Northern Graphite : 2020Annual Information Form

NORTHERN GRAPHITE CORPORATION

ANNUAL INFORMATION FORM

FOR THE YEAR ENDED DECEMBER 31, 2020

April 15, 2020

TABLE OF CONTENTS
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS	....................................................................3
MARKET AND INDUSTRY DATA ...........................................................................................................................................................	3
GENERAL MATTERS ..................................................................................................................................................................................	3
CORPORATE STRUCTURE .......................................................................................................................................................................	4
DESCRIPTION OF THE BUSINESS..........................................................................................................................................................	4
GENERAL DEVELOPMENT OF THE BUSINESS ..................................................................................................................................	6
THE GRAPHITE INDUSTRY..................................................................................................................................................................	12
THE BISSETT CREEK PROJECT...........................................................................................................................................................	15
Project Description and Location........................................................................................................................................................................	15
Accessibility, Climate, Local Resources, Infrastructure and Physiography........................................................................................	16
History ...........................................................................................................................................................................................................................	17
Geological Setting......................................................................................................................................................................................................	18
Exploration ..................................................................................................................................................................................................................	18
Mineralization ............................................................................................................................................................................................................	19
Drilling...........................................................................................................................................................................................................................	20
2013 Mineral Resource Estimate ........................................................................................................................................................................	23
Mineral Reserves.......................................................................................................................................................................................................	25
Mineral Processing and Metallurgical Testing...............................................................................................................................................	26
Anticipated Mining Operations and Production............................................................................................................................................	30
Environmental and Permitting ............................................................................................................................................................................	31
Capital and Operating Costs ..................................................................................................................................................................................	33
Economic Analysis ....................................................................................................................................................................................................	36
Preliminary Economic Assessment Update.....................................................................................................................................................	37
Current Project Economics ....................................................................................................................................................................................	39
Current Status.............................................................................................................................................................................................................	41
DESCRIPTION OF CAPITAL STRUCTURE ........................................................................................................................................	41
PRICE RANGE AND TRADING VOLUME OF SHARES ....................................................................................................................	42
PRIOR SALES.............................................................................................................................................................................................	42
ESCROWED SECURITIES .......................................................................................................................................................................	42
DIRECTORS AND OFFICERS.................................................................................................................................................................	42
AUDIT COMMITTEE INFORMATION.................................................................................................................................................	47
PROMOTERS .............................................................................................................................................................................................	48
LEGAL PROCEEDINGS AND REGULATORY ACTIONS ..................................................................................................................	49
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS .....................................................................	49
REGISTRAR AND TRANSFER AGENT................................................................................................................................................	49
MATERIAL CONTRACTS........................................................................................................................................................................	49
INTERESTS OF EXPERTS ......................................................................................................................................................................	49
RISK FACTORS .........................................................................................................................................................................................	49
ADDITIONAL INFORMATION..............................................................................................................................................................	55
SCHEDULE "A" - CHARTER OF THE AUDIT COMMITTEE...........................................................................................................	56

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Annual Information Form contains "forward-looking statements" which reflect management's expectations regarding the Corporation's future growth, results of operations, performance and business prospects and opportunities. Such forward-looking statements may include, but are not limited to, statements with respect to the future financial or operating performance of the Corporation and its projects, the future price of graphite or other metal and mineral prices, the estimation of mineral resources, the timing and amount of estimated future production, costs of production, capital, operating and exploration expenditures, costs and timing of the development of deposits, costs and timing of future exploration, requirements for additional capital, government regulation of mining operations, environmental risks, reclamation expenses, title disputes or claims, limitations of insurance coverage and the timing and possible outcome of regulatory matters. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variations (including negative variations) of such words and phrases, or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.

Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, performance or achievements of the Corporation to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others: general business, economic, competitive, political and social uncertainties; the actual results of current exploration activities; conclusions of economic evaluations; fluctuations in currency exchange rates; changes in project parameters as plans continue to be refined; changes in labor costs or other costs of production; future prices of graphite or other industrial minerals; possible variations of mineral grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labor disputes and other risks of the mining industry, including but not limited to environmental hazards, cave-ins,pit-wall failures, flooding, rock bursts and other acts of God or unfavorable operating conditions and losses; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; actual results of reclamation activities, and the factors discussed in the section entitled "Risk Factors" in this Annual Information Form. Although the Corporation has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking statements contained herein are made as of the date of this Annual Information Form and the Corporation disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise, except as may be required by applicable securities laws. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

MARKET AND INDUSTRY DATA

This Annual Information Form includes market and industry data that has been obtained from third party sources, including industry publications, as well as industry data prepared by management on the basis of its knowledge of, and experience in, the industry in which the Corporation operates (including management's estimates and assumptions relating to such industry based on that knowledge). Management's knowledge of such industry has been developed through its experience and participation in such industry. Although management believes such information to be reliable, the Corporation has not independently verified any of the data from third party sources referred to in this Annual Information Form or ascertained the underlying economic assumptions relied upon by such sources. Furthermore, references in this Annual Information Form to any publications, reports, surveys or articles prepared by third parties should not be construed as depicting the complete findings of the entire publication, report, survey or article. The information in any such publication, report, survey or article is not incorporated by reference in this Annual Information Form.

GENERAL MATTERS

Unless otherwise indicated, all amounts herein are stated in Canadian dollars ($). Unless otherwise specified, the information contained in this Annual Information Form is presented as at December 31, 2020.

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CORPORATE STRUCTURE

Northername a d Incorporation

Graphite Corporation (" " or the "") was incorporated on February 25, 2002 under the (Ontario)Northernas "Industrial MineralsCorporCanadation Inc." Pursuant to articles of amendment dated March 1,Business2010, Corporationsthe CorporationAct changed its name to "Northern Graphite Corporation" and subdivided its then outstanding

common shares. Pursuant to articles of amendment dated August 10, 2010, the Corporation amended its articles to remove certain private company restrictions and cumulative voting provisions.

The Corporation's registered office is Suite 6000, 1 First Canadian Place, 100 King Street West, Toronto, Ontario M5X 1E2. The Corporation's mailing address is P.O. Box 279, Manotick, Ontario K4M 1A3.

Intercorporate Relationships

The Corporation has no subsidiaries.

DESCRIPTION OF THE BUSINESS

B ssett Creek Project

Northern is a mineral exploration and development company which holds a 100% interest in the Bissett Creek graphite

project (the "

Mining

"). The Bissett Creek Project presently consists of Ontario mining lease number

Leas

106693 (covering 565 hectares) and Ontario mining lease number 109335 (covering 1,938 hectares) (the "

"). Ontario mining lease number 109335 expires on June 30, 2034 and Ontario Mining Lease number 106693

ENDM

Mining Act

expires on August 31, 2035. Both leases require annual rental payments to the Ontario Ministry of Energy, Northern

Development and Mines (the "

") in an amount prescribed by the

(Ontario) which is approximately

$7,508 in total. The Corporation also held five unpatented mining claims, contiguous to the Mining Leases, which have

Mining Ce

s

been converted into 52 cells covering 1,159 hectares under the Province of Ontario's new Mining Lands Administration

System (the "

"). The total area of the Mining Leases and the Mining Cells is approximately 3,662 contiguous

hectares, and they are all located in the United Townships of Head, Clara and Maria, in the County of Renfrew, Province

of Ontario.

The Corporation's principal business is the exploration and potential development of the Bissett Creek Project. The

Corporation has no other properties or rights to acquire other properties.

FS

tpd

Northern completed a full feasibility study on the Bissett Creek Project in July 2012 (the " ") which confirmed the

technical and financial viability of constructing and operating an open pit mine and 2,500 tonne per day (" ")

Standards of Disclosure for Mineral Projects NI 43-101

processing plant at the Bissett Creek Project, and in respect of which a technical report prepared in accordance with

National Instrument 43-101 -

FS Update

("

") was filed on SEDAR on August

24, 2012. The FS was updated on September 23, 2013 (the "

") following an additional drill program on the

Bissett Creek Project, the release of a new and larger resource estimate, revision of the mine plan based on the new

resource model, and updating of the economics for the project to incorporate the new resource estimate, some

modifications to capital and operating cost assumptions, and lower graphite prices.

The Corporation plans to develop the Bissett Creek Project in two phases. The production scenario outlined in the FS

and FS Update represents Phase 1 and is a conservative approach that consists of building a smaller project with a

reasonable capital cost and a realistic production volume relative to the size of the current graphite market. In Phase

2, production will be doubled to meet the expected growth in graphite demand, in part arising from the LiB and electric

Expansion PEA

vehicle markets. The Corporation completed a preliminary economic assessment on an expansion case for the Bissett

Creek Project, which includes both Phases 1 & 2, on October 23, 2013 (the "

"). A technical report was

prepared in accordance with NI 43-101 and was filed on SEDAR on December 6, 2013 (being the 2013 Technical Report, as hereinafter defined). It is the current technical report on the Bissett Creek Project. The Expansion PEA was undertaken to demonstrate the potential ability to meet expected future growth in graphite demand by doubling production after three years of operation based on measured and indicated resources only.

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The Corporation also updated the Expansion PEA on June 24, 2014 (the "

") to assess the

economics of building a two million tonne per annum ("

") processing plant at the outset rather than increasing from

one

million to two million tpa

Expansion PEA Update

after three years of operation. The larger process plant was evaluated due to

tpa

developments in the lithium-ion battery industry but the Corporation does not intend to pursue the development

scenario envisioned by the Expansion PEA Update at the present time.

Because of the passage of time since completion of the various technical reports and updates, the Corporation has

reviewed the economics of the Phase 1 development scenario in order to evaluate the effect of some modifications to

the flow sheet as well as changes in commodity prices, exchange rates, equipment and labor costs, and other project

inputs. The Corporation also evaluated the effect of increasing the proposed production rate of 20,000 tonnes of

concentrate per annum by at least 20 percent. The results of this analysis were released as a sensitivity analysis on the

Expansion PEA and indicate that the Bissett Creek Project still has an attractive net present value ("

") and internal

rate of return ("

") as cost inflation has been offset by very favorable movements in the CDN/US dollar exchange rate

and savings from some simplification of the flowsheet.

MCP

NPV

2004

IRR

") with ENDM in 2004 (the "

The Corporation and previous management originally filed a mine closure plan ("

") and was authorized to begin production based on a dry recovery process but a commercial operation was never

established due to technical problems and financial difficulties. In the fourth quarter of 2012, the Corporation filed an

MCP

amended MCP to increase the size of the potential operation and to use a conventional flotation recovery process as

outlined in the FS. On August 26, 2013, the Corporation announced that MENDM had accepted the Corporation's MCP

for filing.

required

A number of operational permitsand environmental

Because of operational changes made to i prove the economics of the Bissett Creek Projec ,

to the passage of

authorizations are also

prior to the commencement of mining and processing operations. These permits and

time, the C mp ny is

to file an amendment to the MCP.

authorizations are well advanced and the Corporation expects that these permits and authorizations will be obtained

in the normal course as needed. Site work for the Bissett Creek Project would include the clearing of internal roads,

plant site and tailings basin. Construction of the plant and infrastructure are estimated to take approximately 12 to 18

months from initiation.

The Bissett Creek Project is subject to a royalty of $20 per ton of graphite concentrate and a 2.5% net smelter return

("

") on any other minerals or metals produced, both of which are payable to the families of the original prospectors

who identified and staked the Bissett Creek Project. An annual advance royalty of $27,000 is payable in two equal
NSR
installments on March 15 and September 15 of each year, which will be credited against future royalties on graphite
concentrate produced from the Bissett Creek Project. As at December 31, 2020 the total amount of advance royalties
paid was $513,000.
On July 15, 2020, the Corporation sold a 1% gross revenue royalty ("GRR") on the Bissett Creek Property to Electric
Royalties Ltd. ("ERL") for $500,000 in cash and two million common shares of ERL valued at $440,340 at the time of
closing (of which half are subject to a 12 month hold period and half to an 18 month hold period) (the "
"). Under the terms of the agreement, ERL also has a two-year option to acquire an additional half of one percent
	C nsideration
GRR by paying $750,000, of which 25 percent can be paid in ERL shares. The Corporation will have the option to buy
Shares
back half of one percent of the initial GRR at any time after 12 months by returning the Consideration Shares or paying
$1.5 million in cash.
The Corporation has an employment contract with Gregory Bowes, Chief Executive Officer. The Corporation has no
other employees and retains consultants to assist in its operations on an as-needed basis. During January 2018, the
Corporation entered into a consulting agreement with John McNeice to provide services as Chief Financial Officer and
Corporate Secretary of the Corporation. The Corporation will begin building a team to construct and operate the Bissett
Creek Project once the next stage of financing is completed.

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