Focus Graphite Inc V.FMS.WT

92% Increase in the Measured and Indicated Mineral Resource

[Panis]

Focus Graphite Reports a 92% Increase in the Measured and Indicated Mineral Resource Categories at its Lac Knife Flake Graphite Project-to 9.6 Million Tonnes Grading 14.77% Cg

OTTAWA, ONTARIO--(Marketwired - Jan. 28, 2014) - Focus Graphite Inc. (TSX VENTURE:FMS)(OTCQX:FCSMF)(FRANKFURT:FKC) ("Focus" or the "Company") is very pleased to announce an update of its National Instrument 43-101 ("NI 43-101") mineral resource estimate for its 100%-owned Lac Knife graphite project, in northeastern Québec.

The resource estimate is based on both the 2012 and 2013 additional exploration and definition drilling programs for a total of 92 holes, and 9,103 meters that successfully achieved the designed goal to upgrade the quality of existing Indicated and Inferred resources to the Measured and Indicated categories. This is in addition to 105 previous drill holes that totalled 9,217 meters.

Measured and Indicated resources are now estimated at 9.6 million tonnes grading 14.77% Cg at a 3% Cg cut-off grade. Additionally there are 3.1 million tonnes of Inferred resources at 13.25% Cg using a 3% cut-off in this updated resource estimate presented in Table 1 below.

Table 1. Lac Knife Mineral Resource Estimate @ 3.0% graphitic carbon ("Cg") cut-off
	Tonnage (t)	Cg (%)	In situ Graphite (t)
Measured	432,000	23.66	102,000
Indicated	9,144,000	14.35	1,312,000
Measured + Indicated	9,576,000	14.77	1,414,000
Inferred	3,102,000	13.25	411,000

Mineral resources are not mineral reserves and do not have demonstrated economic viability

Highlights

• Measured and Indicated mineral resources reported at a cut-off of 3.0% Cg increased in tonnage by 92% to 9.6 million tonnes grading 14.77% Cg compared to the previous estimate of 4.9 million tonnes grading 15.76% Cg reported at a cut-off of 5.0% Cg.
• Upgraded 432,000 thousand tonnes of Indicated resources to the Measured resource category grading an average of 23.66% Cg using a 3% cut-off grade.
• The updated resource estimate increased the in-situ Graphite content by 81%.
• The bulk of the 3.0 million tonnes previously classified as Inferred resource was successfully upgraded to the Measured and Indicated categories.
• Delineation of an additional 3.1 million tonnes of Inferred resources that is located within the southwest extension of the Lac Knife deposit.

As shown in Table 2 below, when comparing at the 5% Preliminary Economic Assessment (PEA) cut-off, the resource tonnage increased by 92% in the Measured and Indicated categories from 4.9 million tonnes grading 15.76% Cg in the PEA study to 9.5 million tonnes grading 14.86% Cg in this new update. This translated to an increase of 81% of in-situ graphite from 778,000 tonnes to 1.4 million tonnes in the Measured and Indicated categories.

In the Inferred resource category, the tonnage decreased by 2.0% from 3.0 million tonnes in the PEA study to 2.9 million tonnes in this resource update. The Inferred resource category average grade was reduced from 15.58% Cg to 13.75% Cg resulting in a reduction of 13.5% of in-situ graphite in this category from 467,000 tonnes down to 404,000 tonnes. These changes resulted from converting most of the 3.0 million tonnes of Inferred resources in the PEA study pit to the Measured and Indicated categories, and also by significantly extending the deposit to the south adding an additional 3.1 million tonnes of Inferred resources in the newly delineated South Central Zone which is still considered open in this direction by Focus (See Figure 1).

Another contributing factor was the reduction of the cut-off grade from 5% Cg in the PEA study down to 3% Cg in this update. The reduction in cut-off was driven by a higher selling price and higher concentrate grade.

Table 2. Sensitivity to cut-off change and comparison to previous estimate
		Updated Mineral Resource Estimate (3.0% Cg Cut-off base case)			October 30th, 2012 PEA Mineral Resource Estimate (5.0% Cg Cut-off base case)			Percent Change
	Cut-off	Tonnes	Cg%	Cg Tonnes	Tonnes	Cg%	Cg Tonnes	Tonnage	Graphite
Measured	greater than 10.0	428,000	23.81	102,000	0		0
	greater than 5.0	432,000	23.66	102,000	0		0
	greater than 3.0	432,000	23.66	102,000
	greater than 2.0	432,000	23.66	102,000
Indicated	greater than 10.0	7,466,000	15.77	1,177,000	4,533,000	16.43	745,000	64.7%	58.0%
	greater than 5.0	9,065,000	14.44	1,309,000	4,938,000	15.76	778,000	83.6%	68.3%
	greater than 3.0	9,144,000	14.35	1,312,000
	greater than 2.0	9,146,000	14.35	1,312,000
Measured + Indicated	greater than 10.0	7,894,000	16.21	1,279,000	4,533,000	16.43	745,000	74.1%	71.7%
	greater than 5.0	9,497,000	14.86	1,411,000	4,938,000	15.76	778,000	92.3%	81.4%
	greater than 3.0	9,576,000	14.77	1,414,000
	greater than 2.0	9,578,000	14.77	1,415,000
Inferred	greater than 10.0	2,196,000	15.81	347,000	2,861,000	15.92	455,000	-23.2%	-23.7%
	greater than 5.0	2,941,000	13.75	404,000	3,000,000	15.58	467,000	-2.0%	-13.5%
	greater than 3.0	3,102,000	13.25	411,000
	greater than 2.0	3,116,000	13.20	411,000

The rounding of tonnes as required by NI43-101 reporting guidelines may result in apparent differences between tonnes, grade and contained graphite.

To view Figure 1 please click on the following link: https://media3.marketwire.com/docs/FMS0128.pdf

Focus Graphite President and Chief Operating Officer Don Baxter stated: "We are very pleased to have further de-risked the Lac Knife project by increasing the quality and tonnage of the resource. This updated resource will be incorporated into a mineral reserve estimate in the feasibility study currently underway with Met-Chem.

"This announcement comes on the heels of our historic announcement of the signing of a 10-year off-take agreement with a Chinese industrial conglomerate, just as China announced it was shutting down approximately 20% of its flake graphite production in Shandong Province. This further illustrates the need for reliable, low cost, high quality graphite flake production outside of China," Mr. Baxter said.

"Again, Focus is showing that it has strong potential to meet these growing needs, and the updated resource indicates the Lac Knife project could potentially produce high quality graphite flake over a significant mine life," he added.

The updated mineral resource is based on 197 diamond drill holes totaling 18,320 metres of historic and recent drilling. This includes 104 surface diamond drill holes totaling 10,337 metres completed by Focus Graphite since 2010.

Mineral Resources have been reported within a constraining pit shell at a cut-off grade of 3.0% graphitic carbon ("Cg"). Details on the mineral resource estimation procedures are given in the notes below.

Notes on Mineral Resource Estimation Methodology

• Mineral resources are estimated in conformance with the CIM Mineral Resource definitions referred to in NI 43-101 Standards of Disclosure for Mineral Projects. Pierre Desautels, P.Geo. Principal Resource Geologist of AGP Mining Consultants Inc. Qualified Person under NI 43-101 who is an independent of the Company, has prepared and authorized the release of the mineral resource estimates presented herein. Jeffrey Cassoff, Eng. Lead Mining Engineer of Met-Chem Canada Inc. and Qualified Person under NI 43-101 has reviewed the technical content of this News Release. This mineral resource estimate is an update of the resource estimated by Roche Limited Consulting Group effective December 5th, 2011 and later accepted (with a resource classification update) by RPA Consulting as part of a Preliminary Economic Assessment study dated October 30th, 2012.
• All drill holes are composed of diamond drill core that was sampled and assayed over the entire length of mineralized zones by sampling approximately 1.5 meter intervals. A QA/QC program was introduced during the 2010 drill program and was expanded during the 2012 and 2013 drill program to include the insertion of standards, duplicates, and blanks and check assays at a secondary laboratory.
• Specific gravities were determined at the IOS laboratory, located in Chicoutimi Quebec. A total of 5,133 specific gravity results exist in the database that was collected by IOS since the 2010 drill program. Due to the strong correlation between sulphur and the bulk density estimates, a density model was interpolated with the same parameters used for the sulphur model. The interpolated density model ranges from 2.64 g/cm3 to 3.05 g/cm3 averaging 2.81 g/cm3
• Detailed geological logging and sectional interpretations by Focus Graphite led to the development of a three-dimensional (3D) domain model based on lithology and grade boundaries. The wireframe modelling resulted in outlining three major mineralized zones with eight minor accessory zones. Grade is typically above 3% within the wireframes but was as low as 1% in local lower grade zones within high grade domains that were utilized in the variography studies, and in the grade interpolation constraints.
• For the treatment of outliers, each statistical domain was evaluated separately and no top cut was necessary. However, a search restriction of 30 x 30 x 30 meters was imposed on threshold values of 38% Cg in order to restrict the influence of the highest values during the interpolation process.
• The composite intervals selected were 3.0 metres in length.
• A 3D geological block model was generated using GEMS© software. The block model matrix size is 6 x 6 x 5 metres. Ordinary kriging was used for all domains with inverse distance and nearest neighbour check models. The interpolation was carried out in multiple passes with increasing search ellipsoid dimensions. Classification for all models was based primarily on the pass number, distance to the closest composite and the krige variance. The Measured classification was only retained in the area, in proximity to, the bulk sample pits. No adjustment to the classification was made for blocks interpolated primarily with historical holes since these were found to be adequate for resource modelling.
• The reported mineral resources are considered to have reasonable prospects of economic extraction. Met-Chem created a pit shell using the Lerchs-Grossman pit optimization algorithm and design parameters including costs, sales price, and the open pit mine, and concentrator operating parameters that were derived from the Updated Preliminary Economic Assessment (see News Release dated November 7th, 2013) as well as typical regional cost estimates;
  • Selling Price: 2,000 $/t (FOB Sept-Iles);
  • Mill Recovery: 91.089%;
  • Concentrate Grade: 96.6% Ct;
  • Pit Slope: 45 degrees;
  • Mining Cost: 6 $/t mined;
  • Processing Cost: 40.61 $/t milled;
  • Transportation Cost: 25 $/t of concentrate;
  • Administration and Infrastructure Cost: 15 $/t milled.
• The resulting pit shell encompasses most of the estimated Measured, Indicated and Inferred Resources. The rounding of tonnes as required by NI 43-101 reporting guidelines may result in apparent differences between tonnes, grade and contained graphite.
• Mineral resources are not mineral reserves and do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.
• The quantity and grade of reported Inferred mineral resources in this estimation are uncertain in nature and there has been insufficient exploration to define these Inferred mineral resources as Indicated or Measured mineral resources and it is uncertain if further exploration will result in upgrading them to the Indicated or Measured mineral resource categories.