Ceylon Graphite Corp. announce the execution of a Memorandum of Understanding dated June 30, 2021 (the “MOU”) with two subsidiaries of Lanka ORIX Leasing Company Group (“LOLC”). Pursuant to the MOU, Ceylon Graphite, through its subsidiary, Plumbago Refining Corp.

B.V. (“Plumbago”), and LOLC, through its subsidiaries LOLC GEO Technologies Ltd. (“LOLCGT”) and LOLC Advanced Technologies Ltd. (“LOLCAT”), will work together to develop new graphite mines outside of the existing Ceylon portfolio, and to construct and operate a graphite processing facility in Sri Lanka. The MOU provides for Ceylon and LOLC to develop and operate a minimum of three mines on grids located near the Government owned Kahatagha Mine, an area known to be rich in high-grade vein graphite, as high grade as 98% Cg. Under the MOU, Ceylon intends to purchase a 10% interest in LOLCGT with an option to buy up to 40% of the company.

The development of the new mines will be funded on a pro rata basis, will be operated by Ceylon, and Ceylon will agree to offtake all mine production for further processing. Further, Ceylon and LOLC will construct an in-country value-add facility to upgrade the mine product further to 99.99% purity, ready for spheronization. This mine production will be in addition to Ceylon's existing and planned mining operations at K1, M1, H1, P1 as well as six other potential sites under development.

Under the terms of the MOU, LOLC intends to purchase up to an aggregate of 15% of Ceylon shares either as a lead order on a future financing or under separate terms with timing and terms to be detailed in a definitive agreement. Both parties will also agree to cross-appointments of designates to their respective corporate boards. The MOU is non-binding and signals the intent of both parties to negotiate in good faith a definitive agreement to reflect the intent and content of the MOU.

There is no assurance that such an agreement will be reached.