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PRESS RELEASE: EcoGraf Limited: QUARTERLY -3-

07/30/2021 | 06:46am EDT

The Company's natural flake graphite business is focussed on development of the long-life, high quality Epanko Graphite Project (Epanko) in Tanzania. Extensive work has been completed at Epanko to establish a development-ready new graphite mine, including:

- Completion of a Bankable Feasibility Study (BFS) that demonstrates a highly attractive development opportunity with a modest investment of USUSD89 million and a robust business case, generating annual EBITDA of USUSD44.5 million;

- Government grant of mining licence and environmental approvals;

- Comprehensive Independent Engineer's Review by SRK Consulting on behalf of lenders, confirming technical aspects of the proposed development and that the Equator Principles social and environmental planning regime satisfies International Finance Corporation Performance Standards and World Bank Group Environmental, Health and Safety Guidelines;

- Flake graphite sales for key markets in Asia (Sojitz Corporation) and Europe (thyssenkrupp and a large European graphite trading group);

- Target cost EPC arrangements for construction of Epanko with GR Engineering; and

- Debt financing program in progress with international banks and Tanzanian financial institutions.

In mid-March, HE Samia Suluhu Hassan was appointed President of Tanzania and has proceeded to implement a range of reforms to encourage more foreign investment in the country. These policy changes are expected to assist EcoGraf finalise the Epanko financing arrangements and commence development.

Development Funding

EcoGraf continues to progress debt financing arrangements for construction of the Epanko Graphite Project that have been developed with German Government development bank KfW IPEX-Bank. As previously reported, after extensive engagement with the Tanzanian Ministry of Minerals, Mining Commission, Ministry of Finance and the Bank of Tanzania, a funding structure has been developed that complies with Tanzania's new mineral legislation relating to offshore banking arrangements.

The proposed funding arrangements have been presented to Government and private sector financing institutions in Tanzania, who have indicated interest in participating in the development.

Initial due diligence activities have been conducted by those institutions and discussions are continuing to agree on a bankable debt financing structure to enable the parties to progress their respective due diligence and credit approval processes.

In parallel, EcoGraf participated in an industry workshop held by the Tanzanian Government on 12 April 2021 to receive industry feedback on regulations for the 16% Government free-carried interest in mining developments. The workshop provided an opportunity for Tanzanian mining companies to put forward proposals for regulatory changes to encourage and accelerate increased mining investment, which were then submitted by the Tanzanian Chamber of Mines to the Government.

Epanko Enhancement Studies

A number of enhancement activities are continuing, including the definition of low cost 'fresh rock' graphite to deliver a high purity 99%C graphite battery anode feedstock without additional processing and the evaluation of low-impact, continuous mining methods, both of which will also add to Epanko's strong ESG credentials.

Sector Leading ESG Credentials

The Epanko bankable feasibility study social and environmental planning programs have been conducted in compliance with the Equator Principles, a globally recognised risk management framework adopted by leading financial institutions for assessing and managing social and environmental risks in new developments.

Achieving this standard and satisfying International Finance Corporation Performance Standards and World Bank Group Environmental, Health and Safety Guidelines is critical to securing international financing support for the new development and reflects EcoGraf's commitment to ensuring the highest level of Environmental, Social and Governance operating standards.

Epanko will provide inter-generational economic and social benefits for the regional community near Mahenge in Tanzania and will support Tanzania's positive industrialisation progress.

Positive Economic Impact

The Project has strong economics and in addition to generating a pre-tax NPV[10] of USUSD211m for shareholders, will make a long-term, inter-generational contribution to economic, industrial and social development within Tanzania. It is expected to operate for over 40 years, during which time it is forecast to directly contribute over USUSD3 billion to Tanzania through local employment, procurement, royalties, taxes and dividends. Over 95% of the 300 permanent staff will be Tanzanian, with an estimated 4,500 indirect jobs to be supported by the operation.

CORPORATE

US Listing on OTC Market

On 14 May 2021 EcoGraf shares were listed for trading on the 'Over the Counter' Market (OTC) in the United States (refer ASX announcement EcoGraf Commences Trading on US Markets 14 May 2021). The Company's primary listing continues to be the Australian Securities Exchange (ASX) and its secondary listing through the Frankfurt Stock Exchange will be maintained.

The OTCQX listing provides EcoGraf access to one of the largest investment markets in the world, with growing investor interest in the US for the electric vehicle sector and its supply chain, as the US pivots more strongly to support the global transition to clean, renewable energy.

No new shares in the Company were issued in connection with the listing and existing ordinary shares of EcoGraf may now also be traded on the OTCQX Market, with real-time quotes and market information on the OTC Markets website (www.otcmarkets.com/stock/ECGFF/overview).

Inclusion in MSCI Global Indexes

From the close of trading on 27 May 2021 EcoGraf was added to the MSCI Global Micro Cap Indexes. As part of the changes, EcoGraf is now included in the MSCI Australia Micro Cap Index, which is designed to measure the performance of the Micro Cap segment of companies traded on the ASX.

MSCI (formerly Morgan Stanley Capital International) is a leading provider of critical decision support tools and services for the global investment community. With over 45 years of expertise in research, data and technology, it aims to deliver better investment decisions by enabling clients to understand and analyse key drivers of risk and return and confidently build more effective portfolios.

Additional information on MSCI is available at www.msci.com

Cash

Cash at bank was USD52.6 million at the end of the quarter and details of cash flows during the quarter are set out in the attached Appendix 5B.

Payments made to related parties during the quarter in item 6 of Appendix 5B were for executive (2) and non-executive (2) directors' remuneration. Details of directors' remuneration and fees are provided in the Remuneration Report of the Company's Annual Report.

Share Capital

During the quarter, the Company cancelled 5,750,000 shares previously issued under its Employee Share Scheme following the lapse of participant entitlements and it issued 600,000 new shares under its Incentive Performance Rights Plan.

There were 449,833,459 shares on issue and 7,950,000 unlisted incentive performance rights at the end of the quarter.

MINERAL TENEMENTS HELD AT QUARTER END

                         Ownership interest Acquired/disposed during the quarter 
Licence       Area (km2)                                                                          Location 
ML 548/2015         9.62               100%                            No change         Mahenge, Tanzania 
PL 7907/2012       26.42                 0%               Conversion in progress Merelani-Arusha, Tanzania 
PL 9306/2013       17.53                 0%              Replaced by PL 17624/20         Mahenge, Tanzania 
PL 17624/20        35.31               100%                        Expanded area         Mahenge, Tanzania 
PL 9331/2013        2.76               100%                            No change         Mahenge, Tanzania 
PL 10092/2014      23.23               100%                            No change Merelani-Arusha, Tanzania 
PL 10388/2014       2.57               100%                            No change         Mahenge, Tanzania 
PL 10390/2014       2.81               100%                            No change         Mahenge, Tanzania 
PL 10872/2016       2.60               100%                            No change Merelani-Arusha, Tanzania 
PL 10972/2016       3.83                 0%              Replaced by PL 17623/20         Mahenge, Tanzania 
PL 17623/20         4.50               100%                        Expanded area         Mahenge, Tanzania 
PL 11081/2017       2.08               100%                            No change Merelani-Arusha, Tanzania 
PL 11082/2017      20.77               100%                            No change Merelani-Arusha, Tanzania 
PL 11143/2017       2.62               100%                            No change Merelani-Arusha, Tanzania 
PL 11196/2018      46.72               100%                            No change Merelani-Arusha, Tanzania 
PL 11386/2019       6.73               100%                            No change Merelani-Arusha, Tanzania 

Two tenements have been expanded and given new licence numbers and the conversion of a third licence is in progress.

This report is authorised for release by the Board.

For further information, please contact:

INVESTORS

Andrew Spinks Managing Director T: +61 8 6424 9002 Forward looking statements

(MORE TO FOLLOW) Dow Jones Newswires

July 30, 2021 06:45 ET (10:45 GMT)

Stocks mentioned in the article
ChangeLast1st jan.
ASX LIMITED -2.75% 81.46 End-of-day quote.13.14%
DJ INDUSTRIAL -1.63% 34299.99 Delayed Quote.13.69%
ECOGRAF LIMITED -5.30% 0.715 End-of-day quote.320.59%
GOLD 0.08% 1736.83 Delayed Quote.-7.73%
MORGAN STANLEY -2.91% 102.04 Delayed Quote.48.90%
OTC MARKETS GROUP INC. 9.26% 51.9 Delayed Quote.52.65%
S&P GSCI GOLD INDEX -0.05% 1011.1786 Delayed Quote.-7.55%
SILVER 0.00% 22.481 Delayed Quote.-14.10%
SOCIÉTÉ ANONYME D'EXPLOSIFS ET PRODUITS CHIMIQUES -0.92% 54 End-of-day quote.-2.04%
SOJITZ CORPORATION 2.23% 1835 End-of-day quote.59.57%
THYSSENKRUPP AG -2.29% 8.954 Delayed Quote.10.22%
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