United States Geological Survey Reports Increases in Both Domestic Consumption and Prices Paid for Graphite

LAS VEGAS, NV -- (Marketwire) -- 01/18/13 -- USA GRAPHITE INC. (OTCQB: USGT) (or "the Company") is pleased to share with its shareholders the 2012 United States Geological Survey's (USGS) report on graphite.

The USGS report, released earlier this week, reports "Although natural graphite was not produced in the United States in 2011, approximately 90 U.S. firms, primarily in the Northeastern and Great Lakes regions, used it for a wide variety of applications. The major uses of natural graphite in 2011 were estimated to be refractory applications and crucibles combined, 33%; foundry operations and steelmaking combined, 26%; brake linings, 7%; batteries and lubricants combined, 5%; and other applications, 29%."

The USGS has also reported a gross increase of more than 7% on domestic imports of graphite for consumption from 2010 to 2011. During this period, prices paid for flake graphite, lump and chip graphite, and amorphous graphite have all increased as well.

The USGS reports: (Data in thousand metric tons unless otherwise noted)

Salient Statistics--United States:          2007   2008   2009   2010  2011e
                                         -----------------------------------
Production, mine                              --     --     --     --     --
Imports for consumption                       59     58     33     65     70
Exports                                       16      8     11      6      7
Consumption, apparent                         43     50     22     60     63
Price, imports (average dollars per ton
 at foreign ports):
  Flake                                      499    753    694    720  1,170
  Lump and chip (Sri Lankan)               2,219  2,550  1,410  1,700  2,070
  Amorphous                                  150    203    249    257    299
Net import reliance as a percentage of
 apparent consumption                        100    100    100    100    100

Import Sources (2007-10): China, 51%; Mexico, 20%; Canada, 19%; Brazil, 6%; and other, 4%.

Events, Trends, and Issues: Worldwide demand for graphite slowly began to increase during the last half of 2009 and continued increasing steadily throughout 2010 and into 2011. This increase resulted from the improvement of global economic conditions and its impact on industries that use graphite. Principal import sources of natural graphite were, in descending order of tonnage, China, Mexico, Canada, Brazil, and Madagascar, which combined accounted for 99% of the tonnage and 92% of the value of total imports. Mexico provided all the amorphous graphite, and Sri Lanka provided all the lump and chippy dust variety. China, Canada, and Brazil were, in descending order of tonnage, the major suppliers of crystalline flake and flake dust graphite.

During 2011, China produced the majority of the world's graphite, and China's graphite production is expected to continue to increase.

World Resources: Domestic resources of graphite are relatively small, but the rest of the world's inferred resources exceed 800 million tons of recoverable graphite.

Advances in thermal technology and acid-leaching techniques that enable the production of higher purity graphite powders are likely to lead to development of new applications for graphite in high-technology fields. Such innovative refining techniques have enabled the use of improved graphite in carbon-graphite composites, electronics, foils, friction materials, and special lubricant applications. Flexible graphite product lines, such as graphoil (a thin graphite cloth), are likely to be the fastest growing market. Large-scale fuel-cell applications are being developed that could consume as much graphite as all other uses combined.

Mr. Wayne Y. Yamamoto, President and CEO of USA Graphite, comments; "The 2012 USGS report reinforces the Company's position on the graphite market. Demand for graphite is growing exponentially as technologies requiring graphite and by-products of graphite are rapidly increasing. Domestic consumption of graphite is reported to be at a five year high. Further, the USA continues to pay record prices for 100% of its consumption, sending fortunes to China, Mexico and Canada. USA Graphite is committed to sourcing multiple large tonnage supplies of graphite in America for the American market."

About Graphite:

• Graphite is used in refractories -- used to line high-temperature equipment; pencils; lithium-ion batteries -- used in consumer electronics and electric vehicles, including the Nissan Leaf, Tesla Model S and others; fuel cells; and Pebble Bed nuclear reactors. It is used in foundries, lubricants and brake linings.
  
  
• Graphite is also used to produce graphene, a tightly packed single layer of carbon atoms that can be used to make inexpensive solar panels, powerful transistors, and even a wafer-thin tablet that could be the next-generation iPad* or iPod*.
  
  
• Graphene, extremely light and strong, has been called the world's next wonder material.
  
  
• The closure of graphite mines in China, which produces 75% of the world's graphite, has resulted in a fall in global graphite production to 1.3 million tonnes per annum in 2011. Like rare earths, China is restricting the export of graphite to protect its own domestic industries. The second largest producer is India, followed by Brazil, North Korea, Austria and Canada.
  
  

*trademarks of Apple Inc.

About USA Graphite:

USA Graphite is a publicly traded US exploration company focused on the acquisition, exploration and development of world-class graphite properties in North America. USA Graphite intends to become a domestic (US) graphite supplier. The USGS has reported that the USA has been a 100% net importer of graphite over the last 5 years, sending billions of dollars out of America. USA Graphite has holdings in Nevada, offering considerable potential for the discovery and development of large flake, high-grade graphite, whereby mineralization is exposed at surface and clearly evident at economic depths. For additional information please visit http://www.usa-graphite.com

"Safe Harbor" Statement:

Under The Private Securities Litigation Reform Act of 1995: The statements in the press release that relate to the Company's expectations with regard to the future impact on the Company's results from new products in development are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. Notice Regarding Forward Looking Statements -This press release includes forward-looking statements that involve a number of risks and uncertainties, including the success of the programs it is commercializing and developing. Further, the risks involve the ability of the Company to raise capital to fund its operations and the capital requirements for the development and marketing of its products. Investors are encouraged to review the risk factors listed or described from time to time in the Company's filings (10K, 10Qs, S-1 and others) with the Securities and Exchange Commission.