First Graphite : 13-04-2016: Update on Graphene Testing Program

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13 April 2016 First Graphite Limited ACN 007 870 760 ABN 50 007 870 760 Registered Office Suite 3 9 Hampden Road Nedlands WA 6009 Tel [phone] Fax [phone] Directors Warwick Grigor Craig McGuckin Peter R. Youd Denis Geldard Chris Banasik Company Secretary Peter R. Youd Email: [e-mail] Website: www.firstgraphite.com.au ASX Symbol FGR, FGROA, FGROB

Update on Graphene Testing Program Confirmation of Graphene Production Process and Quality of Product Highlights Optimising graphene production test work using different electrolyte concentrations and voltages in continuous runs of up to 24 hours Very Large average graphene platelets size distribution averaging 30-40 micron with a top size of 100 micron Yield from graphite to graphene optimised at > 80% within 24 hours, believed to be an order of magnitude better than that achieved by other companies on lesser grade ore Very high quality graphene confirmed Additional ability to produce >99.9% graphitic concentrate Preparing for scale up production test work to 50 litre cell capacity. Full scale commercial 250 litre cell designed. First Graphite Limited ("the Company" or "FGR") is pleased to confirm sound progress in the optimisation of a unique graphene production process being undertaken at The University of Adelaide, to establish a scalable process for the recovery of graphene from vein-style graphite deposits. Laboratory work to early April comprised the operation of a number of 2.5 litre cells for periods of time ranging from one to 24 hours under a variety of conditions which tested power consumption, electrolyte concentrations, agitation methods and flow rates, the results were tabulated and analysed and optimum parameters were established. The original research and development program contemplated increasing the production cell incrementally to 10 litres however the researchers and FGR were sufficiently encouraged to progress directly to the 50 litre production cell with designs for the full scale 250 litre cells containing proportionately large quantities of lump graphite completed. Conversion to graphene occurs at a rapid rate with approximately 50% recovery being achieved within four hours. Extension of the time frame to 20-24 hours increases the recovery to 75-80%, but with exfoliation occurring at a slower rate. Further work is underway to maximise total recovery by optimising recovery conditions and logistics for graphite loading. Unconverted graphite can be subsequently recycled and reprocessed to maximise total recovery, if this is deemed the most economic outcome.

The graphene product from this process naturally settled into three phases through gravity separation. The upper layer contains the purest quality, comprising > 99.5% graphene and traces of small graphitic nanoparticles. The middle phase contains 97-98% graphene, and the lower phase contains higher proportions of graphitic particles. Applying further separation process enables improved quality of graphene in these layers by the removal of small graphite particles, which may or may not be relevant for a saleable product depending upon the application for which it is required.

Characterisation and Quality Control

Sets of characterisation techniques were used to test the quality of the graphene produced including SEM, EDAX, XPS, XRD, Raman, TGA, particle size measurements, 4-probe conductivity and optical microscopy.

The study of the correlation of different characterisation methods was performed in order to determine the quality of produced graphene, presence of graphitic particles and impurities.

A simplified quality assured process for the graphene and graphite material is being explored to capture the most critical quality parameters and develop new simplified methods for quality control (in progress).

Future Program and the Graphene Market

The Company will continue to scale up the production capacity as described above. It will soon be in a position to provide large commercial samples of graphene to potential customers.

Elsewhere the Company has been involved in discussions with a number of parties who are testing the vein graphite and graphene for advanced industrial applications. Shareholders will be informed as to progress on this front as and when material progress is made.

Relative Value of Graphite and Graphene

In recent years the high-grade Sri Lankan graphite has been selling in the range of US$1,700-$2,000 per tonne, and FGR expects this will be the base price range for unprocessed vein graphite. In contrast graphene has been selling at prices of up to US$300 per gram, but not in bulk. As more graphene makes it to the market we are likely to see the price of graphene settle at much lower prices. Some operators are suggesting a realistic price would be US$55,000 per tonne once it is commoditised. Accepting this proposition, the logic driving FGR in pursuing the graphene strategy in parallel with graphite production is clearly that conversion to graphene could result in a 25 times uplift in value when compared to sales of run-of-mine product. FGR will be well positioned to deliver graphene into the market as and when the market requires supplies.

Mr McGuckin, Managing Director, said "We are highly encouraged by the latest results which put us at the cutting edge in terms of quality and economics. The very high conversion rate to graphene could enable the Company to achieve the status of a reliable supplier of graphene at minimal capital cost. As an added benefit, the process also lends itself to the achievement of >99.9% graphite concentrate grades, at a fraction of the cost of synthetic and highly processed graphite. The rate of progress being achieved in this testing program is most pleasing given the relatively short time frame until now, and expenditure which has been modest."

Figure 1: Agglomerated graphene produced from cell overflow

Figure 2: SEM of large graphene platelets

About First Graphite Ltd (ASX: FGR) First Graphite is aiming to develop an underground mining operation to extract high-grade, crystalline vein graphite, which is unique to Sri Lanka. The Company holds exclusive rights to exploration licenses covering approximately 39,500 hectares in area, with historical workings located within nearly all license grids. About Graphene Graphene, the well-publicised and now famous two-dimensional carbon allotrope, is as versatile a material as any discovered on Earth. Its amazing properties as the lightest and strongest material, compared with its ability to conduct heat and electricity better than anything else, mean it can be integrated into a huge number of applications. Initially this will mean graphene is used to help improve the performance and efficiency of current materials and substances, but in the future it will also be developed in conjunction with other two- dimensional (2D) crystals to create some even more amazing compounds to suit an even wider range of applications. One area of research which is being very highly studied is energy storage. Currently, scientists are working on enhancing the capabilities of lithium ion batteries (by incorporating graphene as an anode) to offer much higher storage capacities with much better longevity and charge rate. Also, graphene is being studied and developed to be used in the manufacture of supercapacitors which are able to be charged very quickly, yet also be able to store a large amount of electricity. Nature of vein graphite Sri Lankan graphite deposition model is best described from the 'bottom up': tension fractures formed in the metamorphic sediments, caused by the folding of the sediments, creating 'conduits' for the hydrothermal deposition of high quality vein graphite. Historically, mining of these veins has found the veins generally increase in thickness and grade quality with increasing depth. Graphite veins generally dip steeply at -70° to near vertical, enabling 'narrow vein' extraction mining techniques similar to those used on narrow vein, high-grade gold deposits. The method commonly used is an overhead retreat stoping technique where the high- grade vein graphite is mined and hauled to surface without contamination. The graphite selvages, in contact with the surrounding waste, is hauled to surface and stockpiled for upgrading. The balance of the waste is used to fill the floor of the stope. Due to the nature of the vein graphite, it is anticipated vein widths of ~25cm, using narrow vein mining techniques can be economically extracted from underground operations.

For further information: Craig McGuckin Managing Director First Graphite Ltd Peter R. Youd Executive Director First Graphite Ltd www.firstgraphite.com.au