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Graphite One Advances its United States Graphite Supply Chain Solution Demonstrating a Pre-tax USD$1.9B NPV (8%), 26.0% IRR and 4.6 Year Payback on its Integrated Project

2022-08-29

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Pre-Feasibility Study Delivers Robust Economics before Accounting for Tax Credits Enacted by the U.S. Inflation Reduction Act of 2022, Expected to Improve Post-tax Results

Projected Commercial Scale Anode Material Production for U.S. Battery Market Using Alaska Graphite

VANCOUVER, BC , Aug. 29, 2022 /CNW/ - Graphite One Inc. (TSXV: GPH) (OTCQX: GPHOF) (" Graphite One " or the " Company "), is pleased to announce the results of its Pre-Feasibility Study of the Graphite One Project.

Parallel strategy to simultaneously develop a commercial scale battery anode materials manufacturing facility in Washington State and the Graphite Creek Mine in Alaska . Manufacturing would begin with purchased materials until Alaska production is available.

Pre-tax internal rate of return of 26.0%, using an 8% discount rate, with a net present value of $1.93 billion and a payback period of 4.6 years.

Post-tax internal rate of return of 22.0%, using an 8% discount rate, with net present value of $1.36 billion and a payback period of 5.1 years, before accounting for tax credits enacted by the U.S. Inflation Reduction Act of 2022, effective December 31, 2022 .

Measured plus Indicated resources increased 197% over 2019 results. Inferred resources increased 177%.

The Preliminary Feasibility Study (" PFS ") of the Graphite One Project was prepared by JDS Energy & Mining Inc. with assistance from various independent technical consultants.

The Graphite One Project (the " Project ") is planned as an integrated business operation to produce lithium ion battery anode materials and other graphite products for the U.S domestic market on a commercial scale using primarily natural graphite from Alaska . The Project combines the operation of an advanced graphite manufacturing facility to be located in Washington State (the " STP ") with the supply of natural flake graphite from the Company's proposed Graphite Creek Mine in Alaska (the " Mine "). The resources associated with the Company's Alaska State mining claims were cited by the U.S. Geological Survey in January 2022 as America's largest natural graphite deposit 1 .

Parallel Project Development Strategy

The Company anticipates that there will be a business opportunity presented by the projected strong U.S. demand for anode materials beginning in this decade and the time required to permit and construct a mine, the PFS plans the parallel design, permitting and construction of the STP and the Mine. Permitting and construction of the STP is estimated to take 3 years. The STP would operate during the first four years by processing purchased graphite. The Mine would begin production in the third year of STP operation and begin supplying graphite to the STP in its fourth year of operation. By the fifth year, it is anticipated that Alaska graphite would supply 100% of the STP's planned natural graphite requirement at full capacity. If the Mine begins production sooner, purchased graphite would be reduced accordingly.

Summary of PFS Economics

Table 1 presents a summary of the economic results of the PFS.

Table 1: Summary of PFS Economic Results

| Economic Parameters | Project | STP | Mine | | | | | Pre-tax | NPV (8%) | $1,927 M | | | | | | IRR | 26.0 % | | | | | | | Payback | 4.6 Years | | | | | | | Post-tax 1 | NPV (8%) | $1,361 M | | | | | | IRR | 22.0 % | | | | | | | Payback | 5.1 Years | | | | | | | Project Life | 26 Years | 26 Years | 23 Years | | | | | Average Annual Production | Graphite Concentrate | | | 51,813 tpy | | | | Anode Materials | | 49,615 tpy | | | | | | Purified Graphite | | 7,354 tpy | | | | | | Unpurified Graphite | | 18,057 tpy | | | | | | Total | | 75,026 tpy | 51,813 tpy | | | | | Capital Costs | Initial Capital Costs 2 | $1,070 M | $571 M | $499 M | | | | Contingency | $170 M | $90 M | $80 M | | | | | Sub-Total | $1,240 M | $661 M | $580 M | | | | | Sustaining Capital Costs 2 | $205 M | | $205 M | | | | | Contingency | $39 M | | $39 M | | | | | Sub-Total | $244 M | | $244 M | | | | | Total Capital Costs 2 | $1,485 M | $661 M | $824 M | | | | | Operating Costs | Average annual | $237 M | $165 M | $72 M | | | | Average per tonne production | $3,590 pt | $2,196 pt | $1,394 pt | | | | | Average Product Price | $7,301 pt | | | | | | | 1 . Before any effect of 10% Federal tax credit enacted by U.S. Inflation Reduction Act of 2022, effective December 31, 2022 | | | | | | | | | | | | | | | | 2 . Non-IFRS Financial Measure as defined below | | | | | | |

The U.S. tax regime for producers of critical minerals and battery components changed August 16, 2022 (see below). The Project's post-tax internal rate of return without inclusion of these changes, is 22.0%, using an 8% discount rate, with a net present value of $1.36 billion and a payback period of 5.1 years.

On August 16, 2022 , the United States enacted the Inflation Reduction Act of 2022 (the " Act ") which instituted, among other things 2 :

1. A tax credit to producers in the U.S. of anode materials equal to 10 percent of the costs incurred with respect to the production of anode materials commencing December 31, 2022 and reducing to 75%, 50%, 25%, and 0% in 2030, 2031, 2032 and thereafter, respectively. 2. A tax credit equal to 10 percent of the costs incurred with respect to production of graphite purified to a minimum purity of 99.9 percent graphitic carbon by mass (" Purified Graphite ") – the phase out provisions in 1 specifically do not apply. 3. Only production in the United States qualifies for the tax credit.

Graphite One's production is expected to qualify under the Act for tax credits in both categories as it plans to produce both anode materials and Purified Graphite in the United States , as defined in the Act. The Company will evaluate the Act's impact on the PFS economics and announce the results when available. The impact is expected to improve the post-tax results.

Based on the PFS's updated graphite resource estimate, the Mine's life for the purposes of the PFS is 23 years. The PFS assumes the STP's operational life is 26 years based on its startup with purchased graphite and continued operation with graphite from the Mine.

On average over its life, the STP would produce about 75,000 tonnes per year of products. About 49,600 tpy would be anode materials, 7,400 tpy purified graphite products, and 18,000 tpy of unpurified graphite products. The anode materials are comprised of four products:

CPN: Coated, spherical natural graphite; BAN: Blended natural and artificial graphites; SPN: Secondary particle natural graphite; and, SPC: Secondary particle composite.

Based on the PFS assumptions, the average price of all products over the STP's life is $7,301 per tonne. Product forecasts and prices have been developed based on numerous graphite market reports commissioned by or purchased by the Company, combined with the Company's internal information. The long-term market forecast used is based on Wood Mackenzie Limited's Graphite Market 2021 Outlook to 2050, updated by its Global Graphite Market Strategic Planning Outlook – Q2 2022. Purchased graphite prices have been supported by non-binding indications of supply from current producers.

The estimated initial capital and sustaining capital costs with their respective contingencies are summarized in Table 1. Also presented are the average annual production costs for the life of the Project on both the basis of annual totals and costs per tonne of production.

Secondary Treatment Plant

The STP is designed to produce lithium ion battery anode materials on a commercial scale for the U.S. domestic market using natural graphite from Alaska as soon as it is available. At full capacity, it requires about 34.5 hectares (85 acres) of land, consists of 17 buildings, and would annually produce about 77,000 tonnes of manufactured graphite products. The products are grouped into battery anode materials, specialty purified graphite products, and traditional unpurified graphite products. The products are manufactured from natural graphite concentrate, artificial graphite precursors, coke and pitch. Key components of the manufacturing process are the purification of natural graphite and graphitization of artificial graphite precursors in high temperature, electrically heated furnaces. The STP's preferred location is in Washington State to access both its relatively lower power rates from hydro generated electricity and its skilled workforce.

Permitting and construction of the STP, once its design is finalized, is expected to take three years. The STP would be constructed in two phases, each with almost identical equipment and production capacity. An exception is that Phase 2 has three furnace lines, Phase 1 has two. Phase 1 is assumed to operate at 90% capacity for the first year to allow for start up adjustments. Thereafter it would operate at full capacity. Phase 2 would come on stream in Year 2 and the STP would operate at full capacity.

The STP, at full capacity (Table 2), is designed to produce 51,167 tpy of anode materials for the electric vehicle and energy storage battery markets; 7,585 tpy of purified, sized material for the speciality graphite market; and 18,622 tpy for the unpurified, traditional graphite market. Total annual production would be 77,374 tonnes based on the expected annual production capacity. The average annual production over 26 years in the PFS is 75,026 tonnes.

Table 2: STP Products and Prices

| No. | Category | Name | Description | Purity (%Cg) | Ph 1 (tpy) | Total (tpy) | Ph 2 (tpy) | Total (tpy) | | 1 | Anode Material | CPN | Coated, spherical NG | 99.95 | 6,015 | 25,584 | 12,030 | 51,167 | | 2 | BAN | Blended AG and NG | 99.95 | 11,458 | 22,915 | | | | | 3 | SPN | Secondary Particle NG | 99.95 | 1,829 | 3,658 | | | | | 4 | SPC | Secondary Particle Composite | 99.95 | 6,282 | 12,565 | | | | | 5 | Purified | 3299 | +32 Mesh Purified | 99+ | 59 | 3,792 | 117 | 7,585 | | 6 | 599 | +50 Mesh Purified | 99+ | 527 | 1,055 | | | | | 7 | 899 | +80 Mesh Purified | 99+ | 586 | 1,172 | | | | | 8 | 199 | +100 Mesh Purified | 99+ | 977 | 1,953 | | | | | 9 | Battery Conductor | -320 Mesh Purified | 99.9 | 692 | 1,386 | | | | | 10 | Synthetic Diamond Precursor | -320 Mesh Purified | 99.99 | 951 | 1,902 | | | | | 11 | Unpurified | 3295 | +32 Mesh | 95+ | 95 | 9,311 | 189 | 18,622 | | 12 | 595 | +50 Mesh | 95+ | 851 | 1,701 | | | | | 13 | 895 | +80 Mesh | 95+ | 945 | 1,890 | | | | | 14 | 195 | +100 Mesh | 95+ | 1,575 | 3,150 | | | | | 15 | Carbon Raisers Lubricants | Carbon Raisers Lubricants | 95+ | 4,640 | 9,279 | | | | | 16 | Coke Reject | Coke Reject | 95+ | 1,207 | 2,413 | | | | | | | | | | | 38,687 | Total | 77,374 |

Graphite Creek Mine

The Mine would produce an average of 51,813 tonnes per year of graphite concentrate for the projected 23-year mine life. The deposit would be mined with conventional open pit mining methods including drilling, blasting, loading, and hauling. The strip ratio in the PFS plan is 2.2:1 with an ore cut-off grade of 2.0% graphitic carbon and an average head grade of 5.6% graphitic carbon. The pit would be mined in six phases over a period of 24 years. One year of pre-stripping would occur prior to the start-up of the process facility. Ore will be hauled to a process facility which would be built adjacent to the pit. Run of mine waste would be comingled with dewatered process tails and placed in waste dumps .

The process facility would process an average of 2,860 tpd for 365 days per year. The flowsheet design is based on metallurgical test work conducted at SGS Canada Inc.'s facilities at Lakefield , Ontario. The flowsheet consists of a jaw crusher that feeds a semiautogenous grinding circuit. After grinding, the ore is subjected to a series of seven flotation/regrind steps. The flotation/regrind steps are designed to recover the graphite at its largest possible flake size while still maintaining a concentrate with a graphitic carbon grade of greater than 95%. The graphite concentrate would be filtered and dried on site. The dried concentrate would be bagged and shipped by barge from Nome, Alaska to the STP in Washington during the annual shipping season. The tails from the flotation circuit would be dewatered, comingled with the waste rock, and placed in a lined waste storage facility. Any drainage from the lined waste storage facility would be treated through a water treatment plant prior to discharge.

Risk Assessment and Mitigation

The risks and uncertainties identified for the Project are generally described in the Company's quarterly Management's Discussion and Analysis statements 3 . These cover the Project's financial, mining, processing, operating, market, and regulatory risks, all of which are common with similar projects.

Other identifiable risks and uncertainties specific to the Project include:

1. Purchase of market graphite in advance of receiving Alaska graphite: While there is no certainty that the Company will be successful in purchasing graphite prior to receiving production from the Mine in the quantities and pricing projected in the PFS, based on industry forecasts and preliminary inquiries, the Company believes this is achievable. It is recommended that the Company begin contracting for this supply as soon as possible. 2. STP's advanced processing technologies: In April 2022 , the Company announced its MOU with Sunrise ( Guizhou ) New Energy Material Co., Ltd. ("Sunrise") 4 . The intent is for the parties to develop an agreement to share expertise and technology for the design, construction, and operation of the STP. There is no guarantee that the agreement will be finalized. The MOU's term was recently extended and Sunrise is in the process of preparing anode materials for sample purposes from Graphite Creek concentrate produced from graphite recovered during exploration. 3. STP site selection: The STP's site has not been finalized. The Company, working with the Washington State Department of Commerce, identified several potential locations. For the purposes of the PFS, a location in Lewis County was assumed. Site selection is to be finalized as soon as possible. 4. Availability of capital: For the Project presented in the PFS to be realized, the Company must acquire the required capital in a timely manner. There is no certainty that this is achievable. The Company is encouraged by the support of its investors to date and believes the recent enactment of the Inflation Reduction Act of 2022 provides investors with additional incentive to support the industry.

Mineral Resources and Reserves

The Graphite Creek property (the " Property ") is located on the Seward Peninsula , Alaska about 60 km North of Nome . The Property comprises 9,600 hectares (23,680 acres) of State of Alaska mining claims. The claim block consists of 176 claims, of which 163 are wholly owned by Graphite One ( Alaska ) Inc. and 13 are leased to Graphite One ( Alaska ). The graphitic mineral zone is exposed on the surface and strikes East/Northeast along the North face of the Kigluaik Mountains. The geophysical expression of the deposit spans more than 16 km (Figure 1).

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Through 2021, 66 holes have been completed in the resource area for a total of 10,112 meters of drilling. The resource data base consists of 6,412 assays. The resource remains open down dip and along strike to the East and West.

The Mineral Resource Estimate for Graphite Creek was updated with data through the 2021 Drill Program. The methodology used was similar to that described in the 2019 NI 43-101 report with a lower angle interpretation of the Kigluaik Fault and an additional estimation between interpreted graphite lodes. A lower cutoff grade of 2% Cg was used in 2022 due to updated mining and processing information, particularly with the integration of the STP.

The updated resource estimate provided in the PFS is presented in Table 3.

| Table 3: PFS 2022 Resource Estimate 5 | | | | | | MINERAL RESOURCE CLASSIFICATION | TONNAGE (Million Tonnes) | GRAPHITE GRADE (% Cg) | CONTAINED GRAPHITE (Tonnes) | | | Inferred | 254.67 | 5.11 % | 13,004,017 | | | Indicated | 27.87 | 5.15 % | 1,435,135 | | | Measured | 4.67 | 5.83 % | 272,205 | | | | | | | | | Measured + Indicated | 32.54 | 5.25 % | 1,707,340 | | | | | | | |

Comparisons to the previous resource estimate from the 2019 NI 43-101 report are summarized in Table 4.

The Inferred category's tonnage increased 177%; Indicated, 201%; and Measured, 176%. Contained graphite in the Inferred category increased 77%; Indicated, 101%; and Measured 101%. There is a corresponding drop in graphite grade in each category.

| Table 4: Resource Estimate Comparison - 2022 PFS Update to 2019 Report 6 | | | | | | MINERAL RESOURCE CLASSIFICATION | RESOURCE REPORT | TONNAGE (Million Tonnes) | GRAPHITE GRADE (% Cg) | CONTAINED GRAPHITE (Tonnes) | | Inferred | 2022 PFS Results | 254.67 | 5.11 % | 13,004,017 | | Change from March 2019 | 177 % | -36 % | 77 % | | | Indicated | 2022 PFS Results | 27.87 | 5.15 % | 1,435,135 | | Change from March 2019 | 201 % | -33 % | 101 % | | | Measured | 2022 PFS Results | 4.67 | 5.83 % | 272,205 | | Change from March 2019 | 176 % | -27 % | 101 % | | | | | | | | | Measured + Indicated | 2022 PFS Results | 32.54 | 5.25 % | 1,707,340 | | Change from March 2019 | 197 % | -32 % | 101 % | | | Note: Cut-off Grades PFS 2%, March 2019 at 5% | | | | |

Table 5 provides the same comparison as Table 4 between the PFS and the 2019 report but with a 2% cutoff grade. The Inferred category's tonnage increased 36%; Indicated, 65% and Measured, 70%. Contained graphite in the Indicated category increased 20%; Indicated, 43%; and Measured, 54%.

| Table 5: Resource Estimate Comparison - 2022 PFS to 2019 Report at 2% Cutoff Grade 7 | | | | | | MINERAL RESOURCE CLASSIFICATION | TONNAGE (Million Tonnes) | GRAPHITE GRADE (% Cg) | CONTAINED GRAPHITE (Tonnes) | | | Inferred | 36 % | -12 % | 20 % | | | Indicated | 65 % | -14 % | 43 % | | | Measured | 70 % | -9 % | 54 % | | | | | | | | | Measured + Indicated | 66 % | -13 % | 45 % | | | | | | | |

The Mine is planned as a conventional open-pit operation using drilling, blasting, loading and hauling. The Mineral Reserves, summarized in Table 6, were estimated through the process of pit optimization, pit design, mine scheduling and cut-off grade optimization. Over a 23-year life, the Mine is expected to produce 22.5 million tonnes of ore with an average grade of 5.6% Cg, at a 2.2:1 strip ratio. Peak mine production is expected to be approximately 11,000 tonnes per day.

| Table 6: Graphite Creek Mineral Reserve Estimate | | | | | | | | | | Class | Diluted Tonnes (000's Tonnes) | Diluted Grade (% Cg) | Contained Graphite (000's Tonnes) | | | | | | | Proven | 3,812 | 6.0 | 230 | | | | | | | Probable | 18,678 | 5.5 | 1,028 | | | | | | | Total Proven & Probable | 22,490 | 5.6 | 1,258 | | | | | | | | | | | | | | | | | Notes: | | | | | | | | | | 1. Mineral Reserves follow CIM definitions and are effective as of June 1, 2022 | | | | | | | | | | 2. Mineral Reserves are estimated using a raised variable cut-off of 2.0% Cg – 3.0% Cg which is required to maximize secondary treatment production. The economic cut-off grade is 0.7% Cg based on a net average Graphite Price of US$7,677/tonne (including transport & treatment charges) and a mill recovery of 90%. | | | | | | | | | | 3. The final pit design contains an additional 7.6 M tonnes of Measured and Indicated resources between the raised cut-off grade (2% Cg - 3% Cg) and the economic cut-off grade (0.7% Cg) at an average grade of 1.7% Cg. These resources have been treated as waste in the final mine production schedule. | | | | | | | | | | 4. The final pit design contains an additional 14.0 M tonnes of Inferred resources above the economic cut-off grade (0.7% Cg) at an average grade of 5.2% Cg. Inferred Mineral Resources are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as Mineral Reserves, and there is no certainty that any part of the Inferred Resources could be converted into Mineral Reserves. | | | | | | | | | | 5. Tonnages are rounded to the nearest 1,000 t, graphite grades are rounded to one decimal place. Tonnage measurements are in metric units. | | | | | | | | | | | | | | | | | | |