Gratomic Inc. announced an update to its Commercial Partnership and Sales Agreement ("Commercial Partnership") with TM2 Verticals ("TM2") to supply Purified Flake Graphite (PFG) to the alkaline battery sector. TM2 Verticals, in partnership with Gratomic and Suntech Labs of South Africa, has successfully upgraded Aukam graphite concentrate to the required 96% grade concentrate as part of their large scale pilot plant OEM qualification program to generate bulk samples to send to global alkaline battery producers. Approximately 700 kilograms of minimum 96% grade were produced.

Gratomic's stockpiled graphite was tested and processed, achieving 96.8% and 97,1% grade concentrate across multiple tests with an average recovery of 80%+. This marks an important milestone in the development of the business in general and more specifically, the global alkaline battery market opportunity for Gratomic. The material will be sent to midstream processors in the United States and Japan where it will be converted into PFG after which it will be supplied to a global OEM for Phase 1 battery performance testing.

After Phase 1, Gratomic and TM2 will enter Phase 2 of testing which will include supplying more concentrate from the mine in Namibia, to produce 1 million battery cell units as the final stage of qualification with the OEM that is financing the qualification process. Once the supply chain and the PFG has been qualified, the OEM will enter into a direct purchase agreement with the Commercial Partnership which is currently in advanced discussions for expected timelines, logistics and potential long term offtake agreements subject to final outcomes of the qualification program. One of the terms of this commercial arrangement with TM2 is that Gratomic will sell its graphite to the commercial partnership for a 50:50 split of the profit after toll processing.

As noted previously, this particular arrangement appears to be the first of its kind in the graphite industry for an up-and-coming producer and shows the power of vertical integration and the benefit of early partnerships with agile supply chain parters and global OEMS. TM2 and Gratomic have been working together during the past two years and both agree it is a mutually beneficial arrangement with larger financial upsides for the producer. The binding offtake contract with TM2 has been extended by 210 days to provide more time for advanced testing and to secure binding agreements with global OEMS. The contract is valid for five years, and establishes annual quantities for delivery starting at 4,200 tonnes per year and reaching 7,260 tonnes per year. Gratomic wishes to emphasize that no Preliminary Economic Analysis, Preliminary Feasibility Study, or Feasibility Study has been completed to support any level of production.

In fact, no mineral resources, let alone mineral reserves demonstrating economic viability and technical feasibility, have been delineated on the Aukam property. The Company is working towards completing a Feasibility Study (FS) on the Aukam Processing Plant. The study, its recommendations, and their subsequent implementation, will provide conclusions and recommendation at a FS level of comfort about scaling-up the existing processing plant to a commercial facility that can produce the desired concentrate grades and production rates.

Gratomic wishes to emphasize that the supply of graphite is conditional on bringing the Aukam Project to production phase, and for any graphite produced meeting certain technical and mineralization requirements.