ore /
% (tonnes / year) (years) (years)
(Non-Compliant) (Non-Compliant) day)
Separation Lake Kenora, Mine
1,800,000 1.20% 21,600 4,000 17,280 104 4.0
Rare Metals 4 Ontario Development
TOTAL PROJECTED GRAPHITE AND RARE METAL NET PRESENT VALUES
ANNUAL
PRODUCTION PROJECTED DEVELOPMENT
PROJECT LOCATION STATUS FEED TONNAGE FEED GRADE OPERATING DAYS GRAPHITE
YIELD PLANT LIFE TIMELINE
PRODUCTION
(tonnes / year) % % (tonnes / year) (years) (years)
High Purity
Graphite
TBD Planned 15,000 85-95% 360 99.0% 14,850 20 3.0
Production
Facility
Project Summary
NOTES:
1) Ore Reserves, Graphite Tonnages and Projected Mine Life are all based on resource estimates done to date. It is believed that additional drilling and exploration will confirm additional reserves.
2) The planned capex for Uley consists of initial expenditures, the lesser amount shown, to restart the existing plant. The larger capex will be used to construct a new, larger plant on the property.
3) For this model it is assumed that the Bedford and Burgess properties will operate as separate mines but will ship their ore to a central processing facility.
4) The figures shown for the Separation Lake rare metals property are preliminary estimates only. Additional exploration and development work is required to confirm the figures.
5) The estimated head grade for Separation Lake is 1.5%. The figure of 1.2% shown is after allowing for a 20% ore dilution factor.
24. The projected demand for natural graphite provides a solid basis for Mega Graphite's business plans. The versatile
chemical and electrical properties of graphite also means that product applications cover a wide range of market
opportunities. At the same time, however, the Company understands that a number of additional key success
factors must form an integral part of its business plan. These are as follows:
Marketing - as an industrial mineral, one of the defining characteristics of the graphite sector is the need to
develop a strong marketing capability. Products must be tailored to fit end user needs, brands must be
developed to stand out with customers, and fully negotiated prices require a competitive cost structure.
Research & Development - natural graphite companies must develop a robust and sustainable R&D capability
in order to meet the changing needs of end users. Apart from a strong internal operation, the company will also
develop key relationships with research facilities, universities and private labs around the world to stay on top of
new products and applications. This financial model allocates a significant portion of the annual G&A cost
structure to R&D.
Strategic Partners and Relationships - the global natural graphite sector consists of large established
companies with comprehensive internal operations. Partnering with these companies in one or more areas will
be an effective way to build customer relationships, reduce costs and improve product capabilities.
Planning, Execution, Management - the hyper-competitive nature of business today, as well as the
expectations of customers, shareholders and financiers dictates that any successful company must incorporate
fundamental planning protocols, develop a clear ability to consistently execute, and above all maintain and
attract sound management and talent to manage these processes. Mega Graphite has begun this process by
gathering experienced mining, production, planning and marketing personnel to carry out this plan.
Key Success Factors
25. MEGA has assembled a strong group of mining and management professionals that is confident will achieve its
goals at every stage of development. The group operates on a team-based and individual initiative-driven
philosophy that is grounded in intelligent planning and continuous execution. Nothing will serve the Company
better than the commitment of its management team in carrying out all of its business strategies.
Paul Gorman, President & Director
Paul Cooper, Chief Operating Officer
Christopher Darby, Managing Director and General Counsel
David Salari, Uley Project Manager & Engineer
Carmelo Marrelli, CFO
Michael Hastings, Director
Greg Cameron, Director
Chris Whiteley, Executive VP Sales and Marketing
Victor Evele, Uley Mine Manager
Management & Directorship
26. Security of Supply – ownership of high quality graphite flake properties in stable political environments such
as Canada and Australia hold significant appeal to global customers seeking a safe, secure and reliable supplier.
Standard and Proprietary Processing Operations – the Company utilizes both traditional graphite processing
methodologies and proprietary cutting edge technologies to achieve high yields and purities, while also
permitting cost-effective operations, all of which will further improve profitability and IRRs.
Licensed Rights to Patented Technology – the Company has licensed, patented leading edge purification
technologies from Hydro Quebecto produce high purity battery grade graphite.
Competitive Production Costs – the Mega management team has used production experience to quantify base
operating costs of approximately $640 per tonne and high purity upgrade costs of approximately $3,800 per
tonne.
First Mover Advantage – by assembling properties capable of producing long-term reliable supply the
Company has achieved first mover advantage in becoming an alternate supplier to leading exporters such as
China.
Experienced Management – Mega has a proven, driven and focused management team with direct industry
experience and a passion for success.
Competitive Advantage
27. Mr. Paul Gorman
President MM
pgorman@megagraphite.com
MM
(905) 339-8888
86 Wilson Street, Suite 100A
Oakville ON Canada L6K 3G5
www.megagraphite.com
Contact Info
