OTTAWA, ONTARIO--(Marketwired - March 23, 2016) - Focus Graphite Inc., (Focus Graphite or "the Company") (TSX VENTURE:FMS)(OTCQX:FCSMF)(FRANKFURT:FKC) is pleased to announce its affiliate, Grafoid Inc., and Xiamen Tungsten Co. Ltd. (Xiamen), have signed a Memorandum of Understanding (MOU) for the establishment of a strategic joint venture partnership.
The MOU establishes terms for Xiamen's acquisition of up to a 20% equity position in Grafoid through the purchase of common shares - including up to 7,000,000 Grafoid common shares currently held by Focus Graphite and; it provides Focus Graphite with a portal in China for the future sale of value added graphite products through its strategic partnership with Xiamen. Focus Graphite, with 7.9 million shares, is the largest shareholder in Grafoid.
In summary, the MOU between Grafoid and Xiamen sets out parameters for actions that meet both parties' immediate and long-term business objectives through a joint venture arrangement. They include:
- Xiamen's desire to build a clean energy technology platform and introduce those technologies to the China market
- Grafoid's goals for developing industrial applications to open the China market for the commercialization of its suite of Mesograf™ and Amphioxide ™ graphene based products
- The fulfillment of Focus Graphite's desire to move forward with the development of the company's Lac Knife, Qubec natural flake graphite project, and supply global markets with high purity, value-added, cost-competitive graphite products while supporting the next generation battery development platform of Grafoid, Focus Graphite, Stria Lithium Inc., and Braille Battery Inc.
- The establishment of Xiamen's business office at the Grafoid Global Technology Center in Kingston, Ontario to provide Xiamen with a North American base for future business expansion, and; the establishment of a Grafoid business office in China
A due diligence process will be concluded by May 22, 2016.
A publicly traded company listed on the Shanghai Exchange, Xiamen Tungsten is China's leader in smelting, processing and export of tungsten and other non-ferrous metal products; the operation of rare earth business interests, and; the supply of battery materials. It has annual revenues in excess of 10.143B CNY ($1.55B US).
Advancing the Lac Knife Graphite Project
Focus Graphite CEO and Director Gary Economo said the proceeds from the pending sale of Grafoid shares held by Focus Graphite will be applied to the company's continuing efforts to bring the Lac Knife Project into production.
"In addition to providing Grafoid with a strategic partner, Grafoid's MOU with Xiamen, has benefits for Focus Graphite. When finalized, it will provide additional funding to allow us to advance our overall mine and transformation plant financing, and potentially open the China market to Focus Graphite for additional offtake partners and the sale of value added graphite products," Mr. Economo said.
"Specifically, this injection of funding could enable Focus Graphite to advance our Lac Knife detailed engineering and finalize the environmental permitting process" said Mr. Economo. "And, it enables us to move to the next stage in assembling our mine CAPEX financing."
Focus Graphite continues its graphite testing. Customer requirements will come from battery manufacturers and from original equipment manufacturers (OEMs) and Tier 1 and Tier 2 suppliers in North America, Asia and Europe associated with the 2015 Focus-Grafoid "Energy" and "Polymer Offtakes."
"The agreement leaves us potentially well positioned to provide a secure and reliable source of graphite feedstock for the Grafoid-Xiamen joint venture," Mr. Economo said.
"With regard to our green energy development focus," said Mr. Economo, "Grafoid's agreement with Xiamen Tungsten encourages our continued collaborative efforts with Grafoid, Stria Lithium Inc., and Braille Battery Inc. to expand our efforts in China and Asia for next generation battery development."
On September 25, 2015, Focus Graphite announced it had concluded two definitive, 10-year offtake agreements in a related party transaction with Grafoid for the purchase of Lac Knife graphite concentrate.
The first offtake agreement (the "Graphene Offtake," commits Grafoid to acquire, at its discretion, up to an annual maximum of 1,000 tonnes of high-purity (98.3% total carbon "Ct")(1) large flake (+80 mesh) graphite concentrate annually from the Lac Knife Project for 10 years, representing up to 6.8% of the projected annual production of 14,606 tonnes of high-purity large flake concentrate. (Taken from Technical Report on The Lac Knife Graphite Feasibility Study, available at www.sedar.com under Focus Graphite Inc)
The second offtake agreement (the "Polymer Offtake") commits Grafoid to acquire, at its discretion, up to 25,000 tonnes of 97.8% Ct (average concentrate grade for all flake sizes) graphite concentrate annually from the Lac Knife Project for 10 years, representing up to 56.4% of the projected total annual production of 44,300 tonnes (all flake sizes). (Taken from Technical Report on The Lac Knife Graphite Feasibility Study.)
About Xiamen Tungsten
Xiamen Tungsten Co., Ltd. is China's largest producer and exporter of tungsten products. Its investment in technology upgrades and metallurgical innovation have narrowed the East-West gap in product quality compared to foreign enterprises and, the company is currently expanding its investments in clean energy technologies to move in lockstep with China's march toward a low carbon economy.
It has annual revenues in excess of 10.143B CNY ($1.55B US).
During the last decade, with a view to upgrading its competitive position in global markets, Xiamen, through acquisition and investment has expanded its business from a tungsten company to a technology oriented conglomerate in control of its complete manufacturing chains.
Xiamen Tungsten is listed on the Shanghai Exchange under the numerical symbol: 600549.
For more information about Xiamen Tungsten, please visit https://www.cxtc.com/